I
Luxembourg

Luxembourg

Company Formation in Luxembourg

Luxembourg

Formation Time
2–3 weeks
Min. Capital
€12,000 (Sàrl) / €30,000 (SA)
Corporate Tax
24.94% combined (SOPARFI: 0% on holding)
Foreign Ownership
100%

Overview

The Grand Duchy of Luxembourg is Europe's premier investment fund center, the second largest fund domicile globally after the United States with over €5.8 trillion in assets under management (AUM), and the continent's most trusted jurisdiction for institutional holding structures. Through the world-renowned SOPARFI (Société de Participations Financières) holding regime, Luxembourg companies benefit from a complete participation exemption on dividends, liquidation proceeds, and capital gains derived from qualifying domestic and international shareholdings. With a AAA sovereign credit rating, multilingual financial workforce, 86 double tax treaties, and comprehensive European single-market passporting, Luxembourg is the undisputed global hub for private equity, sovereign wealth funds, real estate capital, and multinational treasury headquarters.

#1 EU investment fund hub
SOPARFI 100% participation exemption
Lowest standard VAT in EU (17%)
86 double tax treaties
AAA credit rating

Why Choose Luxembourg

1

Europe's #1 investment fund and asset management capital with €5.8 trillion in managed assets

2

SOPARFI holding regime offering 100% tax exemption on qualifying dividends and capital gains

3

AAA sovereign credit rating and one of the world's most stable political and economic jurisdictions

4

86 comprehensive double taxation treaties worldwide preventing double taxation

5

IP Box regime providing an 80% tax exemption (yielding an effective ~5% tax rate) on qualifying IP

6

Deepest private equity and venture capital structuring ecosystem in the European Union

7

Multilingual commercial and legal environment (English, French, German, Luxembourgish)

Business Entity Types

EntityOwnershipDirectorsCapitalTaxBest For
Sàrl (Société à Responsabilité Limitée - Private LLC)100%1 manager€12,000 (fully paid up at incorporation)24.94% combined CIT on trading; 0% on holding profits under SOPARFI regimeHolding companies (SOPARFI), real estate holding, private equity vehicles, tech subsidiaries
SA (Société Anonyme - Public Corporation)100%1 director (if single shareholder) or 3 directors€30,000 (minimum 25% = €7,500 deposited prior to registration)24.94% combined CIT; 0% on qualifying holding incomeLarge institutional funds, securitization vehicles, public offerings, multinational HQs
SOPARFI (Société de Participations Financières)100%1 manager€12,000 (Sàrl) or €30,000 (SA)100% exemption on qualifying dividends and capital gains under Participation ExemptionCross-border holding of multinational corporate groups, PE portfolio companies, debt financing

Step-by-Step Formation Process

1

Company Name Availability & Structure Approval

1–2 days

Verify corporate name with Registre de Commerce et des Sociétés (RCS).

2

Blocked Capital Account Opening

1–2 weeks

Open temporary blocked account with a Luxembourg bank and deposit share capital.

3

Notarial Deed Execution

2–3 days

Luxembourg notary executes Deed of Incorporation via Power of Attorney (PoA).

4

RCS Registration & RESA Publication

3–5 days

File with RCS and publish deed in the official gazette (RESA); company is legally registered.

5

Tax Registration & Operational Account Release

1–2 weeks

Register for tax numbers (CCSS/ACD) and release capital into operational bank account.

Costs & Fees

Government / License FeeEUR 500+
Our Service FeeUSD 4,500 – 7,000
Annual RenewalUSD 3,500+

Fees are indicative and may vary based on business activity, entity type, and additional approvals required. Contact us for a precise custom quote.

Get Custom Quote

Banking

Luxembourg is home to over 120 international commercial and private banks. While onboarding involves thorough AML and source of funds verification, Luxembourg banks are world leaders in managing complex corporate holding structures, debt instruments, and multi-currency treasury operations.

Account Opening Time
2–4 weeks
Multi-Currency
Yes — multiple currencies supported

Recommended Banks

BGL BNP ParibasBanque de LuxembourgING LuxembourgBCEE (Spuerkeess)Quintet Private Bank

Tax Overview

Corporate Tax
24.94% combined effective rate in Luxembourg City: 17% Corporate Income Tax (CIT) + 7% solidarity surtax + 6.75% Municipal Business Tax (MBT). SOPARFI holding income is 100% exempt
Personal Income Tax
0% to 42% progressive income tax (plus solidarity surtax)
VAT / Sales Tax
17% standard VAT rate (the lowest standard VAT rate in the European Union)
Capital Gains Tax
100% exempt from corporate tax under the Participation Exemption on qualifying shareholdings
Withholding Tax
15% standard dividend withholding tax (0% under EU Parent-Subsidiary Directive and qualifying double tax treaties)
Double Tax Treaties
86 countries

Net Wealth Tax (NWT) applies at 0.5% on net assets up to €500M, with a Minimum Net Wealth Tax (MNWT) typically fixed at €4,815 for financial holding companies.

Visa & Residency

Investor Residence Permit

3 years, renewable

For individuals investing at least €500,000 into an existing Luxembourg business or €3M in fund structures

EU Blue Card Luxembourg

Up to 4 years

For sponsored highly qualified specialists and executive managers

Family visa: AvailableProcessing: 6–12 weeks

Frequently Asked Questions

What is a Luxembourg SOPARFI and how does it work?
A SOPARFI (Société de Participations Financières) is a fully taxable, standard commercial company—most commonly structured as a Sàrl or SA—that is utilized specifically as an international holding and financing vehicle. Unlike exempt fund vehicles, a SOPARFI has full access to all Luxembourg double tax treaties and EU Directives. Under the Luxembourg Participation Exemption regime, dividends received from, and capital gains realized upon the sale of shares in, qualifying subsidiaries are 100% exempt from Luxembourg corporate tax.
What are the requirements to qualify for the Luxembourg Participation Exemption?
To benefit from the 100% corporate tax exemption on incoming dividends and capital gains, the Luxembourg SOPARFI must hold a direct participation of at least 10% in the share capital of a qualifying subsidiary (or a shareholding with an acquisition cost of at least €1.2 million for dividends, or €6 million for capital gains) for an uninterrupted period of at least 12 months.
What is the minimum share capital for a Luxembourg Sàrl vs SA?
A Sàrl requires a minimum share capital of €12,000, which must be fully paid up at incorporation. An SA requires a minimum share capital of €30,000, of which at least 25% (€7,500) must be paid up at incorporation.
Does a Luxembourg company require local physical substance?
Yes. To ensure that foreign tax authorities do not challenge the tax residency of the Luxembourg company under General Anti-Abuse Rules (GAAR) or ATAD III, a company should maintain verifiable substance in Luxembourg: a physical registered office, a majority of board meetings held in Luxembourg with local resident managers present, and local bank account administration. Incorp International provides compliant corporate management and directorship services.
What is the standard corporate income tax rate in Luxembourg?
For companies in Luxembourg City, the combined corporate tax rate is 24.94%, consisting of a 17% Corporate Income Tax (CIT), a 7% solidarity surtax on CIT (1.19%), and a 6.75% Municipal Business Tax (MBT). However, holding profits and capital gains under the SOPARFI regime are 100% exempt.
Can a foreign entrepreneur incorporate in Luxembourg remotely?
Yes. The entire incorporation before a Luxembourg notary can be executed via a Power of Attorney (PoA) apostilled in your home country. Incorp International coordinates the notary execution, bank capital deposit, and RCS trade registry filing.