If you are looking for a country to start or expand your existing business, Luxembourg is the ideal jurisdiction for your business ambitions. These are the main advantages and features of Luxembourg as a jurisdiction for setting up a company.
High quality of life
Looking for a great place to live with your family? As one of the safest countries in the world, Luxembourg will become a pleasant place to live, in particular thanks to its first-class healthcare system, the beauty of its landscapes, and a variety of cultural offerings. The peculiarity of the country is one of the most attractive social security systems in Europe.
Luxembourg opens access to Europe
Luxembourg, located in the heart of Europe, is the main launching pad for entering European markets, and this is its key feature.
Relatively small in size, Luxembourg can be used as an ideal test market for conceptualizing and testing new products and services. Famous trade and political neutrality as a feature of the country contribute to the development of first-class international business relations.
The qualified local population, fluent in multiple languages
It employs highly qualified staff who speak English, French, and German. A multicultural and cosmopolitan environments are the main advantages and features of opening a Luxembourg company. The country attracts the best talent from neighboring countries and facilitates exchanges with international clients.
Digital infrastructure
Today Luxembourg is one of the leading countries in the world in the field of information and communication technologies. The reason is the strong determination of the authorities to become a reliable data center.
The country’s strengths are world-class ICT infrastructure, confirming the attractiveness of an innovative and pioneering digital jurisdiction.
Logistic center in Europe
Luxembourg’s central location in Europe, combined with an excellent air, road, rail, and water transport infrastructure, makes the country a competitive intercontinental logistics center, offering advantages and features that neighboring countries do not have. The country offers many strategic advantages for the efficient and effective management of international trade activities in Europe.
The highly efficient ecosystem of innovation
To stimulate the emergence of innovative projects, the country offers a variety of public and private grants to fund research and development. Investors have many financial incentives and benefits at their disposal, as well as support measures to help companies.
Multicultural approach
Luxembourg has implemented a wide range of policies and institutional arrangements to make economic growth more socially inclusive. Therefore, the peculiarity of the state is an open, equal society that maintains a long tradition of welcoming foreign citizens and making them feel at home. Luxembourg has become home to over 170 nationalities.
Ideal business environment
It’s easy to do business here. This is largely due to the successful efforts of successive governments to create an enabling environment for business. Also their ability to attract many international companies through flexible and attractive legal and policy frameworks. Access to public authorities and management is easily accessible, and the openness and foresight of politicians, as a feature of the jurisdiction, gives advantages to companies wishing to start a business in Luxembourg or move here.
Taxes in Luxembourg
The basic information about taxes in Luxembourg. Corporate, Municipal business, and VAT taxes.
Corporate tax
The corporate tax rate is 15% of operating income for income below 175,000 euros and 17% for income over 200,000 euros.
Municipal business tax
Tax calculated on operating income from 17,500 euros per year. Tax base: 3% of operating profit after deducting provision.
Value-added tax
VAT has differentiated rates. Super Reduced Rate: 3% on food (including restaurants, excluding alcohol), certain products and services such as shoes, clothes for children, and public transportation. Reduced rate: 8% on hairdressing, some art, and flower sales. Average rate: 14% on print ads, and bespoke clothing. Base rate: 17% on all other goods and services.
Advantages and features of opening a holding company in Luxembourg
The best solution to create a holding company in Luxembourg is the SOPARFI form. The abbreviation SOPARFI stands for a fully taxable resident company but enjoys the benefits of tax exemption thanks to double tax treaties Luxembourg has signed with over 70 countries.
SOPARFI helps to significantly reduce the tax burden by limiting the ownership and structuring of investments to benefit from the EU Parent-Subsidiary Tax Regulations Directive. This regime has the following features: under well-defined conditions, exemption from tax on dividends paid by companies in which the parent company owns, and capital gains from the sale of blocks of shares.
SOPARFI has a specific corporate purpose defined in the Articles of Association, just like a regular company. This feature is used to invest in various investment schemes: holding and financial transactions, intellectual property rights, the acquisition of real estate, and other assets.
