Company Formation in Luxembourg | CompanyFormation24

Last updated: April 2026.

Luxembourg reduced its corporate income tax from 1 January 2025. Small companies now pay 14% headline CIT and large companies 16%, bringing the combined effective rate in Luxembourg City — after the 7% solidarity surtax and the 6.75% municipal business tax — down to 23.87%. The standard VAT rate is the lowest in the EU, tied with Malta, at 17%. Withholding tax on interest and royalties paid to non-residents is 0%. Dividends attract 15% WHT, but the domestic participation exemption and the EU Parent-Subsidiary Directive reduce that to zero for most qualifying holders. The dominant vehicles are the SARL (société à responsabilité limitée, €12,000 share capital) and the SA (société anonyme, €30,000). A €1-capital SARL-S exists for individual entrepreneurs.

We form Luxembourg entities end to end: name reservation, notarial deed, RCS registration, RBE beneficial-owner filing, VAT and CIT activation, Right of Establishment permit, and introduction to a Luxembourg bank. Fixed price. One point of contact. No hourly fees.

Quick facts	Value
Corporate Income Tax — small (≤ €175,000)	14%
Corporate Income Tax — large (> €200,000)	16%
Solidarity surtax on CIT	7%
Municipal Business Tax (Luxembourg City)	6.75%
Combined effective rate (Luxembourg City)	23.87%
VAT (standard)	17% — threshold €50,000 (resident)
Withholding tax — dividends / interest / royalties	15% / 0% / 0% (participation-exemption reducible)
Minimum share capital (SARL)	€12,000 fully paid up
Minimum share capital (SARL-S / SA)	€1 / €30,000 (25% paid up for SA)
Standard formation time	2–4 weeks end to end
Government fees	Included in our packages
Language of filings	French, German, or English (English accepted for most filings since 2016)
Currency	Euro (EUR)

Why Form a Company in Luxembourg

Luxembourg is a small country with an outsized corporate footprint. Over 140,000 active entities are registered on a population of 680,000. Here is why foreign founders pick it.

A purpose-built holding regime. The participation exemption, codified in Article 166 of the Luxembourg income tax law, exempts dividends and capital gains on qualifying shareholdings from CIT, municipal business tax, and net-wealth tax. The conditions are well-trodden: at least 10% ownership or €1.2 million acquisition cost (€6 million for capital gains), a 12-month holding period, and a qualifying subsidiary. Combined with zero WHT on interest and royalties, Luxembourg is the default European holding jurisdiction for private equity, venture capital, family offices, and corporate groups. The purpose-built vehicle is called a SOPARFI — société de participations financières — not a separate legal form, but an SARL or SA structured to qualify for the regime.

EU access with a low-friction tax profile. Luxembourg is a founding EU member state. A Luxembourg company invoices across the Single Market under EU VAT reverse-charge, receives EU parent dividends tax-free under the Parent-Subsidiary Directive, and pays interest and royalties cross-border without WHT under the Interest and Royalties Directive. The country has concluded over 85 double-tax treaties. The regulatory environment is stable, predictable, and litigated infrequently.

A deep financial-services infrastructure. Luxembourg is the second-largest fund centre in the world behind the United States, with roughly €5.9 trillion in assets under management in regulated funds. The ecosystem around funds — specialist auditors, custodians, administrators, law firms, and the CSSF financial supervisor — is mature and responsive. For any structure that is fund-adjacent, holding-adjacent, or private-capital-adjacent, Luxembourg is the logical seat.

The trade-offs are real. Formation is slower than the UK or Poland — 2 to 4 weeks is normal, not 48 hours. Notarial deeds are required for most forms, adding cost and a physical or apostilled step. Bank account opening is the slowest element, with non-resident minimum deposits commonly between €10,000 and €50,000. Substance expectations are increasingly enforced: directors, office, and economic activity matter for tax residency and for ATAD anti-abuse rules.

For comparable jurisdictions in the region, see Belgium, the Netherlands, and France.

Company Types Available in Luxembourg

Luxembourg company law recognises a short list of vehicles. Three cover over 95% of foreign-founder cases.

SARL (Société à Responsabilité Limitée)

The default private limited company. Over 60% of Luxembourg registrations are SARLs. Minimum share capital €12,000, fully subscribed and paid up at incorporation. Between 1 and 100 shareholders; a single-member SARL is permitted. Natural persons or corporate shareholders, resident or non-resident. Incorporation requires a notarial deed. The SARL is the standard vehicle for SOPARFI holdings, IP-licensing structures, operating subsidiaries, and family-investment companies. Draft bill 8669, tabled on 16 December 2025, proposes allowing the €12,000 capital to be paid up in tranches over 12 months — still under parliamentary review at the time of writing.

SARL-S (Société à Responsabilité Limitée Simplifiée)

Introduced in 2017 to lower the barrier for individual entrepreneurs. Minimum share capital €1. Incorporation by private deed — no notary required. Only natural-person shareholders are permitted, and no person may hold more than one SARL-S at any time. The business activity must require a Right of Establishment business permit (commercial, craft, or liberal profession). Not suitable for holdings or passive investment structures. Useful for solo founders in trading or services who want a legal person without notary cost.

SA (Société Anonyme)

The public-limited-company form. Minimum share capital €30,000, of which at least 25% must be paid up at incorporation. Bearer shares are permitted but must be deposited with a licensed depositary; the practical reality is that registered shares dominate. The SA is required for companies planning a stock-market listing, for most regulated-fund vehicles (SICAV, SICAF), and for insurance and banking entities. Many mid-sized holding structures use an SA rather than an SARL where they want freely transferable shares without shareholder consent.

SCS and SCSp (Partnership Forms)

The SCS (société en commandite simple) and SCSp (société en commandite spéciale) are limited partnerships. The SCSp is particularly important — it has no separate legal personality but is tax-transparent, making it the vehicle of choice for alternative investment funds (private equity, venture capital, real estate) alongside a Luxembourg GP structured as an SARL or SA. No minimum capital. Not the right choice for an operating business.

Branch (Succursale)

A foreign company's Luxembourg branch. Not a separate legal person. Registered with the RCS. Used when a foreign group needs a local presence without a subsidiary — infrequent in practice, because tax and substance planning usually favour a separate SARL.

Form	Min capital	Liability	Tax	Common use
SARL	€12,000	Limited	CIT (14–16%)	Default — SMEs, SOPARFIs, subsidiaries
SARL-S	€1	Limited	CIT	Solo founders, trade/craft activities
SA	€30,000 (25% paid)	Limited	CIT	Listed cos, funds, large holdings
SCS / SCSp	None	Mixed / transparent	Tax-transparent	Alternative investment funds
Branch	n/a	Parent's	CIT on LU source	Foreign-group presence

Step-by-Step Formation Process

A typical SARL formation for a foreign founder runs as follows.

Name check and entity selection. We confirm the proposed name is available on the Luxembourg Business Registers search and does not clash with existing trademarks. We agree the form (SARL in most cases; SARL-S if eligible and cost-sensitive; SA where free share transferability matters). Two or three alternatives are normal.

Business-permit assessment. Commercial, craft, and industrial activities require a Right of Establishment authorisation from the General Directorate for SME, Craft and Retail. Pure holdings and financial-participation companies do not. Where a permit is needed, we file it in parallel with the incorporation — the permit typically issues in 2 to 4 weeks and is required before the company can trade but not before it can be registered.

KYC and documentation. Each shareholder, director, and beneficial owner provides passport, proof of address, tax identification number, and a signed UBO declaration. Corporate shareholders provide apostilled certificates of incorporation and registers. All non-French, non-German, and non-English documents require sworn Luxembourg translation — we coordinate this through a registered traducteur assermenté.

Capital deposit and blocking certificate. For SARL and SA, the share capital is paid into a Luxembourg bank account in formation. The bank issues a certificat de blocage that the notary requires before signing the deed. This step is often the slowest — the capital account usually opens in 5 to 15 business days, driven by the bank's KYC. SARL-S skips this step.

Notarial deed. A Luxembourg civil-law notary executes the deed of incorporation in the presence of the founders or their attorneys-in-fact. We provide the power of attorney template; the notary meeting itself takes roughly 30 minutes. SARL-S is executed by private deed, no notary.

RCS filing. The notary transmits the deed to the Registre de Commerce et des Sociétés. The RCS number issues within 3 to 7 business days. From that moment, the company has legal personality.

Post-incorporation registrations. The beneficial-owner declaration to the RBE is due within one month of incorporation. We register with the ACD for corporate income tax, the AED for VAT, and the CCSS where the company employs staff. The business bank account is activated once the blocked capital is released, typically within a few days of the RCS entry.

End-to-end, from first contact to operating company with an active bank account, a Luxembourg SARL typically takes 2 to 4 weeks. A SARL-S for a simple case can complete in around a week.

Required Documents

For each shareholder, director, and beneficial owner we need:

Passport or EU national ID
Proof of residential address dated within three months
Tax identification number from the country of residence
Signed UBO declaration for the RBE filing
CV or profile summary for the bank KYC

For corporate shareholders:

Apostilled certificate of incorporation
Apostilled register of directors or certificate of incumbency
Group structure chart showing the ultimate beneficial owner
Sworn translation into French, German, or English of all non-qualifying-language documents

Where a Right of Establishment permit is required, we additionally collect a criminal-record certificate for the manager named on the permit, proof of professional qualification where the activity is regulated (accountancy, construction, specific trades), and a statement of honourability.

Costs and Timeline

Luxembourg formation costs are higher than in Anglo-Saxon jurisdictions because notary fees, sworn translation, and registered-agent substance are genuine line items. The package economics break roughly into: notary fee, RCS filing, sworn translation, registered domicile for year one, bank introduction, VAT and CIT registration, RBE declaration, and Right of Establishment permit where applicable.

Our packages cover all of the above end to end. Contact us for a fixed-price quote — there are no hourly legal fees, no government surcharges added later, and no translation or notary invoices arriving after the fact. SOPARFI structuring, cross-border holding advice, and initial tax residency-substance setup are offered as scoped add-ons where relevant.

For urgent cases, our sister brand maintains a small inventory of ready-made Luxembourg SARL companies that can be transferred in days rather than weeks.

Typical timeline from KYC clearance:

Day	Milestone
0	Engagement, KYC submitted
1–3	KYC cleared, drafting underway, sworn translation ordered
4–10	Capital account opened, blocking certificate issued
10–12	Notarial deed signed
13–16	RCS registration complete; company legal person
16–21	RBE filing, VAT and CIT activation, bank account live

Tax Overview for Luxembourg Companies

Luxembourg's headline corporate tax profile has three moving parts.

Corporate Income Tax (CIT): 14% on taxable income up to €175,000; a tapered rate between €175,000 and €200,000; and 16% above €200,000. These rates were reduced by 1 percentage point effective 1 January 2025. A solidarity surtax of 7% applies to the CIT amount, funding the employment fund. Municipal Business Tax (MBT) is levied by each commune; in Luxembourg City it is 6.75% on a slightly adjusted base. The combined effective rate in Luxembourg City is 23.87% for large companies and 21.8% for small companies for financial years beginning in 2025 and 2026.

Participation exemption. Dividends from qualifying subsidiaries are exempt from CIT and MBT. Capital gains on the sale of qualifying shareholdings are exempt. The minimum thresholds are a 10% stake or €1.2 million acquisition cost for dividends, and €6 million for capital gains — in each case with a 12-month minimum holding period and a qualifying tax-resident subsidiary. The regime is the reason so many cross-border structures include a Luxembourg holding layer.

VAT. Standard rate 17% — the lowest in the EU alongside Malta. Intermediate 14% on advertising material, certain fuels, and wines. Reduced 8% on clothing, utilities, and hairdressing. Super-reduced 3% on food, pharmaceuticals, books, restaurant services, and residential construction. The resident registration threshold rose to €50,000 on 1 January 2025, from €35,000 previously. Non-resident suppliers have no threshold and must register from the first taxable supply.

Withholding tax. The standard 15% rate on dividends to non-residents is eliminated by the domestic participation exemption for qualifying corporate shareholders, and by the EU Parent-Subsidiary Directive for EU-resident parents holding at least 10% for 12 months. Treaty reductions bring the residual rate down to 0%, 5%, or 10% for most jurisdictions. Luxembourg does not withhold tax on arm's-length interest paid to non-residents, and does not withhold tax on royalties paid to non-residents. The combination — 0% WHT on interest and royalties — is unusual in the EU and underlies Luxembourg's use in intra-group financing and licensing structures. A new penalty regime for mischaracterised royalty payments takes effect from 1 July 2026.

Net wealth tax. Luxembourg levies an annual minimum net wealth tax on companies: €535 for small companies whose financial assets exceed 90% of total assets, and up to €4,815 depending on balance-sheet size for others. The standard rate is 0.5% of taxable net wealth, with a reduced 0.05% band above €500 million. Shareholdings qualifying for the participation exemption are excluded from the base.

R&D and IP regimes. Luxembourg offers a patent-box regime (Article 50ter) exempting 80% of qualifying IP income, yielding an effective rate of roughly 4.8% on eligible revenue — aligned with OECD BEPS nexus requirements.

E-invoicing. Business-to-government e-invoicing has been mandatory since 2023 via the Peppol network. Business-to-business e-invoicing is not yet mandatory and will phase in under the EU ViDA reforms over 2028–2030.

Banking for Luxembourg Companies

Luxembourg banking is conservative, well-regulated, and biased toward clients with real substance. Non-resident-controlled entities should expect enhanced due diligence, minimum deposits between €10,000 and €50,000, and timelines of 5 to 15 business days once the documentation pack is complete.

Spuerkeess (Banque et Caisse d'Épargne de l'État) is the state-owned savings bank, consistently ranked among the safest banks in the world by Global Finance. The corporate-account division handles SARL and SA account openings including for foreign-founded companies, though the process is paperwork-intensive. A reliable default for plain-vanilla SOPARFI and operating structures.

BGL BNP Paribas is the largest banking employer in Luxembourg and runs a dedicated non-resident desk. Strong product range across cash management, treasury, and cross-border payment integration with the BNP Paribas European network. Often the fastest traditional-bank route for internationally-controlled SARLs.

BIL (Banque Internationale à Luxembourg) is the oldest private bank in the country, founded in 1856 and owned today by Legend Holdings. Relationship-led, strong on private banking and holding-company servicing, less optimised for high-volume operational banking.

ING Luxembourg, part of the Dutch parent, is the most digitally mature of the traditional banks. Strong English-language support, transparent fee structure, and good online business banking. A natural fit for tech-enabled businesses already using ING elsewhere.

Banque Raiffeisen is a cooperative bank oriented toward domestic SMEs and professions. Useful for clients with Luxembourg-resident directors and genuine local trading activity; less convenient for passive holding structures.

For faster onboarding where a traditional bank is not viable, 3S Money offers a licensed Luxembourg EMI account with a local LU IBAN, remote onboarding in 5 to 15 business days, and a dedicated relationship manager. Wise Business and Revolut Business provide multi-currency EMI accounts useful for cross-border operations, but neither offers a native Luxembourg LU-IBAN that reads as a domestic account in all Luxembourg systems. Where a Luxembourg IBAN is important — for staff payroll to local residents, for tax-authority direct debits, or for supplier relationships with local SMEs — a traditional bank or 3S Money is the better fit.

Frequently Asked Questions

How long does it take to form a company in Luxembourg?

A SARL typically takes 2 to 4 weeks end to end, from KYC clearance to an operating company with an active bank account. The capital account at the bank is usually the slowest step — 5 to 15 business days. The notarial deed and RCS registration together take 3 to 7 business days. SARL-S structures, which require no notary and no capital deposit, can complete in around a week.

What is the minimum share capital for a Luxembourg SARL?

€12,000, fully subscribed and paid up at incorporation. Draft bill 8669, tabled in December 2025, proposes allowing the capital to be paid in tranches over 12 months, but that reform is not yet in force. The SARL-S requires only €1 of share capital. The SA requires €30,000, of which at least 25% must be paid up at the time of incorporation.

What is the difference between SARL and SARL-S?

A SARL requires €12,000 of share capital, a notarial deed, and allows corporate shareholders and an unlimited range of activities including holdings. A SARL-S requires €1, no notary, and is restricted to natural-person shareholders conducting an activity that requires a Right of Establishment business permit. A person may hold only one SARL-S at a time. SARL-S is designed for solo founders; SARL is the default for anything more structured.

What is a SOPARFI?

A SOPARFI — société de participations financières — is not a separate legal form. It is an SARL or SA whose principal activity is holding participations in other companies, structured to qualify for Luxembourg's participation-exemption regime. Dividends and capital gains from qualifying subsidiaries are exempt from CIT, municipal business tax, and net-wealth tax. SOPARFIs are the standard European holding vehicle for private equity, family offices, and corporate groups.

What is the corporate tax rate in Luxembourg?

Headline CIT is 14% on taxable income up to €175,000 and 16% above €200,000, effective 1 January 2025. With the 7% solidarity surtax and Luxembourg City municipal business tax of 6.75%, the combined effective rate in the capital is 23.87% for large companies and 21.8% for small companies. Rates vary slightly between communes. Withholding tax on dividends is 15%, reducible to zero under the participation exemption and the Parent-Subsidiary Directive.

Can a non-resident open a Luxembourg company?

Yes. Luxembourg company law imposes no residency or nationality requirement on shareholders or directors of a SARL or SA. Non-resident founders regularly form Luxembourg companies entirely by power of attorney, subject to sworn-translated documents, apostille of foreign corporate records, and the bank's KYC process. Substance considerations — genuine board presence, local office, economic activity — matter for tax-residency certainty rather than for incorporation eligibility.

Do I need a business permit to operate a Luxembourg company?

Commercial, craft, industrial, and regulated-profession activities require a Right of Establishment permit from the General Directorate for SME, Craft and Retail. Pure holdings, family-investment structures, and financial-participation companies (SOPARFIs that do not trade) do not require a permit. The permit typically issues in 2 to 4 weeks and must be in place before the company begins trading, though not before the company is incorporated.

Get Started — Form Your Luxembourg Company

A fixed-price quote in 60 seconds. Notarial deed, RCS registration, RBE filing, Right of Establishment permit where needed, and bank introduction — all handled. SOPARFI structuring advice, participation-exemption analysis, and initial substance setup included where the structure requires it.

Call +48 2222 5 2222 or email [email protected] to start. Most Luxembourg SARL formations are complete and operating with a bank account within 3 weeks of KYC clearance.

Content prepared by Piotr Walter, In-house Counsel. Approved by Tomasz Bielski, Managing Director.