Doing business in Luxembourg

Luxembourg commercial law is codified civil law. Companies are formed before a notary and registered with the Luxembourg Business Registers, which also keep the beneficial ownership register. The Inland Revenue (ACD) administers direct taxes and the AED administers VAT and registration duties. The Ministry of the Economy issues business permits and screens foreign investment, the CSSF supervises the financial sector and the CAA supervises insurers. As an EU member, Luxembourg applies the GDPR, the EU customs union and EU tax directives.

Key facts

Corporate income tax

16% top rate (from 2025)

Combined rate (Luxembourg City)

23.87%

VAT

17% standard; 14%, 8%, 3%

Main entity form

SARL (EUR 12,000 fully paid)

Business permit

Required for most regular activity

Foreign investment

Screening for non-EU/EEA control in critical sectors

Employer notice

2, 4 or 6 months by service

Data protection

EU GDPR

New York Convention

In force since 8 December 1983 (reciprocity)

Foreign investors usually use an SARL, with EUR 12,000 fully paid capital, or an SA, with EUR 30,000. Companies are formed before a notary and registered with the Luxembourg Business Registers, which also run the beneficial ownership register.

Key facts

• The SARL needs EUR 12,000 fully paid capital and is formed before a notary.

• The SA needs EUR 30,000 capital, a quarter paid up at formation.

• The SARL-S allows capital from EUR 1 for smaller ventures.

• Register with the LBR and record beneficial owners in the RBE.

Who handles this in LuxembourgCorporate & Entity ServicesLegal & Contracting

Corporate income tax is 16% at the top rate from 2025, which with the solidarity surtax and municipal business tax gives about 23.87% in Luxembourg City. Companies also pay annual net wealth tax. VAT is 17%, dividends carry 15% withholding tax and interest and royalties are generally free of withholding tax.

Key facts

• Corporate income tax is 16% above EUR 200,000 and 14% below EUR 175,000.

• The all-in rate in Luxembourg City is 23.87%.

• Net wealth tax of 0.5% applies, with a minimum charge from EUR 535.

• VAT is 17% standard, with 14%, 8% and 3% rates.

• Dividends carry 15% withholding tax unless an exemption applies; Pillar Two returns are first due by 30 June 2026.

Who handles this in LuxembourgTax & International StructuringAccounting, Reporting & Statutory Compliance

Employer notice periods run from 2 to 6 months depending on service, and severance is due after 5 years. Wages are automatically indexed to inflation. Highly qualified non-EU staff can use the EU Blue Card without a labour market test.

Key facts

• Notice is 2, 4 or 6 months depending on years of service.

• Large employers must hold a pre-dismissal interview; severance is due after 5 years.

• All wages rise by 2.5% when the index trigger is reached.

• EU Blue Card applicants need at least EUR 65,652 a year.

• Employees pay 2.80% sickness and 8% pension contributions up to a ceiling.

Who handles this in LuxembourgEmployment, Payroll & Mobility

Most regular economic activity needs a business permit from the Ministry of the Economy, which requires a physical presence in Luxembourg. Real estate transfers bear registration duties.

Key facts

• Obtain a business permit before trading.

• The permit needs a physical installation and a permit holder who actually manages the business.

• The permit costs EUR 50 in stamp duty and is tacitly granted after 3 months without reply.

• Property sales attract 7% registration duty, plus 3% in Luxembourg City.

Who handles this in LuxembourgGovernment & Regulatory Affairs

The CSSF supervises banks and other financial firms, including for anti-money laundering, under a system built on the 2004 AML/CFT Law. Exchange control rules were not confirmed.

Key facts

• The CSSF is the prudential and AML supervisor of the financial sector.

• Expect due diligence under the 2004 AML/CFT Law when opening accounts.

• Suspicious transactions go to the independent CRF-FIU.

Who handles this in LuxembourgBanking & Capital AccessRisk, Compliance & Financial Integrity · Bruno Abbate

Luxembourg applies EU customs law under the Union Customs Code. National customs procedures were not confirmed.

Key facts

• EU customs rules apply under the Union Customs Code.

Who handles this in LuxembourgTrade, Customs & Supply Chain

The GDPR applies directly in Luxembourg, including 72-hour breach notification where feasible. The national data protection authority (CNPD) and national implementing law were not confirmed.

Key facts

• The GDPR applies to Luxembourg processing of personal data.

• Notify breaches within 72 hours where feasible.

Who handles this in LuxembourgTechnology, Data & Cyber

Trademarks and designs are registered Benelux-wide through BOIP, and Luxembourg is a PCT state.

Key facts

• File trademarks and designs with BOIP for the whole Benelux.

• International patent applications can designate Luxembourg under the PCT.

Who handles this in LuxembourgIntellectual Property & Brand Protection

Since 1 September 2023, non-EU/EEA investors taking control of entities in critical sectors must notify the Minister of the Economy before completion. Merger control and insolvency rules were not confirmed.

Key facts

• FDI screening applies from 1 September 2023.

• Non-EU/EEA control acquisitions in critical sectors must be notified before completion.

• Screening decisions take up to 2 months plus 60 days, with closing blocked once screening opens.

• Non-compliance can cost up to EUR 5,000,000 for a company.

Who handles this in LuxembourgTransactions & Deals

AML supervision is split between the CSSF, the CAA and the AED depending on sector, and beneficial ownership breaches are enforced through criminal law. Anti-bribery and sanctions rules were not confirmed.

Key facts

• Real estate agents are supervised for AML by the AED.

• Insurers are supervised for AML by the CAA.

• Beneficial ownership disclosure breaches carry criminal penalties only.

Who handles this in LuxembourgRisk, Compliance & Financial Integrity · Bruno Abbate

Luxembourg applies the New York Convention to awards from other contracting states. Courts, the 2023 arbitration law reform and arbitration institutions were not confirmed.

Key facts

• Foreign awards from contracting states are enforceable under the New York Convention.

Who handles this in LuxembourgDisputes & Resolution