What are the steps required to set up a startup in Luxembourg? Adrien Rollé, CEO of FinCorp Luxembourg gives us the detailed plan.
Step 1 – Open a bank account
The first thing you have to write on your to-do list when setting up a new company is to open a bank account with your preferred bank. The KYC procedure might be heavy in some cases but should be quite straightforward if you elect a bank where you already hold an account. Having a long-standing relationship with your bank will also allow you to negotiate the best rates for your account.
Cost: dependent on the existing relationship; around €500 per year + €585 (set-up fees)
Step 2 – Choose a name for your company
Before setting up a company, you need to choose a name for it and ensure it is unique. You can check the availability of a commercial brand name or a company name you plan to use by submitting a request to the Trade and Companies Register.
Step 3 – Choose the type of company to set up
There are numerous types of companies to choose from in Luxembourg but the most common ones are the Limited Liability Company (SARL) and the Public Limited Liability Company (SA). The main differences between the two would be the minimum capital (respectively €12,000 and €30,000), the obligation to appoint an auditor for the SA, the restrictions for the transfer of shares and the rules applicable to the board.
Step 4 – Draft the Articles of Association
The Articles of Association are the constitutional documents and the company’s fundamental charter which set out its operating rules. The articles of association make the company a legal entity meaning that it can act as such and make commitments to third parties.
Step 5 – Transfer the share capital
One of the main steps in the incorporation process is the transfer of the share capital to the bank. This amount will be dependent on the type of company you have elected (minimum contribution varies for a SARL and SA) and the amount of cash you are willing to invest in the project.
Step 6 – Issuance of the blocking certificate from the bank
Following the transfer of the share capital, the bank will issue a blocking certificate which provides a confirmation to the notary that the share capital referenced in the Articles of Association has been deposited with the bank and that the company can be incorporated.
Cost: around €117
Step 7 – Organise a meeting with the Notary
Once the blocking certificate has been issued and the Articles of Association finalised, a meeting with the Notary is organised. The company is formed through the recording of its Articles of Association. The said articles are lodged by the Notary with the Trade and Companies Register and published in the Official Bulletin.
Cost: around €1,200
Step 8 – Send the deblocking certificate to the bank
Once the company is incorporated, the notary delivers a deblocking certificate, which should be sent to the bank. This certificate will allow the bank to release the funds and make them available to the company.
Step 9 – Apply for a business license (where applicable)
The right to set up in commercial activities, skilled craft trades and certain specific professions (professions libérales) is regulated by the Law of 2 September 2011 and requires a business permit. The business permit is only granted if there is a physical installation in Luxembourg that includes an infrastructure suitable for the nature and scale of the concerned activity.
Cost: €24 (tax stamp)
Step 10 – Apply for a VAT number (where applicable)
Value Added Tax (VAT) is a general consumption tax. It is levied on all economic activities. Transactions may be subject to VAT by law or because they are carried out against payment. As a general rule, all persons subject to VAT must register for VAT. To register for VAT, the company must submit an initial declaration to the Land Registration and Estates Department (Administration de l’enregistrement et des domaines – AED).
Editor’s note: This article is brought to you by Finimmo Luxembourg S.A. and reflects only the opinion of the author. The article was updated on 2021, January 6.