Setting up a company in Luxembourg
Luxembourg is often chosen when setting up a company. Its particular geography is not the only reason to consider when setting up a company in Luxembourg.
The main advantages of Luxembourg are
- Political and social stability under a parliamentary monarchy;
- High standard of living which places Luxembourg at numberone1 in terms of GDP per habitant far before Switzerland, the United States, Japan or even the Emirates, with high growth and low unemployment (about 5%);
- A cosmopolite population (590 667 inhabitants) since 47,7% of its habitants are of foreign nationality and speak different languages: French, German, Luxembourgish, English, Dutch…
- Welcoming to data centers.
Because of its geographical location and the low electricity cost, Luxembourg is attractive to datacenters and to tech companies, videogames companies and e-commerce companies. The current fiber optic network allows Luxembourg to be connected to the biggest online exchange places in Europe.
Exemplar tax and social competitivity
- Social security rates:
Borne by the employee: 12.45 %
Borne by the employer: 12.16 %
To these is added the accident insurance of 1% and the employer contribution that varies between 0.51% and 2,92% according to the class. These contributions are born by the employer.
Combined social security rates varies between 25,72% and 28,25% which is one of the lowest rates in Europe.
- Weekly working hours: 40
The corporate tax rate is 15% of operating income for income below 175 000€ and 17% for income over 200 000€.
Municipal business tax
It is a tax calculated on operating income.
Allowance of 17 500€.
Tax base: 3% of operating income after allowance.
This tax is calculated based on the net wealth of the company (capital, reserves and results carried forward).
Chamber of commerce membership fee
That annual fee is mandatory.
Value added tax (VAT)
Super reduced rate: 3% for food (restaurants included except for alcohol) and a few products and services such as shoes or clothes for children, transport of people…;
Reduced rate: 8% for hairdressing, certain pieces of art, sales of flowers…
Intermediary: 14% for printed ads and tailored clothing;
Normal: 17% for all other goods and services.