|Type of Company|
|Common or Civil Law|
|Disclosure of Beneficial Owner|
|Migration of Domicile Permitted|
|Tax on Offshore Profits|
|Language of Name|
|Minimum Number of Shareholders|
|Minimum Number of Directors|
|Bearer Shares Allowed|
|Corporate Directors Permitted|
|Company Secretary Required|
|Standard Authorised Share Capital|
|Government Register of Directors|
|Government Register of Shareholders|
|RECURRING GOVERNMENT COSTS|
|Minimum Annual Tax/Licence Fee|
|Annual Return Filing Fee|
The Grand Duchy is situated at the cross-roads of Europe, in the triangle where the borders of Belgium, France and Germany meet, and covers an area of 2,400 sq. km Luxembourg enjoys a mild climate, temperatures are continental with winter (November to February) temperatures as low as -15ºC, while during the summer (July, August) temperatures can rise to as high as 35ºC.
Luxembourgish, German and French are the official languages. English is also widely spoken, and is used daily in commercial transactions.
Luxembourg Franc (“Flux”). Belgian Francs also circulate freely in Luxembourg, as the two currencies are at par.
TYPE OF LAW
PRINCIPAL CORPORATE LEGISLATION
Commercial Companies Act 1915, as amended.
TYPE OF COMPANY FOR INTERNATIONAL TRADE AND INVESTMENT
1929 Sociètè Anonyme Holding Company.
1929 Sociètè à Responsabilité Limitee Holding Company.
1990 Sociètè de Participation Financière (SOPARFI) Trading and Holding Company.
PROCEDURE TO INCORPORATE
The Acte de Constitution, the Articles of Incorporation, has to be prepared in the form of a deed. This deed should include:
|•||The name of the person(s) wishing to form the corporate entity|
|•||The address of the Registered Office|
|•||The amount and currency of the authorised capital|
|•||Type of shares and classes|
|•||Amount of capital paid up|
|•||Voting rights of shares|
|•||Names addresses and nationalities of the proposed directors|
In addition to the aforementioned a certificate of name acceptability issued by the Trade Registry is required, together with a certificate of blockage produced by the proposed company’s Luxembourg Bankers confirming that the paid up capital is deposited with them.These documents and information then have to be presented before a Notary Public by the proposed company’s appointed representative. After notarisation, the Notary Public lodges the Articles of Incorporation and By-Laws with the Department of Registration and Trade Registry. The Articles of Incorporation are then published in the Official Gazette.
RESTRICTIONS ON TRADING
A 1929 Holding Company may not:
|•||Be an active member of a general partnership or partnerships limited by shares|
|•||Carry on any commercial or industrial activity|
|•||Carry on brokerage or banking activities|
|•||Carry on insurance, assurance or reinsurance activities|
|•||Own real estate other than its own premises|
|•||Grant loans to companies, which are not subsidiaries|
|•||Render any type of advice or management services|
A 1929 Holding Company may:
|•||Acquire, hold and dispose of shares and bonds in Luxembourg or foreign companies|
|•||Hold cash and foreign currencies and negotiate securities|
|•||Finance subsidiaries or companies where it has a direct shareholding|
|•||Hold and licence patents and receive income from the granting of licences|
|•||Issue bonds by private or public subscription of up to ten times the amount of its paid up capital|
|•||Borrow up to three times its issued capital|
The 1990 normal Luxembourg Trading and Investment Company with SOPARFI provisions has no trading restrictions other than without the appropriate licences it may not undertake the business of banking, insurance, assurance, reinsurance, fund management, collective investment schemes and any other activity that may suggest an association with the banking and insurance industries.The advantages of a 1990 normal Luxembourg Trading and Investment Company with SOPARFI provisions can be summarised as follows:
Companies investing in shares can benefit from the affiliation privilege; which means that these companies are fully subject to corporation tax, but exemptions are granted by law for: dividends received from shareholdings; capital gains made on the sale of shareholdings and liquidation gains on liquidation of companies in which shares are held. This corporate tax exemption is granted with the following conditions:
|•||Dividend and liquidation gains exemption on shareholdings of at least 10% or a cost of at least Flux 50 million held at the start of the financial year of receipt, and at least 12 months prior to the end of the financial year of receipt|
|•||Capital gains exemption of shareholdings of at least 25% or costs of at least Flux 250 million held at least 12 months before the start of the financial year of sale|
|•||Under certain conditions financing costs, value adjustments and administration expenses are tax deductible|
|•||Zero withholding tax applies to dividends paid to an EU Parent/Subsidiary Directive (EU Directive 27 of 1990)|
|•||Withholding tax on dividend payments to non-EU countries, but may be reduced through tax treaty relief.|
POWERS OF COMPANYAs dictated by the objects in the Articles of Incorporation.
LANGUAGE OF LEGISLATION AND CORPORATE DOCUMENTS
The legislation is published in both French and German. The corporate documents can be in any language, provided they are accompanied by a French or German translation.
REGISTERED OFFICE REQUIRED
Yes, must be maintained in Luxembourg.
SHELF COMPANIES AVAILABLE
Due to the costs associated with incorporation and paid up capital requirements, shelf companies are not available.
TIME TO INCORPORATE
Subject to adhering to the prerequisite criteria, a company can be incorporated in one day.
Any name that is similar or identical to an existing name. Any name of a major international corporation, where written consent to incorporate is not available. Any name which in the opinion of the Trade Registry is undesirable or offensive. There are no other specific rules regarding name restrictions. However, it is normal practice for the Trade Registry to refuse names that are associated with the banking and insurance industries and any name that would suggest government patronage.
LANGUAGE OF NAME
Can be in any language using the Latin alphabet. The Public Registry may request a French or German translation if a foreign language is used.
NAMES REQUIRING CONSENT OR LICENCE
The French and German names for bank, buildings society, savings, insurance, assurance, reinsurance, fund management, investment fund, council, municipal, co-operative or the foreign language equivalent.
SUFFIXES TO DENOTE LIMITED LIABILITY
Sociètè Anonyme or SA
DISCLOSURE OF BENEFICIAL OWNERSHIP TO AUTHORITIES
AUTHORISED AND ISSUED SHARE CAPITAL
The minimum authorised share capital of a 1929 Holding Company and a 1990 Company with SOPARFI provisions is EURO 31,000.00. Guidebook all of which has to be issued and fully paid up. The capital can be expressed in any currency.
CLASSES OF SHARES PERMITTED
Registered shares, bearer shares, preference shares and shares with or without voting rights.
BEARER SHARES PERMITTED
Yes, but must be fully paid.
A 1929 Holding Company is exempt from local taxation, but pays 0.2% per annum on its share capital, which is payable quarterly. A Company with SOPARFI (Sociètès de Participations Financières) provisions is subject to the normal rate of taxation (39%), but subject to certain conditions (as detailed under “Restrictions On Trading”) dividends received and capital gains are exempt from taxation.
DOUBLE TAXATION AGREEMENTS
Luxembourg has entered in to many double tax agreements.
As 1929 Holding Companies are exempted from local taxation, they are excluded from benefit of the agreements. Luxembourg companies with SOPARFI provisions may access Luxembourg‘s extensive treaty network. Treaties have been concluded with:
Austria, Belgium, Brazil, Bulgaria, The Czech and Slovak Republics, Denmark, Finland, France, Germany, Greece, Hungary, Iceland (air traffic treaty only), Ireland, Italy, Japan, Morocco, Netherlands, Russia, South Korea, Spain, Sweden, Switzerland, CIS (air traffic treaty only) United Kingdom and the United States of America.
FINANCIAL STATEMENT REQUIREMENTS
Yes. An annual audit is compulsory.
The minimum number of directors is three. They may be natural persons or bodies corporate. They may be of any nationality and need not be resident in Luxembourg.
The Luxembourg Companies Acts do not provide for the appointment of a company secretary.