LUXEMBOURG

Geographical position. Luxembourg is situated in the center of Europe.

The population is approximately 400,000 people. The official languages are Luxembourg, French and German.

Political system - a constitutional monarchy. Luxembourg is a member of the European Union. The legal system - The Civil Law. The currency unit is Luxembourg Franc LUF (37 CHF/USD).

 

1

Advantages

A high international reputation of Luxembourg as a member of EC.

The possibility to register a tax-free holding company, a holding company with benefits on tax conventions, etc.

A large number of concluded tax conventions.

2

Disadvantages

The need to have accounting and submit the annual report with the auditors’ opinion.

A comparatively high cost of registering and administering the Company.

3

Corporate Law

Companies Law of 1928, Holding Companies Law of 1929

4

The form of companies
  1. Societe Anonyme SA - a public corporation
  1. societe holding SH – a holding company
  2. societe de participations finansieres (SOPARFI) – an investment and finance company
  1. Societe a responsabilite limitee (SARL) – a private company with limited liability

2.1 societe a responsabilite limitee unepersonalle (SARLU) – a single-owner limited liability company

5

Permitted activities

SH – ownership of shares in related companies and financing

SARL – no special limitations

6

Prohibited activities

Banking, insurance and reinsurance.

7

Taxation

General provisions:

Profit tax – 30% (since 1988), 20% of tax on profit to LUF 400,000; 25% of tax on profit of LUF 400,000 to 1,312,000

Additional corporate tax – 4% of profit.

Municipal tax – 4% of profit multiplied by the municipal ratio (the city of Luxembourg – 2.5).

Value added tax – 15% on principal goods and services, financial and insurance services are not taxable.

Holding companies and investment funds are exempt from the profit tax on investment income and income from sales of shares in rerelated companies.

SOPARFI pays standard taxes, the profit tax is not imposed on dividends and income from sales of shares in the capital of rerelated companies provided certain conditions are complied with.

8

Capital export taxes

A standard additional tax on export from Luxembourg of:

dividends – 25%, interest – 0%, royalties – 10 to 12%.

Tax conventions concluded by Luxembourg and the EC Parent/Subsidiary directive reduce the additional tax to 0-15%.

Dividends distributed by holding companies are not imposed by 25% additional tax.

The effect of tax conventions is not applied to holding companies, except SOPARFI.

9

The period of registration

2 to 3 weeks

10

Documents necessary for the registration

Incorporation act (includes the charter), the confirmation of payment of the share capital, a power of attorney for the signatory

11

The possibility to buy a shelf company

None

12

The name of the Company

Should not be identical or similar to any one registered.

SA – the name should include the word

SARL - the name should include the word

13

The Company’s share capital

The minimum subscribed share capital:

  1. SH – LUF 1,000,000, 100% should be paid in by the registration
  2. SARL – LUF 500,000, 100% to be paid in by registration

14

Shares

SA – registered and bearer shares with the face value, or the face value may not be mentioned

SARL – only registered shares. Transfer of shares requires 75% of shareholders votes

15

Shareholders, founders:

-- minimum number


-- nominee shareholders

-- citizenship

-- trust ownership

 

SA – at least 2
SARL – at least 2, maximum 40
SARLU -1

possible


not determined

permitted

16

Possible re-domiciliation of the Company in any other jurisdiction

Yes

17

Whether the law provides non-disclosure of the information:

-- on the beneficial owner of the Company

 

 


Yes

18

Directors:

-- minimum number


-- a company as a director

-- ethnic origin and nationality

-- status

 

SA – at least 3
SARL – at least 1 manager

SA – possible


No requirement


All rights except those being within the exclusive competence of the shareholders (determined by the Articles of Association)

19

The existence in the territory of Luxembourg of:

-- a registered office

-- a registered agent

-- a secretary

 

 

Obligatory

Not determined


Not obligatory

20

Meetings of:

-- shareholders;

 

-- directors

 

SA – annual meetings of shareholders in Luxembourg are obligatory
SARL – no requirement as to frequency and place

No requirement as to the place and frequency

21

The requirement of:

-- the accounting

-- preparing the annual report

-- submission of the auditors’ opinion

 

Yes

Yes


Yes, a chartered auditor is required if any single criterion is exceeded:

  1. assets – over LUF 93 million;
  2. net turnover – over LUF 186 million;
  3. the number of employees is over 50

22

The information available upon request of any third parties

Names and addresses of directors and shareholders, registered office

23

Documents kept in the registered office

All legal and accounting reports

24

Double taxation avoidance treaties

USA, Canada, Great Britain, Germany, Sweden, Finland, France, Japan, Russia, the Netherlands, Hungary, Czechia, Slovakia, Switzerland, Spain, etc.

25

Currency control

None

26

Capital tax (on registration)

1% of the paid in share capital

27

Annual fee

0.2% of the paid in share capital for holding companies