Expand Business in Luxembourg

Luxembourg

Global Upside helps businesses expand into Luxembourg by providing talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. Our comprehensive offerings create an end-to-end solution that helps you establish your business and optimize your operations, all while maintaining compliance with the laws and regulations of Luxembourg.

The hiring and incorporation processes in Luxembourg are often complex, time-consuming, and involve numerous legal and compliance challenges. Global Upside simplifies these processes and lifts the compliance burden from your business. Our teams have the experience and expertise required to help you establish a legal entity in Luxembourg. We also offer PEO/EOR solutions to companies interested in hiring employees quickly, without setting up a legal entity in the country.

Capital City

Luxembourg City

Currency

Euro (€)

Language

Luxembourgish, German, French

Government

Parliamentary Representative Democratic Monarchy

Country Overview

A landlocked nation in Western Europe, Luxembourg has a stable and high economy with consistent growth, low unemployment, and low inflation. Luxembourg ranks as one of the most competitive financial centers in Europe.

  • Luxembourg ranks as one of the wealthiest countries in the world.
  • The major export commodities of Luxembourg are machinery and equipment, steel and rubber products, chemicals, and glass.
  • Luxembourg’s primary agricultural products consist of dairy, potatoes, forestry, wheat, wine, fruits, and animal feed crops.

Options for setting up a legal entity in Luxembourg include:

Private Limited Liability Company

A private limited liability company also called Société à responsabilité limitée (S.à r.l), is a form of an entity set up that requires a minimum of 1 investor and there is no personal liability of the investor(s). A manager or board of managers who handle the overall administration and decision-making of the company manage the entity.

Public Limited Liability Company

A public limited liability company, also known as Société Anonyme (S.A.), is an establishment that can be incorporated as a:

i. One-tier company- comprising of a sole director or a board of directors with at least 3 directors.

ii. Two-tier company- comprising of a supervisory board (Conseil de surveillance) and an executive board (directoire).

In a public limited liability company, the investors are not accountable for any personal liabilities.

Special Limited Partnership

A special limited partnership also called a Société en Commandite Spéciale (SCSp) is a structure that is largely influenced by the Anglo-Saxon limited partnership. This form of establishment needs:

i. A limited partner (associé commanditaire) who does not have any liability for the partnership’s commitment.

ii. A general partner (associé commandité) who is jointly and severally responsible for the partnership’s commitment.

The general partner(s) or a board of managers manages the partnership.

It takes a minimum of three to four weeks to establish a legal entity set up in Luxembourg.

The Labor Code of Luxembourg regulates the employment relationship and mentions all rights and responsibilities.

The terms that need to be stipulated in the employment contract of Luxembourg are:

  • Name and address of the employer and employee
  • Date of commencement of the employment
  • Job location
  • Job description
  • Working hours
  • Remuneration and payroll cycle
  • Leave entitlements
  • Probationary period (if applicable)
  • Collective bargaining agreements (if applicable)
  • Termination and notice period
  • Pension scheme

There are 11 statutory national holidays in Luxembourg and they are:

  • Jan. 1: New Year’s Day
  • Easter Monday
  • May 1: Labor Day
  • Europe Day
  • Ascension Day
  • Whit Monday
  • June 23: National Day
  • Aug. 15: Assumption
  • Nov. 1: All Saints’ Day
  • Dec. 25: Christmas Day
  • Dec. 26: Boxing Day

The payroll frequency, in Luxembourg, is monthly.

A 13th salary, equivalent to one month’s wage, is paid out to the employees at the end of the year. It is a standard practice for employers in Luxembourg to give the employees an additional half month’s salary. The employer must provide the employee with a detailed payslip each month.

All companies in Luxembourg must prepare and publish their financial reports per the International Financial Reporting Standards (IFRS).

Corporate Tax

The corporate tax rate in Luxembourg is 17%.

Value Added Tax (VAT)

The VAT rate in Luxembourg is 17%.

The reduced rates are 3%, 8%, and 14%.

The General Data Protection Regulation (GDPR), came into effect in May 2018 and represents a comprehensive amendment of the guidelines of Europe. It states that the employees have the right to information on the processing of their data.

Additionally, the protection of personal data in the field of telecommunications and electronic communications is administered by the modified Law of May 30, 2005, on data protection and electronic communications, enforced by the Directive 2002/58/EC.

Anti-Bribery & Anti-Corruption Law

The legal scheme relating to public and private bribery is stipulated in the Luxembourg Criminal Code under Articles 240 et seq. and Articles 310 et seq., respectively.

1. Bribery of Public Officials

For Individuals:

i) Imprisonment for at least 5 to 10 years

ii) A monetary fine from €500 up to €187,500

iii) Dismissal from exercising public functions

iv) Removal from civil rights for 5 to 10 years

For Businesses:

i) A monetary fine of € 3.75 million

ii) Ban on public biddings

iii) Dissolution of the legal entity

2. Bribery of Private Officials

For Individuals:

i) Imprisonment for at least 1 month up to 5 years

ii) A monetary fine from €251 up to €30,000

iii) Dismissal from exercising public functions

iv) Dismissal of civil rights between 5 to 10 years

For Businesses:

i) A monetary fine of € 30,000

ii) Ban on public bidding

iii) Dissolution of the legal entity