Luxembourg is one of Europe’s most attractive business jurisdictions, renowned for its political stability, strategic location, and sophisticated financial services sector. As a founding member of the European Union, Luxembourg offers exceptional access to European markets while maintaining a business-friendly regulatory environment. The economy is highly developed and diversified and the key growth sectors include banking and finance, investment funds, technology, logistics, and space industry. Luxembourg consistently ranks among the world’s most competitive economies and offers one of the highest GDP per capita globally.
Unlock growth opportunities in Luxembourg with Cerity Global as your trusted partner. We offer end-to-end support for establishing your legal entity, navigating Luxembourg’s often complex regulatory landscape with clarity and efficiency.
From company registration to ongoing back-office support, including HR, payroll, benefits, accounting, tax and compliance, Cerity Global simplifies the process so you can focus on growing your business.
Need to hire quickly before your entity is set up? We offer interim EOR services in Luxembourg, enabling you to onboard talent fast. Once your entity is established, we ensure a smooth transition of your employees from the EOR Structure to your own legal entity, without disrupting payroll or compliance.
Our experts stay ahead of regulatory changes to keep your operations aligned with Luxembourg’s employment and tax laws, helping you scale confidently and compliantly.
The most popular form of private limited liability company for foreign investment in Luxembourg. A SARL can be set up by one or more shareholders, with a maximum of 100, and requires a minimum share capital of €12,000. The liability of shareholders is limited to their capital contributions, offering strong protection for investors. This entity type provides excellent flexibility for business operations and is ideal for most international businesses seeking European market access. Minimum capital €12,000 fully paid up.
A simplified SARL for natural persons only with capital from €1 to < €12,000 (convert to a standard SARL once capital reaches €12,000). No turnover cap in law; fewer setup formalities. Not available to legal-entity shareholders.
A joint-stock company is suitable for larger operations requiring significant capital investment or planning public offerings. Requires minimum share capital €30,000; all shares must be subscribed and at least 25% paid up at incorporation; board-led governance suitable for larger raises and listings.
Allows foreign companies to conduct business activities in Luxembourg under the parent company’s name. Requires registration with the Trade and Companies Register (RCS) and compliance with local regulations. No minimum capital requirement, but the branch operates under the liability of the parent company and must maintain local accounting records.
A limited presence allowing foreign companies to conduct market research, liaison activities, and represent the parent company’s interests. Cannot engage in commercial activities or generate revenue in Luxembourg. Suitable for companies exploring the Luxembourg and EU markets before full establishment.
Luxembourg law does not impose a statutory residence requirement for directors/managers. However, to secure tax residency and demonstrate effective management in Luxembourg, having local management/substance is strongly recommended. This requirement ensures adequate local representation and compliance oversight. Foreign nationals can serve as managers with appropriate residence status.
Luxembourg law does not impose a statutory residence requirement for directors/managers. However, to secure tax residency and demonstrate effective management in Luxembourg, having local management/substance is strongly recommended.
Luxembourg law does not impose a statutory residence requirement for directors/managers. However, to secure tax residency and demonstrate effective management in Luxembourg, having local management/substance is strongly recommended. This person is responsible for the branch’s activities and compliance with Luxembourg regulations, including filing requirements and tax obligations.
Must appoint a chief representative who is resident in Luxembourg and responsible for the office’s activities and compliance with Luxembourg regulations. Registration required with relevant Luxembourg authorities.
Luxembourg bank account setup benefits from the country’s world-renowned banking sector:
Bank Account Setup in Luxembourg: Process and Requirements
Before Incorporation:
After Incorporation:
Note (for SARL/SA):
All banking activities must comply with EU anti-money laundering regulations and Luxembourg banking supervision. Due diligence requirements are thorough, requiring comprehensive documentation.
Required documents include RCS extract, articles of association, directors’ identification documents, proof of registered office address, and business activity documentation.
Cerity Global supports companies in their global expansion plans and helps in legal entity setup, registration and ongoing support services. With us, you can quickly set up a legal entity, operate compliantly, and expand globally. The process typically takes a few days to a week, depending on the bank.
Employment in Luxembourg is governed by the following primary legislation:
Employment contracts must be in writing in Luxembourg for contracts exceeding one month and provided to employees within two months of commencement.
Some of the standard details mentioned in the written contract include:
The different types of employment relationships are:
Permanent Employment Contract (Contrat à Durée Indéterminée)
The standard form of employment providing ongoing job security and comprehensive employment protections. Provides full access to statutory benefits and social security coverage. Can be full-time or part-time arrangements with proportional benefits.
Fixed-Term Employment Contract (Contrat à Durée Déterminée)
Used for temporary positions with specific end dates or completion of particular projects. Maximum duration of 24 months with possibility of renewal once. Provides same entitlements as permanent employment during the contract term.
Temporary Work Contract (Travail Intérimaire)
Employment through temporary work agencies for specific assignments. Provides flexibility while maintaining employment protections during assignments. Subject to specific regulations under the Labour Code.
Luxembourg allows probationary periods with the following standard durations:
The standard working time in Luxembourg are 40 hours per week and 8 hours per day.
Overtime
Overtime in Luxembourg is usually permitted with a legal limit of 48 hours per week and 10 hours per day.
Notice periods in Luxembourg vary based on length of service:
During probationary period:
Regular employment:
Severance pay (indemnité de licenciement) is mandatory for dismissals based on length of service and circumstances.
EU/EEA and Swiss citizens can live and work in Luxembourg without restrictions. However, non-EU/EEA nationals must obtain appropriate work authorization before beginning employment.
Work Visa & Permit Options in Luxembourg
1. Single Application Procedure
Combines residence and work permits for non-EU nationals employed by Luxembourg companies.
2. EU Blue Card
For highly skilled professionals with university degrees and high-salary job offers.
3. Highly Qualified Worker Status
For professionals in shortage occupations or with specific expertise.
Key Requirements:
Whether you’re relocating EU talent or sponsoring non-EU professionals, Luxembourg’s single-permit and updated EU Blue Card frameworks provide clear, compliant routes to bring in skilled staff efficiently.
Minimum statutory annual leave is 26 working days. Many collective agreements provide additional days, commonly 26-30 days total. Part-time employees receive proportional entitlements based on working patterns.
Female employees are entitled to 20 weeks of maternity leave – 8 weeks before birth and 12 weeks after birth. Maternity benefits are paid at 100% of salary through social security, subject to contribution ceilings.
Male employees are entitled to 10 days of paid paternity leave, which must be taken within 2 months of the child’s birth. Paternity benefits are paid at 100% of salary through social security.
Each parent is entitled to 4 or 6 months full-time, 8 or 12 months part-time, or split options; paid by the state based on prior earnings within set min/max cap. Parental leave is paid through social security at an income-linked allowance within statutory caps.
Employees in Luxembourg are entitled to sick leave with full salary protection:
The following statutory national holidays are observed in Luxembourg:
Payroll frequency in Luxembourg is typically monthly, with salaries paid at the end of each month.
A 13th-month salary and holiday premium (prime de vacances) are common practices under contracts or CBAs but not universally required by law.
Luxembourg has a comprehensive social security system with mandatory contributions:
The mandatory benefits in Luxembourg are:
Additional voluntary benefits may be provided by employers.
Luxembourg accounting follows Luxembourg GAAP based on EU directives, with larger companies also required to comply with International Financial Reporting Standards (IFRS) for consolidated accounts.
All Luxembourg companies must file annual accounts with the Trade and Companies Register (RCS):
Audit requirements depend on company size:
Mandatory audit required:
Optional review:
Audit exemption:
CIT reduces from 17% to 16% for financial years beginning 1 Jan 2025 (plus 7% solidarity surcharge on CIT). Combined with municipal business tax (e.g., 6.75% in Luxembourg-City), the aggregate rate in Luxembourg-City is about 23.9% for 2025.
The standard rate of VAT in Luxembourg is 17%.
However, 14% intermediate; 8% reduced; 3% super-reduced. Effective 1 Jan 2025, the small-undertaking VAT exemption threshold increases to €50,000.
Corporate income tax filing deadlines vary but typically fall 5 months after balance sheet date. Extensions are commonly available upon request.
Penalties include late filing fees, interest on unpaid taxes, and potential criminal liability for serious tax evasion. Luxembourg tax authorities have comprehensive penalty regimes.
Luxembourg has comprehensive transfer pricing rules aligned with OECD guidelines:
Luxembourg implements CbC reporting requirements:
Transfer pricing documentation requirements apply to Luxembourg entities:
Master File
Local File
Deadline: Documentation must be available upon request by tax authorities.
Luxembourg implements the EU General Data Protection Regulation through the Law of 1 August 2018, providing comprehensive data protection framework with local adaptations.
Luxembourg’s AML framework is governed by the Law of 12 November 2004 on anti-money laundering and terrorist financing, implementing EU AML directives with additional Luxembourg-specific requirements.
Key requirements:
Obligated entities: Banks, insurance companies, investment fund managers, PSF (financial sector professionals), and other obligated entities.
Penalties: Administrative and criminal penalties including substantial fines and potential license revocation.
Reasons you should setup legal entity in Luxembourg:
Cerity Global ensures your business expansion in Luxembourg is fast, compliant, and future-ready, so you can focus on growth while we manage the back-office tasks.
Economic figures are subject to change based on quarterly reports and market conditions.
Cerity Global combines deep local knowledge with proven expertise to make your Luxembourg business establishment effortless and compliant. Whether you’re looking for legal entity setup and registration or ongoing support, we’re your trusted partner for sustainable global expansion in Luxembourg.
Disclaimer – The information provided is for informational purposes only and does not constitute legal, business, or tax advice. Entity setup requirements, tax rates, and economic data are subject to change and may vary by location.
To discuss your needs and how we can help you achieve a compliant and efficient expansion.