Our Offshore Jurisdiction: Luxembourg
Company Formation in Luxembourg
Our Law Firm - Panama Offshore Registration can provide legal support if you need to register a company in Luxembourg (among other jurisdictions). Complete Package Price depends on the services you need. For more information about the legal and business services offered by our Law Firm - Panama Offshore Registration, please contact us by phone or email. We will get in contact with you as soon as possible with potential solutions for your business needs
Luxembourg is considered one of the major banking and financial centres in the world. In Luxembourg there are 212 banks, 48 savings and deposit companies, 20 non bank financial institutions, 890 institutions with collective investments (mutual and investment trusts with a total investment of U.S. $ 108 billion), 60 insurance companies, 200 companies and 10,000 secondary insurance holding companies.
Taxation in Luxembourg
Citizens of Luxembourg pay vast taxes on personal income (at 56%) and very low social security contributions. Corporations pay the following taxes:
- Income from companies can be up to 39%.
- Dividends are 15%
- The transfer of license rights between 10-12%.
- Tax on the accrued interest.
However, it is extremely beneficial to organize holding companies or investment funds as they are exempt from paying income taxes on property and dividends.
In addition, the data is supplemented by benefits and other concessions in order to stimulate investment activity for the companies SICAV, SOPARFI and reinsurance companies.
With regard to treaties on avoidance of double taxation, Luxembourg has treaties with 22 countries, including the U.S. and the UK.
Types of companies of Luxembourg
In Luxembourg, there are three types of companies. The traditional holding 29 company, which is a very profitable form of business as the company is virtually exempt from taxes. However, it has its "cons", the operation of treaties on avoidance of double taxation are not covered. It can be registered as a limited liability company (both closed and open). There are some limitations on the types of activities.
Therefore, the traditional holding company is allowed to:
- carry out activities of sales of securities (stocks and bonds), both local and foreign;
- possess a variety of material resources (money, gold, securities, etc.);
- provide funding for various companies, whose shares are owned by a holding company;
- to own patents;
- issue shares. However, their cost may exceed the paid up share capital ten times. Also, it can be increased by a loan (no more than three times).
- redeem their shares (but not more than 10%)
Traditional holding company in Luxembourg
With regard to restrictions on activities, a traditional holding company may not:
- Carry out banking and industrial activities.
- Serve as a member of a partnership.
- Grant loans to companies (with some restrictions).
- Own real estate (other than their offices.) At the same time holding shares in companies involved in a real estate holding company is allowed.
The procedure for registering a company in Luxembourg
The procedure for registering a company in Luxembourg is:
- Share capital must be paid and the minimum amount is 40,000 USD. Confirmation of the availability of such funds is a bank statement (local or foreign) that shows that this amount has been deposited in the escrow account for the registration of the company.
- There must be a minimum of two founders (shareholders) and their status and residency (individual or company) does not matter.
- Three directors must be assigned to manage the holding company. Their status (individual or company), and residency is also irrelevant.
Luxembourg holding companies must provide an income statement on a quarterly basis. There are some particular offshore discoveries in Luxembourg for Ukrainian companies. This is due to the lack of agreement between the two countries for the avoidance of double taxation. Therefore, the best activity for Ukrainian entrepreneurs in Luxembourg is investing. The fact is that, as already mentioned, holding companies in Luxembourg, provide a special tax regime. Consequently, investors can abundantly transfer profits to other jurisdictions, not paying taxes at the same time in the form of dividends or capital gains in the other jurisdiction.
In order to avoid double taxation, it is possible to transfer money through a company registered in the country, which has an agreement with Ukraine (e.g. Cyprus). A normal Luxembourg Company with the provisions of SOPARFI pays taxes in the usual manner. However, a holding company has tax benefits. Under certain conditions payment of taxes on dividends and capital gains can be avoided. All other companies pay taxes. Financial reporting must be provided at the end of each year.
In Luxembourg Commercial and Industrial companies are very similar to the previously explained company in terms of tax incentives. The main difference is it that the objectives of its activity are beyond simple possession of third party actions. Commercial and Industrial companies in Luxembourg require permission from the government due to the type of business activities they will devise. However, it is not difficult to obtain.
For private investors and large investors seeking to reduce costs, the best kind of company is a holding 29 company (which dates back to 1929, hence the name).
Advantages of companies registered in Luxembourg
The main advantages of these companies are as follows:
- A relatively simple turnover of shares that may be registered or bearer.
- Share capital (shares) may be calculated in any currency.
- A variety of activities can be carried out.
- There are no foreign exchange controls.
- There are no restrictions on nationality or residence of companies.
- registering a company in Luxembourg gives you automatic access to its foreign currency exchange.
A normal Luxembourg Company with the provisions of SOPARFI must provide financial statements at the end of each calendar year. All companies registered in Luxembourg must keep copies of financial reports. As a rule, financial reports should be stored in Luxembourg, but it’s not forbidden.
Each year the following documents must be submitted:
- extract from the balance
- profit and loss accounts, audited and approved by the annual general meeting of shareholders.
Every year, companies have to allocate at least 5% of net profit to the reserve fund as long as its size does not make 10% of the issued capital. The annual meeting of shareholders must be in Luxembourg. At this meeting, the financial statements of the company must be approved by the directors and also approved by the auditor. The order of assembly is defined in the statute. In cases where shares are registered, shareholders bust be notified about the upcoming meeting in writing. If a company does or doesn’t have shareholders, it must still place an ad in a printed publication (Memorial and Luxembourg Journal) about the forthcoming meeting. The shareholders must be notified at least 8 days prior to the meeting.
Our Law Firm - Panama offshore registration can provide you with legal support services if you need to register a company in Luxembourg (among other jurisdictions). The cost of the services may change if you add any additional services that you may require. For further information regarding the legal and business services offered by Law Firm - Panama Offshore registration please get in contact with our experienced consultants in Panama by calling us or by email. We look forward to finding a suitable solution to your personal business needs.