• Corporate FX

Corporate FX Luxembourg

Business and Commercial FX Services in Luxembourg

Luxembourg

Corporate Foreign Exchange Luxembourg

Are you a UK company with operations in Luxembourg?

Do you have customers or clients based in Luxembourg?

Are you considering expanding business operations with a base in Luxembourg?

Do you operate internationally and in multi-currencies?

Do you manage FX risks using hedging products with banks and FX brokers?

 

 

FX Services in Luxembourg

Foreign Exchange Services

Setting up a new company in a different country can be a complex process if you are new to region or have not conducted business there before. Luxembourg remains one of the most appealing for many working in the financial sector, with several tax-efficient vehicles that are relatively straightforward to set up. Here we look at Luxembourg in more detail, covering its financial standing, business setup requirements, tax status and more.

Overview of Luxembourg

Background

Luxembourg is a landlocked country that borders Germany to the east, Belgium to the west and north and France to the south. It is a relatively small country that covers an area of 2586 km² (999 sqm), which is smaller than Rhode Island in America.

The population is around 576,000 (as per 2016), with Luxembourg City home to around 100,000 citizens. Luxembourgish is the main language, although English, French and German are also spoken. The country comprises two main regions: Gutland in the south, which is more urbanised and Oesling in the north, which is characterised by green and natural spaces.

Luxembourg has been a grand duchy since 1815 and became a fully independent country in 1867. It has a constitutional monarchy and a parliamentary democracy and is one of the most politically stable countries in the EU.

Luxembourg Financial Services

FX Services

Luxembourg offers a wide range of financial services that serve markets around the World.  Companies and corporate groups of all sizes are able to gain access to a wide variety of financial services. This is complemented further by consultants, law firms, training and education, FinTech firms and IT partners.

The Commission de Surveillance du Secteur Financier (CSSF) is responsible for the supervision of the financial sector in Luxembourg. The country has maintained a AAA rating which remains attractive to financial institutions from around the globe.

Luxembourg Corporate Tax

Tax Laws

If you are a corporate resident of Luxembourg, you will be taxed on your worldwide income. A business with a taxable income lower than 175,000 euros are subject to 15% corporate tax.

Companies that earn €175,000–€200,001 will be subject to the following: €26,250 plus 31% of the base above €175,000. Companies that earn more than $200,0001 are subject to 17% corporate tax, which equates to an overall 24.94% tax rate in Luxembourg City. This also accounts for the solidarity surtax of 7% on the CIT rate, including the municipal business rate of 6.75%.

Please kindly note, you should always gain specific tax advice from an expert. We cannot guarantee the accuracy of information included here and the information is also subject to change. We can certainly provide FX and FX risk management support but it is important to seek specific expert advice in all other areas.

How to register a company in Luxembourg

Luxembourg Company Registration

There are 5 options when it comes the type of company which can be set up in Luxembourg:

  • Société Anonyme or S.A. (same as a PLC)
  • Société à Responsabilité Limitée or S.à r.l. (Same as a PLC)
  • Société en Nom Collectif or S.e.N.C. (Same as a General Corporate Partnership)
  • Société en Commandite Simple or S.e.C.S. (Same as a Limited Corporate Partnership)
  • Sole Proprietorship

The steps involved in registering a company vary, depending on the type of company that is to be incorporated. For example, SA statutes must be printed in German or French, and also include the name, address and occupation of a director. Another example is an S.a.r.l., which requires the company to have at least €12,400 in capital divided into ‘participation certificates’ with a maximum of 40 shareholders.

One base requirement for all new applications is a business permit. This comes in the form of the card and must also be paid for, along with notary fees and other legal costs and director must have a professional qualification in line with the planned activity.

Larger companies and corporate groups have the option to set up several entities in Luxembourg at once, rather than waiting to implement in separate stages, which can aid the incorporation process.

Whichever option chosen, you should seek independent professional advice from an expert to help you find the most appropriate solutions.

Economic overview of Luxembourg

Economic Overview

Economic growth in Luxembourg is largely driven by exports of financial services, while the manufacturing and services sectors also contribute heavily. In 2022, the real GDP grew by 3.1% and like many countries around the World it is likely to moderate slightly in 2023 due to ongoing inflationary issues. It is estimated that as much as $4 trillion is received in foreign direct investment every year.
The country recovered quickly from the COVID-19 pandemic thanks to extensive policy support that was quickly introduced by the government. Economic freedom has traditionally remained strong in Luxembourg, with citizens enjoying a high level of prosperity. As an example of this, the recession in 2009 was its first in 60 years and thanks to its strong infrastructure, it is attracting a lot of interest as a hub for the 21st century information economy.

Luxembourg Tax and Tax Haven Status

Tax Status Luxembourg

Since the 1960s, Luxembourg has been considered a tax haven for corporations and corporate groups. Special purpose entities can be set up in the country which is encouraged by the favourable tax regime. For example, due to the lack of withholding taxes on interest and royalty payments, there are tax advantages for companies and group in moving operations to Luxembourg.

Opening Business Bank Account in Luxembourg

Opening Bank Accounts for Companies

There are many benefits of opening an offshore bank account in Luxembourg. One of the most prominent being that you do not have to be a Luxembourg national to do so. This means you can manage your finances from an overseas account if this is a more suitable arrangement.

Depending on the services you require, account activation and maintenance fees will vary so it is certainly useful to compare a number of providers. When applying for an account you will need to provide:

  • A copy of the Articles of Incorporation
  • Details about the directors and shareholders involved with the business
  • List of persons who hold signing authority

Proof of ID is also required (passport or identity card), proof of residence and further information about the specific profession and business activities. Most banks offer online account applications, although may also ask to see the documentation in original form, either by post or in person, to verify the validity of your application.

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