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Four reasons why companies incorporate in Luxembourg

Four reasons why companies incorporate in Luxembourg

18 July, 2023
Luxembourg Incorporation & Establishment

When it comes to choosing a location for incorporating a company, Luxembourg stands out as an attractive destination for many businesses. With its favourable business environment and numerous advantages, it has become a preferred choice for companies worldwide.

Rémy Cornet, Head of Corporate Services in Luxembourg, examines the four compelling reasons why incorporating a company in Luxembourg can be highly beneficial:

Why register a company in Luxembourg?

1. Double tax treaties

The tax-friendly system in Luxembourg is a significant draw for companies looking to establish their presence in the country. Luxembourg entered a double taxation treaty with an impressive 86 countries worldwide, including major economic powers such as the United States, China, and Russia. Additionally, Luxembourg has signed agreements with all European Union member states and the Organisation for Co-operation and Development (OECD).

These double tax treaties provide companies with several advantages. For example, there are no withholding taxes on dividends paid to EU or double tax treaty resident companies, while a 15% withholding tax applies otherwise. Furthermore, there is no withholding tax on interest. These provisions help companies minimise their tax burden and optimize their financial operations, making Luxembourg an attractive jurisdiction for international businesses.

2. Internationally recognised financial centre

Luxembourg's financial centre is internationally acclaimed and ranks first in terms of being the most international financial centre in the world. The country's financial sector enjoys a stellar reputation, attracting global investors and businesses alike. In fact, international activity represents a significant portion, around 60%, of Luxembourg's total financial activity.

Luxembourg's financial prowess allows companies to raise substantial investment and capital. The option to list bonds on the Luxembourg Stock Exchange provides businesses with access to a wide range of funding opportunities. As a testament to its financial prominence, Luxembourg is the second-largest investment fund centre globally. This vibrant financial environment not only stimulates the country's economy but also provides businesses with a solid foundation for growth and expansion.

3. Political & social stability

Luxembourg is renowned for its political and social stability, providing a solid foundation for businesses to thrive. The country has a long history of political stability, with a strong commitment to democratic principles and a reliable legal system. This stability creates a favourable environment for business operations, ensuring that companies can operate with confidence and security.

Furthermore, Luxembourg boasts a peaceful and inclusive society, with a high standard of living and a low crime rate. This social stability not only provides a safe and secure environment for businesses but also attracts a skilled and talented workforce. Companies can benefit from a stable and harmonious society that fosters productivity and innovation.

4. Diversified Workforce

Luxembourg boasts a diverse and multicultural workforce, making it an ideal location for companies seeking a global talent pool. The country attracts a significant number of foreign nationals who bring their skills, experiences, and perspectives to the workplace. This multicultural workforce fosters creativity, innovation, and international collaboration.

While English is widely used in the business context, Luxembourg has three official languages: French, German, and Luxembourgish. This linguistic diversity further enhances business opportunities by facilitating communication and building relationships with clients and partners from various cultural backgrounds. Companies can tap into this diverse talent pool and benefit from the expertise and multicultural dynamics it offers.

How can Ocorian help with incorporating in Luxembourg?

Incorporating a company in Luxembourg offers numerous advantages, including political and social stability, double tax treaties, a diversified workforce, and an internationally recognised financial centre. These factors contribute to an attractive business environment that supports growth, innovation, and international collaboration.

If you’d like to find out more information on incorporating a company in Luxembourg, please contact our expert team. We are leaders in corporate and fiduciary services, and as well as providing a full range of fund and capital markets administration services.

Contact our corporate team today.