Starting a Business in Luxembourg: What Are the Advantages?

To boost its appeal, Luxembourg applies some of the most competitive corporate tax rates in Europe:

• SMEs (taxable income ≤ EUR 175,000): 14 %

Lump sum amount of EUR 24,500 + 30 % on the portion of taxable income between EUR 175,000 and EUR 200,000.

• Large companies (taxable income > EUR 200,000): 16 % (as of 2025)
  

For intermediate income, a smoothing mechanism prevents a sharp increase when moving between categories. An additional 7 % surcharge funds the employment fund.

Effective overall rate in 2025:

• SMEs: 21.73 % in the city of Luxembourg (taking into account the 7 % solidarity surcharge applied to the 14 % CIT rate and including the applicable 6.75 % municipal business tax rate).
• Large companies: 23.87 % in the city of Luxembourg (taking into account the 7 % solidarity surcharge applied to the CIT rate and including the applicable 6.75 % municipal business tax rate).

Comparison:

• OECD: 23.6 %
  
• EU: 21.2 %
  
• France & Belgium: approx. 25 %

In Luxembourg, social security contributions are among the lowest in Europe.

The total charge represents around 25 % of gross remuneration (compared with up to 45 % in France).
 

Advantageous VAT

• Standard rate: 17%

• Intermediate rate: 14%

• Reduced rate: 8%

• Super-reduced rate: 3%

Comparison:

• Belgium: 21%

• France: 20%

• Germany: 19%

• Luxinnovation: innovation support
• SNCI or Mutualité de Cautionnement: facilitating access to medium- and long term financing and loans
• House of Entrepreneurship: advice, events, networking
  
• LHoFT: fintech hub
  
• Chamber of Commerce & ADEM: StartYourBusiness program
  
• MyGuichet.lu: online administrative procedures, max 3-month deadline (tacit approval if no response).

• AAA rating

• GDP per capita among the highest worldwide

• Unemployment < 6 %

• Transport: international airport with 100+ destinations, free highways, high-speed trains, free public transport

• Digital: dense fiber network, attractive data center costs, MeluXina supercomputer (18 petaflops), recognized cybersecurity expertise (LU-CIX).

 

Form	minimum capital	advantages
SARL-S: reserved for individuals	EUR 1	ideal for start-ups and low-capital projects
SARL: most common form	EUR 12.000	suitable for SMEs
SA: for large companies	EUR 30.000	for large companies, strong image for investors, facilitates fundraising and share transfers
SCI: not suitable for commercial activities	None	not suitable for commercial activities, simplifies real estate management and transfers

The choice depends on the activity, the number of partners, and the entrepreneurial project.

• Finance (30 % of GDP): over 120 banks, Luxembourg House of Financial Technology as a European fintech hub.

• Technology and start-ups: 600+ innovative young companies, supported by Luxembourg-City Incubator and government programs like Fit 4 Start.

• Digital and e-commerce: benefiting from advanced digital infrastructure.

Luxembourg’s entrepreneurship is booming.

In 2024, establishment permit requests rose by 7 % compared to the previous year, mainly in trade and crafts.

Beyond numbers, more leaders are committing to sustainability, driven by the CSRD directive requiring detailed sustainability reports from certain companies.
This trend reflects growing awareness and a desire to align economic success with a more responsible future.