Luxembourg

Key Corporate Features
General Information
Company Information
Compliance

Key Corporate Features

General Information

The Grand Duchy is situated at the crossroads of Europe, in the triangle where the borders of Belgium, France and Germany meet, and covers an area of 2,400 sq. km. Luxembourg enjoys a mild climate, temperatures are continental with winter (November to February) temperatures as low as -15 degrees C, while during the summer (July, August) temperatures can rise to as high as 35 degrees C.

The population is approximately 405.000.

Luxembourgish, German and French are the official languages. English is also widely spoken, and is used daily in commercial transactions.

The currency is the Euro €.

There is no exchange control.

The type of law is Civil Law.

The principal corporate legislation is the Commercial Companies Act 1915, as amended.

Company Information

Type of Company for International Trade and Investment 1929 Société Anonyme Holding Company. (SA)
1990 Société de Participation Financière (SOPARFI) Holding Company. (SA).

The procedure to incorporate is the following: the Acte de Constitution, the Articles of Incorporation, have to be prepared in the form of a deed. This deed should include:

The name of the person(s) wishing to form the corporate entity.
The address of the Registered Office.
The amount and currency of the authorised and issued capital.
Type of shares and classes.
Amount of capital paid up.
Voting rights of shares.
Names addresses and nationalities of the proposed directors and auditors.

In addition to the aforementioned a certificate of name acceptability issued by the Trade Registry is required, together with a certificate of blockage produced by the proposed company's Luxembourg Bankers confirming that the paid up capital is deposited with them.
These documents and information then have to be presented before a Notary Public by the proposed company's appointed representative. After notarisation, the Notary Public lodges the Articles of Incorporation and By-Laws with the Department of Registration and Trade Registry. The Articles of Incorporation are then published in the Official Gazette.

A 1929 Holding Company may not: Be an active member of a general partnership or partnerships limited by shares, carry on any commercial or industrial activity, carry on brokerage or banking activities, carry on insurance, assurance or reinsurance activities, own real estate other than its own premises, grant loans to companies, which are not subsidiaries, render any type of advice or management services. A 1929 Holding Company may acquire, hold and dispose of shares and bonds in Luxembourg or foreign companies, hold cash and foreign currencies and negotiate securities, finance subsidiaries or companies where it has a direct shareholding, hold and licence patents and receive income from the granting of licences, issue bonds by private or public subscription of up to ten times the amount of its paid up capital, borrow up to three times its issued capital.

The 1990 SOPARFI is normally set up as a holding company. If it were set up as a trading company it would need authorisation to do business.

The advantages of a 1990 SOPARFI can be summarised as follows:

Companies investing in shares can benefit from the affiliation privilege; which means that these companies are fully subject to corporation tax, but exemptions are granted by law for: dividends received from shareholdings; capital gains made on the sale of shareholdings and liquidation gains on liquidation of companies in which shares are held. This corporate tax exemption is granted with the following conditions:

Dividend and liquidation gains exemption on shareholdings of at least 10% or a cost of at least EUR 1.2 million held at the start of the financial year of receipt, and at least 12 months prior to the end of the financial year of receipt.

Capital gains exemption of shareholdings of at least 10% or costs of at least EUR 6 million held at least 12 months before the start of the financial year of sale.

Under certain conditions financing costs; value adjustments and administration expenses are tax deductible.

Zero withholding tax can apply to dividends paid to a EU Parent.

Withholding tax on dividend payments to non-EU countries may be reduced through tax treaty relief.

The powers of a company are as dictated by the objects in the articles of incorporation.

The Legislation is published in either French or German. The corporate documents can be in any language, provided they are accompanied by a French or German translation.

>A registered office is required, it must be maintained in Luxembourg.

Due to the costs associated with incorporation and paid up capital requirements, shelf companies are not available.

Subject to adhering to the pre-requisite criteria, a company can be incorporated in two days.

There are name restrictions on any name that is similar or identical to an existing name, any name of a major international corporation, where written consent to incorporate is not available, any name which in the opinion of the Trade Registry is undesirable or offensive. There are no other specific rules regarding name restrictions. However, it is normal practice for the Trade Registry to refuse names that are associated with the banking and insurance industries and any name that would suggest government patronage.

The name can be in any language using the Latin alphabet. The Public Registry may request a French or German translation if a foreign language is used.

The following names require consent or licence: the French, German and foreign names for bank, buildings society, savings, insurance, assurance, reinsurance, fund management, investment fund, council, municipal, co-operative or the foreign language equivalent.

The following suffixes denote limited liability: Société Anonyme, SA or AG.

There is no disclosure of beneficial ownership to authorities.

Compliance

The minimum authorised share capital of a 1929 Holding Company and a 1990 Company with SOPARFI provisions is EUR 31.000 all of which has to be issued and fully paid up. The capital can be expressed in any currency or in Euros.

The following classes of shares are permitted: registered shares, bearer shares, preference shares and shares with or without voting rights.

A 1929 Holding Company is exempt from local taxation, but pays 0,2% per annum on its share capital, which is payable quarterly. A Company with SOPARFI (Sociétés de Participations Financières) provisions is subject to the normal rate of taxation (39%), but subject to certain conditions (as detailed under restrictions on trading) dividends received and capital gains are exempt from taxation.

Luxembourg has entered in to many double tax agreements ( see list below ).

As 1929 Holding Companies are exempted from local taxation, they are excluded from benefit of the Agreements. Luxembourg companies with SOPARFI provisions may access Luxembourg's extensive treaty network. Treaties have been concluded with: Austria, Belgium, Brazil, Bulgaria, Canada, China, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Indonesia, Ireland, Italy, Japan, Korea, Malta, Mauritius, Mexico, Morocco, Netherlands, Norway, Poland, Romania, Russia, Singapore, Slovenia, Spain, Sweden, Switzerland, Thailand, Tunisia, United Kingdom, United States of America, Uzbekistan and Vietnam.

Non-ratified treaties: Iceland, Portugal and South Africa.

In negotiation: Argentina, Chile, Estonia, India, Israel, Lithuania, Malaysia, Mexico, Mongolia, Slovenia, The United Arab Emirates, Turkey and Trinidad and Tobago.

There are no licence fees as such.

Financial statements are required. An annual audit is compulsory.

The minimum number of directors is three. They may be natural persons or bodies corporate. They may be of any nationality and need not be resident in Luxembourg.

The Luxembourg Companies Acts do not provide for the appointment of a company secretary.

he minimum number of shareholders is two.

Contact: info@personaloffice-bv.com