What costs should you budget for when setting up a company in Luxembourg?

So you’ve decided to set up your company in Luxembourg. You have the ideas, network and motivation required to embark on the great adventure that is life as an entrepreneur. You’ve gathered plenty of information about the various steps involved in setting up your business, but still have some questions about the different costs you should budget for to launch your start-up. We’re here to guide you.

What does the incorporation of a company cost in Luxembourg? How much will you have to pay in administration fees? What are the key costs you need to budget for? In this article, myLIFE outlines the most common costs facing anyone setting up a company. Some will apply to all businesses, others depend on the type of business and the legal form you have chosen.

The share capital of the company

One of the initial costs is of course the company’s share capital. It is made up of the cash or contributions in kind made by the company’s shareholders. The capital must be paid into a bank account opened in the name of the company, which is then frozen until the company is incorporated. The minimum amount of share capital for the most common structures in Luxembourg is:

• • EUR 1 (up to EUR 12,000) of fully paid up capital (i.e. paid into the bank account) for an SARL-S (société à responsabilité limitée simplifiée) – a Luxembourg simplified limited company;
  • EUR 12,000 of fully paid up capital for an SARL (société à responsabilité limitée) – a Luxembourg limited company;
  • EUR 30,000 with at least one quarter fully paid up for an SA (société anonyme) – a Luxembourg public limited company.

→ Useful info: in the event of contributions in kind (buildings, machines, etc.) to the share capital, you must use the (paid) services of an independent auditor to assess their value before the company is incorporated.

There is no minimum share capital requirement when setting up a sole proprietorship in your own name.

The entrepreneur must pay stamp duty (droit de chancellerie) of EUR 50 in order to obtain a business permit.

Administration fees for incorporation

• • Stamp duty for the business permit
    In Luxembourg, a business permit is required in order to exercise any commercial or artisan business and certain professional activities. To obtain this, the new entrepreneur must meet certain professional integrity and qualification criteria for the relevant activity and pay stamp duty of EUR 50. In addition, there is a charge for some of the documents required for the application, depending on the entrepreneur’s situation: a declaration of non-bankruptcy before a notary, inscription in the relevant register of certificates, etc.

• • Notary fees
    A notary visit is required to incorporate an SARL or SA. The notary is responsible for drawing up the articles of association and filing these with the Luxembourg Trade and Companies Register (RCS). Fees are calculated on the basis of the fee schedule of the Chamber of Notaries.

• • RCS registration
    If the company is incorporated before a notary, the notary is responsible for registration with the RCS, otherwise the entrepreneur must handle this themselves. The registration costs can be consulted on the RCS website. They range from EUR 10 to EUR 106 depending on the legal form of the company. It is advisable to check whether the brand name or company name is available before incorporation by requesting a “Certificate of trade name availability” from the Luxembourg Business Registers (LBR). This is subject to administration fees of between EUR 4.75 and EUR 10.

→ Useful info: since 2019, companies registered with the RCS must register their beneficial owners in the Register of Beneficial Owners (RBE). The fees are set by Luxembourg law.

• • Registration duties
    A fixed registration duty of EUR 75 must be paid to the Luxembourg Registration Duties, Estates and VAT Authority (AED) when a non-trading or commercial company is incorporated.

The costs of the company’s premises

The new entrepreneur must budget for the cost of renting premises suitable for running their business. The rental costs will depend on location, size and the type of premises (office, store, workshop, etc.). The price can range from around EUR 300 a month to rent shared office space on the outskirts of Luxembourg to several thousand euros a month for a shop or premises in the city centre.

There will be ancillary charges on top of the rental costs: a rent guarantee, agency fees, and other charges.

There will be ancillary charges on top of the rental costs: a rent guarantee (up to 3 months’ rent), agency fees, and other charges (water, electricity, heating, internet and telephone subscription), etc.

To reduce these costs, the new business manager may decide to set up their company in their home. However, this is highly regulated: your home must be in Luxembourg; municipality regulations, the condominium and/or the owner must have authorised business activity on the premises; your home must include an office or workshop suitable for your business; etc.

→ Useful info: Luxembourg offers numerous alternatives for entrepreneurs looking for premises for their company. There are plenty of classified ad sites for business properties (immotop.lu, wortimmo.lu, etc.) as well as many co-working spaces that include a range of services at affordable prices: The Office, Silversquare, Urban Office, Paladium, Bamhaus, Wishbox, Luxembourg City Incubator, etc.

The cost of equipment and stock

The cost of equipment for your company will vary depending on the type of business. If you’re providing intellectual services, such costs may be limited to purchasing IT equipment (a PC and printer), a smartphone and business software. But costs will be of quite a different magnitude if you need to fit out a shop or equip a workshop. In this case you will have to budget for the cost of fitting out the premises and carrying out any necessary work, on top of purchasing machines, tools, furniture and production material.

Lastly, if your business requires stock, you will also have to think about the price of buying these goods or raw materials, as well as the cost of transportation and/or storage.

Costs to bear in mind

In addition to costs associated with setting up and equipping your company, you will need to consider additional fees when you launch your business:

• • Consultancy fees: the fees of a lawyer, tax adviser, business adviser or consultant carrying out market research, for example, in order to get your project off to the best start.
  • Bank fees: account handling charges, fees for a professional bank card, rental costs for a payment terminal, etc.
  • Accounting fees: the remuneration of your accountants based on the duties assigned to them, filing documents and financial data with the RCS, etc.
  • Insurance premiums: insurance premiums for professional or operating third-party liability cover, legal protection, insurance specific to the company’s business, etc.
  • Licences and training costs: expenses in connection with obtaining a licence for a specific business activity (taxi licence, licence for the sale of alcoholic beverages, etc.) or for compulsory training (in the real estate or hotel and catering sectors, etc.).
  • Brand protection: where necessary, don’t forget to register your trademark (for a fee) with the Benelux Office for Intellectual Property (BOIP) or the European Union Intellectual Property Office (EUIPO), to protect your company’s name, products and services.
  • Mobility costs: cost of purchasing/leasing a vehicle, maintenance and running costs, etc.
  • Corporate communication costs: creating a logo, a website (including purchase of the domain name and webhosting costs), business cards, business brochures, advertising campaigns, etc.
  • Personnel expenses: budget for wages, employer contributions, material and training costs, etc. if the business will require you to hire staff.

NB: once established, the manager will be responsible for mandatory charges in connection with social security and taxes. These vary depending on the legal form of the company and whether there are any employees.

It is essential to draw up a detailed business plan before you launch your business.

You now have an overall idea of the most common costs associated with setting up your company. However, each company is different and it is essential to draw up a detailed business plan before you launch your business. It will help you structure your project and identify your precise financing requirements. This is key to the success of your business!

Find details of the various organisations that can advise and assist with your Luxembourg start-up, drawing up your business plan, and the various financing options available on Guichet.lu. Good luck!

The start-up costs highlighted in this article are provided for indicative purposes only. They will vary depending on the type of business and the legal form of the company.