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.
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:
→ 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.
→ 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.
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 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.
In addition to costs associated with setting up and equipping your company, you will need to consider additional fees when you launch your business:
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.
Financial assistance for entrepreneurs
Luxembourg has several schemes to help entrepreneurs finance their business project. In addition to bank loans and external investors, the government has schemes to provide financial support for companies that include subsidies, interest rebates and special guarantees. Special programmes have also been set up to support young start-up creators and help them find access to financing: Fit4Start, Startup World Cup Luxembourg, etc. Find out about the different types of help and financing schemes that are available in the article: Funding your start-up in Luxembourg |
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.
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