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Luxembourg Company Formation

This country of only 2,586 sq. km is entirely landlocked so cannot, by any physical means, be considered "offshore", and indeed the term is not used at all in its legislation. However, its economy is almost entirely supported by financial services, mostly to foreign investors looking for tax-efficiency and secure banking, with one of the world's highest levels of banking secrecy. This combination means Luxembourg a very good  tax friendly European location in which to operate either a trading or holding company and is used by many large corporations such as PayPal, Skype etc. The fact that Luxembourg is a member of theEuropean Union and borders Beigium, France and Germany is potentially a double edged sword because membership of the EU offers advantages but potentially at some future date could threaten the jurisdictions ability to maintain banking and corporate confidentiality.

ADVANTAGES 

REQUIREMENTS

Name: Name availability must be checked with the Company Registrar. Luxembourg companies limited by shares follow the French designations of societe a responsabilite limitee (private) or societe anonyme (public).

Capital: The minimum capitalisation for a Sari and an SA is €12,500.00 and €31,000.00 respectively. In the case of a Sari the capital must be fully paid, with an SA it is possible to pay 25% of the value of the issued capital. It is important to keep in mind that Stamp Duty of 1% is charged on a Luxembourg company's issued share capital and that notary fees will tend to increase in proportion to the issued share capital.

Registered Office: A local office must be maintained and the company books and/or registers must be maintained at this location.

Books, Records and Seal: A full register of members and charges must be kept at the registered office.

Registered Agent/Nominees: To establish local management and control virtually all Luxembourg companies employ local "nominee" directors" and agent facilities.

Board of Directors: All companies must have a properly constituted board of directors. There is a minimum requirement of three directors and a statutory auditor. Directors can be of any nationality and can either be individuals or companies. Details of directors are kept on public record.

Shareholders: There is a minimum of two shareholders required. Shareholders can be of any nationality and can be either individuals or companies.

Powers of attorney: All companies can grant a general or specific power of attorney to any legal person, to act on it's behalf, to execute contracts, agreements, deeds and any other instruments. These powers are not a matter of public record.

Certificates of good standing: Confirmation of a companies status can be provided by the Registrar.

Bearer shares: Both registered and bearer shares are available for SA companies. In the case of bearer shares it is necessary to fully pay up the issued share capital. Sari's can only issue registered shares.

Annual Meetings: An annual general meeting must be called within 18 months of the date of incorporation and following that every 12 months. If bearer shares have been issued then notification of an AGM must be given in the Memorial Gazette and also in a Luxembourg newspaper. If all the shares are registered then no public notification is needed and you simply need to send a registered letter to each of the recorded subscribers.

FORMATION PROCEDURE

The initial step to begin the formation is to decide on a company name and following that the setting up of a bank account where the share capital amounting to €12,500 is to be deposited. In order to be accepted by the bank, the client will be required to provide all relevant identification information (such as passport copy, utility bill duly certified by a notary public or law firm, a signed detailed CV, a bank reference letter certifying the client’s good standing relationship with the bank and original police conduct; however this list is not guaranteed to be complete as requirements could be subject to certain changes). If the shareholder of the future Luxembourg company will be another foreign company then the Luxembourg, banks will require documents showing the beneficial owner. As a note: banks in Luxembourg have a strict know-your-customer policy.

2) After the client’s application to open the share capital account has been approved, the bank will then issue a certificate stipulating that the share capital has been injected and is blocked until formation. It is absolutely mandatory that the banks identify the client and understand the activities to be carried out by the company. The following step for the incorporation of a company in Luxembourg will be signing the required documents in front of a Luxembourg Public Notary. This can either be done personally or through a proxy if the shareholders will not travel to Luxembourg.

3) Last but not least, the final step is to register the company with the Trade Register and to obtain Tax ID. Once all the company formation related documents have properly notarized as per the requirements of the law in Luxembourg, they will be filed with the Trade Register for approval.

SERVICES PROVIDED FOR LUXEMBOURG COMPANY INCORPORATION

Setting up a Limited Liability Company (Luxembourg Societe a Responsabilite Limitee - SARL)
This is the type of entity is preferred by most foreign investors in Luxembourg. The maximum number of shareholders cannot exceed 40. The shareholders must provide a minimum capital of €12,400 divided into participation certificates. The partners of a limited liability company are liable for the company's debts and obligations only to the extent of their own contribution to the company's share capital.

Establishing a Joint Stock Company (Luxembourg Societe Anonyme - SA)
A joint stock company is formed by at least two members who can be residents or non-residents, individuals or legal entities. This company type is regulated by the Commercial Companies Law 1915 and is designated for business at a large scale. The partners of a joint stock company must provide a minimum capital of €31.000 which is divided into freely transferable shares. The shareholders' liability is limited to the amount of their subscribed contribution to the company's capital. The shareholders of a S.A. can be anonymous.

FEES

Luxembourg Sàrl Company Formation - Formation time 7 - 10 days

Items Included

The cost of the formation including the above is $8750 / £5500 / €6850

Additional costs that should be considered:

Annual Company Administration & Registered Office fee €4250 per annum

Luxembourg Escrow account  (required) €500

ANNUAL FEES: €4250

The annual fee includes the following


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(International +44 20 7175 0041)
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(INTERNATIONAL +1 954 866 5986)
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