Top Reasons Why Luxembourg Should Be Your Business Base in Europe

Luxembourg is one of the smallest countries in Europe, yet it offers numerous benefits for registering a company in Luxembourg. Entrepreneurs and multinational companies like it because of its good business policies, stable economy, and great quality of life. Luxembourg is an excellent starting point for businesses looking to expand in Europe or establish a presence in the EU.

In this post, we’ll talk about the Top 5 Reasons for registering a company in Luxembourg and why this small country is a huge participant in the world of business.

Where is Luxembourg?

Luxembourg is a small country in Western Europe that shares no borders with other countries. It shares borders with three other countries:

1. Belgium to the west and north
2. Germany is to the east.
3. France to the south

Luxembourg is one of the smallest countries in Europe, yet it is centrally located on the continent, making it easily accessible to many important European markets. Being located in the heart of Europe, it is an ideal location for foreign enterprises seeking to expand within the EU.

Luxembourg is well-positioned for firms to reach a wide range of customers across the EU, which has a population of more than 500 million. The country boasts a robust infrastructure, featuring modern transport systems (roads, rail, and air) and advanced internet services. This makes it an ideal location for both logistics and tech-driven firms to establish a presence.

Top Reasons to Set Up a Business in Luxembourg

Strategic Location in the Heart of Europe

Excellent access to European markets

One of Luxembourg’s most notable features is its location. Luxembourg is situated between Belgium, France, and Germany, making it easy for enterprises to reach nearly 500 million customers throughout the European Union. Because the country is small, enterprises can quickly expand into large markets in nearby countries. This makes it an excellent place for trade and commerce.

World-Class Transportation System

Luxembourg has a modern transportation system, including an international airport, extensive rail networks, and well-maintained highways. The Luxembourg Airport is a vital hub for both passengers and freight, enabling firms to run their logistics and supply chain activities more smoothly. Luxembourg’s infrastructure ensures that your items can be delivered quickly across Europe, regardless of your business.

Insight: Luxembourg is an ideal location for businesses seeking to expand into the broader European market, thanks to its strategic position and extensive transportation networks.

Favorable Tax Environment

Low Corporate Tax Rates

Luxembourg is noted for having tax policies that are favorable to business. The business tax rates in this country are lower than those in many other EU countries, making them competitive. Companies in Luxembourg also benefit from a tax system that encourages innovation. For example, they can get tax reductions on profits from research and development (R&D) and intellectual property (IP).

VAT and Reduced Rates

Luxembourg has one of the lowest Value Added Tax (VAT) rates in Europe, which is 17%. There are also lower prices for some goods and services, like food and drugs, which makes it a desirable place for enterprises in these fields to set up shop.

Double Taxation Treaties

Luxembourg has numerous double taxation treaties that help firms reduce their tax burden by preventing double taxation on income earned in other countries. This function is quite helpful for businesses that work across borders.

Pro Tip: Businesses can maximize the benefits of registering a company in Luxembourg with low taxes by collaborating with a local tax professional to refine their tax strategy.

Access to the European Union Market

Free Movement of Goods and Services

Luxembourg’s membership in the European Union grants businesses access to the EU single market, facilitating the free movement of goods and services across 27 member states. This eliminates tariffs and reduces bureaucratic barriers, making it easier for businesses in Luxembourg to expand their reach across the EU.

Regulatory Simplicity

Businesses in Luxembourg are subject to the same rules as those in the EU. This makes it easier for them to deal with other countries. An IT business based in Luxembourg, for instance, can easily sell its goods to other EU countries without having to cope with the problems that come with following multiple national rules.

Insight: Registering a company in Luxembourg’s position in the EU gives firms a competitive edge by making it easier for them to access one of the world’s largest consumer markets.

The Bottom Line

Luxembourg offers the best mix of benefits for enterprises looking to establish a presence in Europe. Luxembourg is an excellent location for businesses to grow, as it is centrally located in Europe, has low taxes, a stable government, and a high quality of life. Entrepreneurs and multinational companies love this country because it has access to the EU market, a highly qualified multilingual population, and strong financial services.

FAQs

What are the key tax breaks for starting a business in Luxembourg?

Luxembourg has a low corporate tax rate, a 17% VAT rate (the lowest in the EU), and several tax breaks for research and development, as well as intellectual property. The country also has a network of accords that help corporations avoid paying taxes in more than one country.

How long does it take to start a business in Luxembourg?

Setting up a business in Luxembourg is typically quick and can be completed within a week, depending on the type of business and the level of preparation.

Is Luxembourg a good place for tech startups?

Yes, Luxembourg boasts excellent infrastructure, robust financial services, and government incentives for tech entrepreneurs. The country places a strong emphasis on new technology and digital innovation, which is beneficial for tech companies.

What help does the government of Luxembourg give to businesses?

The government of Luxembourg has several programs, including Fit 4 Start for tech companies, and offers rewards to enterprises that focus on sustainability and innovation. These programs provide financial support, coaching, and expert advice.

Is it easy for enterprises in Luxembourg to get to the EU market?

Yes, because Luxembourg is a member of the European Union, enterprises can easily access the EU market and do business in all 27 member states without many trade restrictions.