The holding company is a legal entity created for the purpose of owning shares or other assets. The holding company is a very popular business form in Luxembourg, as it offers many advantages to its owners.
Legal entities used
- private limited liability company,
- public limited liability company,
- tax exempt holding company (SOPARFI),
- limited partnership,
Usual registration with the Luxembourg Companies Register
Approx. 3 weeks
Types of assets owned by the holding
- real estate,
- intellectual property etc.
Requirment for local bank account (Yes/No)
Residency requirements for the founder(s)
- tax exemptions,
- easy to register,
- good reputation of Luxembourg,
- access to double tax treaties
Special conditions under the EU Parent-Subsidiary Directive
At least one shareholder
- EUR12,400 for private companies,
- EUR31,000 for public companies
21% income tax rate for holdings registered as private and public companies
Full foreign control of the parent company
Registered agent requirements
No local agent is required, however, such services are available
Accounting and reporting
Audited financial statements must be filed no later than 6 months from the end of the financial year
Number of double taxation treaties
Foreign investors who want to establish holding companies in Luxembourg must follow the same procedures for setting up other types of companies, as the holding can take one of the forms acknowledged by the Company Law.
A private limited liability company, shortly known as SARL, which is the most popular business form in Luxembourg;
A public limited liability company, also known as SA, which is suitable for large operations;
A partnership limited by shares, also known as SCA and which can be set up by at least two members;
A co-operative, shortly known as SC, which falls under the prospect of the Luxembourg Civil Code.
Most of the times, Luxembourg holdings are registered as SARLs or SAs which imply share capital requirements of 12,500 euros in the case of the SARL, respectively 31,000 in the case of the SA.
Types of holding companies in Luxembourg
Luxembourg is known as a reputed financial center not only in Europe, but in the entire world. Holding companies are very popular here, which is why they can take various forms depending on their activities.
The following types of holding companies can be created in Luxembourg:
Out of all of these, the financial holding company is the most popular. If you want to create a holding company in Luxembourg, you can request the help of our law firm.
Requirements for setting up a holding company in Luxembourg
As seen above, the holding company in Luxembourg can take the legal forms imposed by the Company Law. However, these have different requirements. Out of all entities, the private limited liability company is the most employed business form for a holding.
When choosing to open a holding company in Luxembourg, the following requirements must be complied with:
the company must have a trading name which must be reserved with the Trade Register,
various documents must be prepared, among which the Articles of Association are essential,
the company must also have a share capital which must be demonstrated through a bank statement,
the company must have at least one director, however, specific provisions apply,
the holding must also have a legal address in Luxembourg prior to incorporation.
All the documents attesting to the creation of a holding company must be filed with the Trade Register. These can be drafted and submitted by our lawyers in Luxembourg.
Trading name reservation for a holding company
There are several aspects that need to be considered when it comes to the trading name of a holding company in Luxembourg. Apart from the usual requisite of being unique (verifications can be made in this sense). Also, the Luxembourg Company Law specifically requires that the name of a holding does not contain or resemble the name of any of the shareholders.
Registered address requirements for a holding
Just like all domestic businesses, a Luxembourg holding company must have a legal address in the Grand Duchy. This is can be an office space or any other address, as long as it can receive official letters, documents and other notifications.
It should be noted that foreign holding companies can also operate in Luxembourg through local offices, but they must also appoint local agents who can provide various services. From this point of view, our law firm can act as a registered agent on behalf of holding companies.
Holding company management in Luxembourg
There are two management structures that can be employed when creating a holding company in Luxembourg. These usually depend on the size of the company.
The company can use one director if the business’ share capital is below 500,000 euros or if it has one shareholder.
Large companies can use a management board and a supervisory board that must be stated in their Articles of Association. In this case, the board must be made of a minimum of three members who can also be shareholders.
All the requirements associated with the appointment of company directors can be explained by our Luxembourg lawyers.
Share capital requirements for a holding company in Luxembourg
The minimum amount of money required for the creation of a holding company is 30,000 euros, however, at least 25% of it must be deposited upon the incorporation of the business with the Companies House.
One of the most employed types of holding companies in Luxembourg is the financial one. Also known as SOPARFI which is short from Sociéte de Participations Financières, its main use is related to owning and managing shares in other companies known as subsidiaries.
Taxation of the holding company in Luxembourg
The levies a Luxembourg holding company is subject to are:
the corporate tax which is levied a rate of 21%,
the contribution to the unemployment fund set at a rate of 4%,
the share transcription tax which implies a rate of 0.5%,
There are many reasons for which local and foreign investors can choose Luxembourg for the creation of a holding company. Apart from having very well-established regulations which will increase businesspersons’ confidence, the Grand Duchy also offers other advantages, among which:
tax advantages if the holding company qualifies for the participation exemption regime,
access to a large network of double taxation agreements,
easy incorporation and corporate bank account opening procedures compared to other European jurisdictions,
professional workforce in the financial field which is the country’s most important economic sector.
When adding that Luxembourg is an European Union member state and operating from here in other member countries is quite simple, it becomes even more appealing to create a holding company here.
If you are interested in setting up a holding company in Luxembourg, you cancontact our local lawyersfor assistance through the registration process. You can also rely on our Luxembourg lawyers if you want to establish other types of companies here.
*Click on the categories below for full list of articles