The 2023 Act on non-profit organizations and foundations is the main law governing the creation of foundations in Luxembourg. The main advantages of this new legal framework refer to the simplified setup and management of these structures and the introduction of a specific accounting system for them. You can obtain more information on the legislation related to the private foundation from our law firm in Luxembourg. We can also assist in the creation of this type of entity.
| Quick Facts | |
|---|---|
| Applicable legislation | The 2023 Non-profit Organizations and Foundations Law |
|
Types of foundations available in Luxembourg |
Private and public benefit foundations can be created in Luxembourg. |
|
Setup pathways |
Foundations can be established through foundation deeds or testaments. |
| Registration requirements |
– the foundation document, – a 3-year financial plan, – provisions about the projects of the foundation for the first 3 years of activity |
| Establishment documents |
– Articles of Association, – testament |
| Registration authority |
Luxembourg Ministry of Justice |
| Approval requirement (if any) |
Yes, a Grand Ducal Decree must be obtained before registering the foundation. |
| Requirements when created through wills |
The founder must nominate a testamentary executor who will register the will with the Ministry of Justice. |
| Local address requirement (YES/NO) |
Yes |
| Minimum share capital (if required) | Yes, for private foundations, at least EUR 25,000 is required. |
| Tax registration required (YES/NO) |
Yes, the foundation must register for taxation. |
| Possibility for foreign NGOs to operate in Luxembourg (YES/NO) |
Yes |
| Possibility for foreigners to set up foundations in Luxembourg (YES/NO) |
Yes, foreigners can also set up foundations in the Grand Duchy. |
| Taxation |
Foundations are subject to corporate and municipal taxes in Luxembourg. |
| Support in creating a foundation in Luxembourg (YES/NO) | Yes, our lawyers in Luxembourg can assist with the creation of a foundation. |
Documents required to open a foundation in Luxembourg
Here are the main requirements in terms of paperwork when setting up a Luxembourg foundation:
- the creation document, which depends on the method of establishment, in a notarized form;
- a memorandum under the form of a report indicating the projects of the foundation in the first 3 years of activities;
- a 3-year financial plan.
By the creation document, one should understand:
- the Articles of Association;
- the will – when creating a foundation by testament, the creator must appoint a testamentary executor who will submit the will to the Ministry of Justice for the recognition of the foundation.
When opening a foundation in Luxembourg by drafting its Articles of Association, these must contain the following information:
- the name of the foundation;
- the purpose of creation and activities to undertake;
- the registered address (a Luxembourg address is required);
- details about the administrators (names, addresses, and nationalities);
- information on how the administrators are appointed;
- details on the distribution of assets in case of dissolution of the foundation.
Our Luxembourg lawyers can help you draw up this document. We can also assist if you want to set up a foundation through the creation of a testament.
What is a foundation according to Luxembourg law?
The private foundation is considered an “orphan entity” as it has no shareholders or any other members. Instead, it has beneficiaries who can be the individuals creating the Luxembourg foundation or third parties. The foundation is usually created for a specific purpose, and its creation will be acknowledged through a Ducal Decree.
It must be stated that, apart from the private foundation, there is also the simple form of a foundation, also known as a non-profit organization, which is created for social purposes. Our lawyers in Luxembourg can offer more information on the two types of foundations.
Requirements to create a private foundation in Luxembourg
Luxembourg has a long tradition with respect to the establishment of non-profit organizations and foundations, which dates back to 1928. Ever since, the legislation has evolved, so the foundation is one of the most appreciated asset protection and estate planning tools in Luxembourg. In 2013, the government amended the legislation so now both local and foreign citizens are allowed to set up private foundations in Luxembourg. It must be stated that the Luxembourg private foundation is the equivalent of foundations in other European countries.
For the establishment of a private foundation, a minimum capital of 25,000 euros is required, and, in the case of a non-profit organization, no minimum amount is needed. However, any capital provided for opening a Luxembourg foundation can be made of cash or kind. Another requirement related to the establishment of a foundation is that it must have a board of directors.
No matter the type of foundation one decides to open in Luxembourg, a notarial document must be drafted and signed by the individual creating it. Other documents which can be prepared for creating a foundation are: private agreements, testaments, or even articles of association.
Registration of foundations in Luxembourg
No matter the way of establishment, the creation deed of a foundation must be approved through a Grand-Ducal Decree by the Ministry of Justice. The application can be submitted in paper format or online by:
- the founders;
- a notary;
- a lawyer (you can rely on our law firm in Luxembourg for this step).
Following approval, the foundation will undergo registration with the Trade Register. Our lawyers in Luxembourg can also help in this stage if you grant us a power of attorney.
Important aspects of the new legislation on foundations
The new law comes with new requirements upon the creation of a foundation in Luxembourg. Some of the most important are:
- the lowering of the endowment amount from EUR 250,000 to EUR 100,000;
- the possibility for foundations to use their assets in their activities, but only if their value does not drop below EUR 50,000;
- the requirement to report any change related to the status of the foundation to the Trade Register within a maximum period of 6 months.
Anyone can open a foundation, including foreign citizens, so if you are interested in immigration to Luxembourg, our lawyers can handle the setup and relocation process on your behalf, if you decide to work with us.
For assistance in registering a foundation in the Grand Duchy, please contact our Luxembourg lawyers.