April nyhed 2015.

Luxembourg

This most prestigious quality jurisdiction and Europe’s last bastion with absolute banking secrecy is now Anglo’s premier choice for a European holding, investment or trading company.

Most of the world’s largest corporations have a foothold in Luxembourg. Take Apple, Skype, Ikea, Pepsi, Fedex, Procter & Gamble, Google and Amazon – a mere handful of the hundreds of household names with companies registered in Luxembourg. There are actually over 9000 companies with foreign capital in Luxembourg.

A company with bank account can normally be set up in five working days.

It is no coincidence that Luxembourg is first choice.

1. Setting up a business

In Luxembourg, the word SARL is used instead of Limited.  A Luxembourg SARL means a ‘Societe a Responsabilite Limitee’ which is actually a limited liability company in Luxembourg.  All the rules for setting up a limited liability company in Luxembourg are stated in the commercial companies law and it is usually the type of business structure that foreign investors choose due to the simple administrative formalities.

A minimum share capital of EUR 12,395 is required for the incorporation of a Luxembourg SARL. This sum has to be deposited in full before company registration in Luxembourg and will subsequently be blocked. Contributions can be made in either cash or in kind and the capital will be divided into shares. These shares must have the same value, which cannot be lower than EUR 24.79.  As soon as the company has been fully incorporated the share capital will be unblocked.

The requirements as far as the shareholders of a limited liability company in Luxembourg are concerned are simple.  The number of shareholders has to be between two and forty. The liability of the shareholders for the company’s debts and obligations is limited to their initial contributions.

The person designated as having responsibility for day-to-day management of the company (managing director) must be in a position to exercise effective oversight of the establishment in Luxembourg on an ongoing basis (which implies a physical presence in the Luxembourg operation most of the time).

A Luxembourg-resident nominee director is therefore needed as it strengthens the substance of the company in Luxembourg and acts as a strong indication that management and control is exercised within the country for tax residency purposes. The name of a non-resident director and ultimate beneficial owner will not be accessible to the public and will not be disclosed to anyone except the notary.

2. Due diligence requirements are:

For the ultimate beneficial owner

–    Recent utility bill confirming his/her place of residence (dated within the last three months)

–    Copy of certified passport

For the directors in case of a corporate entity

–    Certificate of incorporation

–    Certificate of shareholders

–    Certificate of directors

–    Memorandum & Articles of Association

For the directors in case of a natural person

–    Recent utility bill confirming his/her place of residence

–    Copy of certified passport

For the shareholders in case of a corporate entity

–    Certificate of incorporation

–    Certificate of share holders

–    Certificate of directors

–    Memorandum & Articles of Association

For the shareholder in case of a natural person

–    Recent utility bill confirming his/her place of residence

–    Copy of certified passport

Brief details of the activity of the company is required. However, no information will be disclosed to third parties.

Kindly note during the incorporation Anglo will forward you draft power of attorney that should be signed by the shareholders authorizing Anglo to proceed with signing the Deed of Incorporation.

3. Corporation tax

All companies are liable for a minimum tax, even if a loss has incurred during a financial year.

The minimum tax for companies that meet both of the following conditions is fixed at EUR 3210:

1. Total balance sheet exceeds EUR 350,000

2. More than 90% of the assets are financial assets (i.e. bank/cash, shares held, loans receivable etc.

In all other cases the minimum tax ranges between EUR 535 and EUR 21,400, depending on the size of the company, as follows:

For example, a holding company has the following assets in its balance sheet:

 

Investments in shares: EUR 100,000
Cash: EUR 100,000
Total assets: EUR 200,000

In this case the second condition is met as >90% of assets are financial assets, but the first condition is not met as total balance sheet is less than EUR 350,000. Therefore, the minimum tax payable is EUR 535 (including 7% employment fund contribution).

Example 2:

Investments in shares EUR 1,000,000
Cash: EUR    100,000
Total assets: EUR 1,000,000

In this case both conditions are met, thus the minimum tax is EUR 3,210 (including 8% employment fund contribution).

Do note that taxable losses can be carried forward indefinitely. In addition, any excess minimum tax paid can be offset against future taxes. Although in case the company does not realize any future profits, the minimum taxes paid will not be refunded.

Corporate Income Tax Rates take into account the provisions of the double tax treaties signed between Luxembourg and more than 70 countries: the taxes levied abroad give a right to a tax credit in Luxembourg.

4. Accounts

The rules for publication of the company’s balance sheet, profit-and-loss account and notes are eased for small and medium-sized companies.

SARLs can draw up an abbreviated balance sheet if, on the balance sheet date, they do not exceed 2 out of 3 of the following criteria:

•    balance sheet total: EUR 4.4 million;

•    net turnover: EUR 8.8 million;

•    average staff numbers: 50;

SARLs can combine certain headings in the profit and loss accounts if, on the balance sheet date, they do not exceed 2 out of 3 of the following criteria:

•    balance sheet total: EUR 12.5 million;

•    net turnover: EUR 25 million;

•    average staff numbers: 250;

The accounts must be drawn up according to the ‘Lux Gaap’ rules (which are much simpler than the IFRS).

5. Audit

In general Sarls are exempt from audit obligation, except in the following two cases:

  • only companies with more than 25 partners are subject to mandatory supervision by one or more auditors (commissaires aux comptes), partners or otherwise, appointed in the articles of association;
  • supervision by a registered auditor (réviseur d’entreprises) is mandatory in all companies which, on the balance sheet date after two consecutive financial years, exceed 2 out of 3 of the following criteria:
    • balance sheet total: EUR 4.4 million;
    • net turnover: EUR 8.8 million;
    • average staff numbers: 50.

6. Value added tax (VAT)

VAT is a “goods and services tax” on supplies made, the standard rate of which is 17%. If a business makes taxable supplies in excess of EUR 25,000 in any 12 months then it MUST be registered for VAT.

There are three types of supply

•    Taxable – must charge VAT on supplies, can reclaim input VAT

•    Exempt – cannot charge VAT nor reclaim input VAT

•    Outside the scope – not in the Luxembourg tax system

The supply of most types of goods and services in Luxembourg would be classed as Taxable supplies. However, when these supplies are made to companies that are outside of Luxembourg advice needs to be sought as to what rate of VAT, in any, to use.

If a Luxembourg entity sells goods or provides services to its non-EU parent then there is no VAT chargeable on this overseas supply, however on the basis that the supply would be Vatable if made in Luxembourg then the entity will be able to reclaim all its input VAT.

Luxembourg has some advantageous reduced VAT rates according to the goods and services purchased: 3% (e.g. food, except alcohol beverages, pharmaceutical products, newspapers, books, radio and television broadcasting services and sporting events etc.), 8% (e.g. supply of gas or electricity), 14% (e.g. wine, advertising pamphlets). For certain services, such as insurance, financial, real estate, postal or education, there is an exempt from paying the VAT.  Some further transactions such as export and related transport are zero-rated.

7. Banking

The two principal pillars of Luxembourg’s financial services sector are private banking and fund administration. With approximately 150 highly experienced and skilled banking institutions, a successful investment fund industry, a dynamic insurance sector, skilled workers and specialized companies, Luxembourg has a full range of diversified and innovative financial services.

Anglo cooperate with ING Bank and RBS Bank, both renowned global banks. These banks offer retail, corporate and private banking as well as sophisticated and user friendly on line banking. The opening of a corporate bank account is encompassed within the five working days for establishing a Luxembourg company.

Anglo usually apply for the bank account during the company’s incorporation hence the application forms will be completed by Anglo.

8. Russian roulette: Luxembourg new offshore hotspot, Cyprus abandoned

Russians pulled $9,7 billion from Cyprus in the last 2 years, and moved their wealth to ‘safer’ offshore banking in Luxembourg, where Russian investments grew by $7 billion.

By increasing their holdings in Luxembourg, Russians are reciprocating the small European financial hub’s long standing tradition of Russian investment. Luxembourg is the third largest country in total investments in the Russian economy, and has invested EUR 28 billion in Russian projects. However, Russian investment only accounts for EUR 4,4 billion of Luxembourg’s EUR 43 billion economy.

9. Islamic finance investments

Luxembourg also offers an attractive environment for Islamic finance investments. The regulatory environment for investment funds is particularly flexible and offers the possibility to structure regulated vehicles in such a way that they can efficiently accommodate all Sharia’s-compliant investments.

Anglo-Corp Limited

100 Pall Mall

St James

London SW1Y 5NQ

Call: +44 (0) 1473 249 024

Email: info@anglo-corp.co.uk

Skype: anglo-corp

www.anglo-corp.co.uk

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