Luxembourg, a founding member of the European Union, is also its smallest member.  During the 20th century, it evolved from an agrarian society into a manufacturing and services economy. With a financial services industry that accounts for about one-third of GDP, Luxembourg is one of the world's wealthiest countries. In addition to being Europe's principal centre for mutual funds and a major force in the banking and insurance industries, it is an ideal location for information technology companies which can rely on a skilled workforce and well-developed infrastructure.

Within a European Union in perpetual evolution, the choice of location of a business, vital center of his financial interest or headquarters has become very crucial.  Luxembourg offers most of the key factors which make a business climate favourable: ease of access, multilingual environment, responsive and close local authorities, state of the art telecommunication networks reliable and performing...

Business Friendly environment

Whether established by Mercer, the Economist, OECD, World market research or other rating organizations, all indicators converge to highlight Luxembourg as one of the best places for living and doing business in Europe.  The testimony of the U.S. Department of Commerce is eloquent in this respect:

"Luxembourg's government is pro-business" and "provides a variety of incentives to investors, including subsidies, tax relief, legislation protecting investors' rights, and a transparent regulatory structure. Its multilingual labor force is efficient, educated, and highly productive; labor strife is minimal…."

Situated in the heart of the European market with its 450 million consumers, it is equidistant to London, Paris and Frankfurt. It is the gateway for new EU members to the center of the European market.  In the last years, Luxembourg has become an international hub for international companies willing to find a business friendly environment with the view to centralize some or most of their investments.

Setting-up business: quick and easy

The government's one-stop-shopping system for business registration applies to foreign and domestic enterprises alike, and regulations are fair, transparent, and applied evenly.   Luxembourghas a very open foreign investment regime and actively promotes foreign investment. Foreign and domestic businesses receive equal treatment, and there are no local content requirements. There are no restrictions or barriers with respect to capital transactions or current transfers, repatriation of profits, purchase of real estate, or access to foreign exchange.  A very large number of holding or financing companies have elected Luxembourg to establish their activities.  French, German and English can be widely used in the corporation deed.

An IT place and e-commerce platform

Luxembourg has an unparalleled communication infrastructure and is an ideal location for information technology companies.  SES, the leading European satellite company (Astra), is originating from Luxembourg.  Recently, Microsoft, AOL, Amazon, Itunes or Skype, the successful Internet telephony company, have set up their European headquarters in Luxembourg.   The EU IT legal framework in respect of electronic commerce has been fully implemented in a particular favourable way to corporations.  VAT rates which are the lowest in Europe constitute unrivalled benefits for e-platform willing to reducing the final selling price to consumers.

Creative and stable legal and tax environment

The Economist Intelligence Unit reports that "contractual agreements…are secure, and the country's judiciary and civil service are highly regarded."

The Luxembourg legal system is stable and transparent. Authorities are in constant search of new legal niches and opportunities likely to attract new investors or improve the business environment.

Recently, Luxembourg has enacted new regulations creating easy to-use and flexible private equity and venture capital vehicles (SICAR) and securitisation special purpose vehicles.

Luxembourg and the old offshore mindset

Luxembourg is not an offshore centre nor a tax heaven.  Founding member of Nato, the Benelux and the European Union, Luxembourg is a full onshore place.  Luxembourg corporate rate set at 29.72% is in the EU average range and individual taxes reach the marginal rate of 40%.  General VAT rate is set at 15%.  It is only through an adequate and clever combination of financing and corporate structuring, with the assistance of local experts, that investors may achieve solutions unmatched in other countries.  However, our lawyers privilege only tax efficient solutions in compliance with the EU guidelines on harmful practices and distortion measures.

Legal authorities are open to secure tax treatment of business transactions in granting advance tax agreements (rulings).  VANDENBULKE’s lawyers and tax experts frequently negotiate rulings either for regular or hybrid financing, intangible protection and optimization or shareholding restructuring.