Luxembourg company setup, what's your thoughts?

[blizz]

Now we have talked a lot about Swiss company formation in this area. I was wondering what your thoughts are about Luxembourg?

The benelux countries mentioned here already are not really discussing the Luxembourg benefits their have been in the past and may still be there.

They are known for a low- or no corporate tax at all, high privacy and almost no issues to transfer money around the world.

When I do my flag theory drawings I came across Luxembourg, some input maybe?

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Be part of the elite, be Mentor Group Gold coo-:!y

 

[clemens]

I found the service provider below
http://galux.lu/tax-optimization/
But to get a quote it looks like‌ you need to know what exactly you need, I can't figure out how to get‍ the fees from them.

 

[cuno]

You have also a well known service
https://sigtax.lu/services/company-formation-luxembourg
they are very responsive to me in‌ the past.

But as you may know, Luxembourg is part of the EU, that may‍ be the reason for why people don't discuss this little point on the map.
You want to look into Liechtenstein, they, as well as Switzerland and Norway are not part⁠ of the EU!

 

[clemens]

I just posted pricing etc in the resource database of mentor group gold from the‌ company above. It's not allowed to publish public.
https://www.offshorecorptalk.com/threads/sigtax-luxembourg.37357/

 

[sonato]

I would agree, it's not that good to setup something in the EU if‍ the purpose is asset protection. Maybe some Gurus can explain what an Luxembourg entity could⁠ be useful for, if at all.

 

[Nicholas Van Orton]

First things first, I have a company in Luxembourg, which is up for sale.

Setting-up costs vary amongst CSPs, and wildly. For a typical SàRL (LLC), you need €15K deposit‌ in a consignment account as share capital before you go to the notary. Then you‍ add the agent fees + the notary fees. Notary fees are about €1,5K and agent⁠ fees can range from €12-15K (our case) up to €50-60K (the so-called big firms). Biggest⁤ problem of al, in my opinion, is not the money you invest in setting it⁣ up, it is the time the process consumes. It took us over 3 months (and⁢ believe me, weeks add up very weekly when you need this or the other document︀ signed and stamped) to get it done, and I felt we were rather 'quick', as︁ we had someone in the ground to deliver the docs quickly.

The good thing about︂ Luxembourg is that they have introduced the option for small SàRLs to act as tokenization/securitization︃ vehicles, meaning the company can legally issue private tokens/shares and sell them out in the︄ open. What this de facto means is that you may create your own private fund︅ without the accounting and administrative complications of such structures or changes in the shareholder capital︆ base. And since these vehicles are tax transparent in Luxembourg (0% taxes), I see it︇ as a very efficient and usually disregarded option for offshore setups.

NVO

I'm not a guru, but I believe what︊ I said in my post does shed some light. Luxembourg may be part of the︋ EU, but it has its own personality (thus far, at least) which can be beneficial︌ if planning to set it up the right way.

 

[saponaire]

can you tell us more about the sarl option︍ you mentioned?

 

[Nicholas Van Orton]

Hello, it is a plain SàRL, with 2-yr clean track record and a bank‍ account opened at a private Swiss bank (it can only be maintained on a USD1MM⁠ deposit from new owners, else I suggest OlkyPay as the banking solution -fast and reliable⁤ for LUX companies-). CSP is good and well-priced (includes audit and filing of annual accounts⁣ + anything in-between). The upside as I mentioned is that it can be converted into⁢ a securitization/tokenization tax transparent (0%) vehicle by amending the articles of incorporation (takes one week︀ tops).

I don't know if there is anything else you'd want me to add, feel︁ free to ask (as long as this doesn't contravene the forum rules).

NVO

 

[kranj99]

We have a client looking to set up a PE Fund in Luxembourg. We are‌ recommending a sort of Special LP (SCSp) - main advantage is that it is not‍ regulated, yet can qualify under AIFM directives and no approval needed from the state authority⁠ CSSF. Also ISIN and Bloomberg tickers can be allocated to the SCSp structure. So if⁤ looking for a fund setup, then Luxembourg is very interesting. But if looking for more⁣ traditional business models, LU may not be very suitable if on a budget.

 

[Nicholas Van Orton]

Agreed, but AIFMs tax transparent and exempt from 'strict' or normal CSSF︀ regulation, are limited to €100M AUM. If planning to go beyond that, then a full︁ setup is required, and maybe Luxembourg loses a big part of its appeal. However, with︂ the tokenization(securitization option, there are no actual limits and for a PE-style fund might be︃ worth a look. Of course, if ISIN and Bloomberg tickers are of the essence, then︄ not a good option.

NVO

 

[kranj99]

Indeed on the 100M AUM, but as far as I know this is only if‌ the AUM is Luxembourg based. While I'm not 100% sure, I believe foreign assets are‍ not subjected to this Furthermore if it is a closed-end fund, I believe the limit⁠ is 500M (LU assets again) - but I admit I'm not fully certain of this,⁤ so I apologies in advance if I have this wrong. I need to check with⁣ my legal advisor, but each call to him is a billable activity, so I try⁢ not to make so many calls!

 

[saponaire]

The Securitization vehicle seems way more interesting.. it give you 0 tax while trading, differently‌ from the SCSp which depending on where you are it might be transparent.

There is‍ an issue with the securitization vehicle though, whatever you securitize must have single strategy.. what⁠ are you using it for?

My take: partnerships are a mess

 

[kranj99]

True - I'm not a fan of partnerships neither. In this particular case though,⁣ our client is a non-EU Private Equity firm and we have found that it is⁢ easier to get them in front of EU investors (non institutionals, and so mainly family︀ offices) if they have an EU setup like the Lux SCSp structure. The types of︁ firms I'm dealing with are setting up funds that are too small for institutional capital︂ and so the smallish AUM of these funds are geared towards EU family offices -︃ some of whom have internal governance restrictions that prevent them from investing outside the EU.︄ The SCSp allows such offices to get exposure to certain non-EU assets through an EU︅ regulated fund and this keeps their compliance teams happy in a way. So this set︆ up has nothing to do with tax optimization or anything, but rather just a set︇ up to make things easier between a bunch of very different parties!

 

[maxmoney]

What's the corporate tax such a company pay from profits?

 

[saponaire]

Corporate tax is the local rate, but it will be exempt since it's a securitization‌ vehicle

 

[Nicholas Van Orton]

As @saponaire pointed out, these are tax transparent (exempt) vehicles, so effective 0% rate it‍ is.

NVO

 

[myshufflemix]

You then have to pay taxes in the country where you live on the entire‌ company's income if everything is to be completely correct, right?

 

[dany]

means the company does not pay‍ taxed it self but the owner has to pay in his home country ? like⁠ US LLC ?

 

[Nicholas Van Orton]

Yes and No. Yes if you cash out as capital gains tax (dividends) and No if‍ you cash out as an employee (assuming you are the GP (general partner, the fund⁠ manager) in the structure), in which case you're already taxed in Luxembourg and thus would⁤ avoid double taxation in your home country.

 

[maxmoney]

I just need this explained in simple terms! So, if I am already being taxed⁣ in Germany on my personal income, does that mean I don’t have to pay tax⁢ on the dividends paid out from the company in Luxembourg because tax has already been︀ paid on them?

That doesn’t sound entirely correct.