With one of the lowest social security contribution rates in the European Union, an attractive tax policy and a central geographical location, Luxembourg has many a trump card when it comes to luring entrepreneurs.
According to a 2017 Statec study, entrepreneurs account for 9% of the total population. That’s one point more than the European average, but it remains below the ambitions of the country, which, for several years now, has been intent on offering further incentives to help aspiring entrepreneurs take the plunge.
In the beginning there is the idea. It is often a simple intuition or a long-held dream that needs to be translated into reality.
This where the non-profit organisation Nyuko comes into the picture. It can take a close look at the feasibility of your idea and put it to potential customers so that your project can be tweaked at the pre-creation stage.
And for those looking for inspiration, the Meetanentrepreneur.lu platform offers a series of encouraging testimonials from those who have already taken up the challenge.
Step #2 of the recipe for success: understand the regulatory framework in which you will operate.
This is where the House of Entrepreneurship comes in handy, a structure supported by the Chamber of Commerce and the Ministry of Economy. It provides free information to any entrepreneur, whether new or established, on all aspects of implementing their business project. It can guide you through formalities such as the incorporation permit, choice of legal form, the Luxembourg tax system, social security systems, VAT, charges, etc.
But that’s not all as, three times a year, a series of free events – the Entrepreneurs Days - is also offered to future entrepreneurs, start-ups and SMEs, who have the opportunity to brush up on their knowledge through various workshops such as: “How do I start my business in Luxembourg?” “How to convince my banker, set up a business plan...”.
Luxembourg was also keen to facilitate company creation by proposing a new legal status, the simplified limited liability company: SARL-S.
From now on, it is no longer necessary to go before a notary to create this structure, whose minimum capital is reduced to one euro in order to eliminate the last barriers to entry. The formalities are reduced to the bare essentials: applying for an incorporation permit from the Ministry of Economy and registration with the business register.
If you are launching an innovative project, the State can support you in the form of a grant or cash injection, all the information is on the Guichet.lu website.
For Jean-Marc Georis, chartered accountant and director of the firm SOGEO, nothing should be done without seeking the external advice of a professional on the future activity.
“A lot of people want to start a company but without a clear business plan. However, it is important to estimate the initial costs carefully, to know how quickly the company will be profitable in order to have the necessary cash flow.”
After all, in Luxembourg, the manager of a company is responsible at the end of the day. If it has VAT debts, charges or taxes, the State normally turns to the manager.
So make sure you surround yourself with the right people to make a success of your entrepreneurial ambitions!
Insurance is also something you need to factor in when setting up in business.
What insurance will you need? Think of your premises, your tools, your stock, your equipment etc. Not to mention your civil liability. What about your employees? What about your pension plan as a self-employed person? Seek the expertise of your insurance advisor to find the right answer for your business.