How to get support and benefits for business in Luxembourg
In this article we will explain what kind of help a business can get from the government, private or public programs and companies.
Luxembourg offers entrepreneurs everything they need to develop their business — financial support, tax optimization tools, business incubators, and much more.
In the Grand Duchy, there are many support measures for start-ups, as well as for developing companies and start-ups. The Fit 4 Start program, which takes place twice a year, and the support of the HoST business incubator are the most common.
Alex in interview for Luxtoday
This is a special government accelerator program. It brings together startups from all over the world, funds them and helps them relocate.
Participants are recruited twice a year. Only 15 startups are selected. And this is an opportunity for them to receive a grant of 150,000 euros and to relocate to Luxembourg.
Upon successful completion of the program and raising over 50,000 euros in private capital, an additional 100,000 euros can be obtained.
Support from Fit 4 Start includes:
Coaching Program
Business Funding
Office space
Network
Access to technology
It is also known as the House of Startups (HoST). HoST is the Grand Duchy's shared workspace with an area of almost 6,000 square meters. It houses teams of different startups under one roof, as well as innovation centers, incubators, business accelerators and consulting services for startups.
In addition to IT infrastructure, the Startup House is equipped with conference rooms for meetings and focused work, as well as spaces for thinking through hypotheses and discussing ideas.
Support from HOST includes:
Technologies
Events
Network
24/7
Dedicated registration desk
The House of Entrepreneurship (HoE) has the same goal as HoST — to support entrepreneurial ideas and projects. The House of Entrepreneurship supports both start-ups and established businesses:
- For those who have already started a business — organizes special webinars where it breaks down news relevant to its target audience.
- For those who are in the process of starting a business — advises on legal issues related to starting a business.
- For all entrepreneurs — advises on business management issues, e.g. tax, legal, etc., creates an ecosystem of entrepreneurs by networking in the community.
If you are just thinking about starting a business, you may find it helpful to read a step-by-step guide to the process.
The Luxembourg Innovation Agency promotes the digital transformation of the economy in general and businesses in particular. Its mission is to promote collaborative innovation projects that stimulate the development of a sustainable, competitive and digital economy.
Luxinnovation acts as a partner for those who want to launch successful innovation activities in Luxembourg: from start-ups and managers of established companies to foreign companies and investors.
Daria in interview for Luxtoday
Luxinnovation's programmes
Many business support programs are designed primarily to help companies improve their competitiveness. They provide you with expert advice as well as government funding.
The Innovation Agency offers a wide range of support programs. To understand if you can benefit from their support, just fill out the form on the website.
Luxinnovation has many different programs to support companies of different sizes, and each has its own rules. However, in most cases you can follow our checklist:
Once your application is approved, you will have to:
- Analyze your company
Together with a Luxinnovation consultant, you will be able to analyze your business for a further action plan.
- Get feedback from the expert
Based on the analysis, the expert will draw up a specific plan for the development of your company, including a financial plan and recommendations for further actions.
- Request financial compensation
After receiving the final plan from the expert, you will be eligible for a government grant that will cover up to 50% of the cost of the consultation.
Any company established in or operating from Luxembourg must pay taxes: such companies are considered tax residents. However, the Grand Duchy has a rather convenient tax system and several tax regimes.
Alex on interview for Luxtoday
This is available to a group of companies in Luxembourg thanks to the consolidated taxpayer regime. It allows the entrepreneur to reallocate profits and losses within the group and reduce the overall tax base.
The regime is available if the parent company holds 95% or more of the capital of the subsidiaries.
Works according to the following principles:
- 17% for companies with a turnover of more than 200 thousand euros per year. Including unemployment contributions and a municipal tax of between 6.75% and 10.5%, the effective tax rate would be approximately 24.94%.
- 15% on income up to 175,000 euros per year. Including unemployment contributions, plus a municipal tax of between 6.75% and 10.5%, the effective tax rate will be approximately 22.8%.
- Fixed amount of 26,250 euros + 31% on the amount above 175,000 euros — for income between 175,000 euros and 200,000 euros per year.
- The standard 17% is charged to companies for the supply of goods and services. But! If the turnover is less than 35 thousand euros per year, a preferential VAT regime applies.
- The reduced 14% applies to businesses selling certain wines, as well as securities management companies and some others.
- The reduced 8% applies, for example, to the supply of gas and electricity.
- The ultra-low 3% applies to the services of writers, composers and performers, and is also levied on businesses in the food industry and some others — pharmaceuticals, radio and television broadcasting, media and periodicals — electronic and paper.
- Exemption from 0% VAT was granted to resident investment funds, entrepreneurs from the sphere of medical, insurance and financial services.
- Resident investment funds pay an annual amount of 0.5% of the net assets of the fund. In some cases, this rate may be reduced to 0.1%. This is called the "subscription tax". They are exempt from corporate, municipal and income taxes.
- Private equity funds (SPFs) pay a "subscription tax" at a rate of 0.25% of the tax base. They are exempt from corporate income tax and capital gains tax. The amount of tax for SPFs is not less than 100 euros and not more than 125,000 euros per year.
- In some cases, 80% of the net corporate income from intellectual property assets is exempt from corporate income tax.
In Luxembourg, there are several ways to get financial support through different instruments.
Entrepreneurs engaged in research and innovation activities can obtain financing from the Société Nationale de Crédit et d'Investissement. SNCI is a banking institution specializing in medium and long-term financing for Luxembourg companies.
SNCI credits
The SNCI offers different types of loans depending on the size of the company and the project. Financing ranges from an average of 25% of the value of industrial projects to as much as 75% of the investment in the case of first-time applications by young craftsmen, traders, and in the case of restaurants and hotels.
In Luxembourg, business owners can count on several types of loans.
Bank financing
Mezzanine financing
Instead of taking out a loan, startups and small businesses can choose crowdfunding to finance specific projects with small amounts of money.
To do this, the entrepreneur must:
- Propose a specific project to finance;
- Choose a crowdfunding platform.
Typically, in this type of fundraising, the platform operator receives a percentage of the funds raised in exchange for providing the platform and publishing auctions.
You can learn more about the crowdfunding process by writing to crowdfunding@cssf.lu.
Companies that meet the general conditions for government aid can apply for it. To do so, you must apply for aid through the online wizard at MyGuichet.lu.
The list of potential beneficiaries includes:
Small and medium enterprises
Green companies
Tourism projects
Agricultural micro-enterprises
Electric mobility development companies
To find out if you are eligible for investment aid, it is worth contacting the House of Entrepreneurship or the Luxembourg Chamber of Commerce. Luxembourg also offers various subsidies and situational/seasonal reimbursements for businesses.
Frequently Asked Questions (FAQ)
Can startups in Luxembourg receive government support
Does Luxembourg have tax incentives for companies and startups
Yes, the Grand Duchy has a fairly convenient tax system, and there are also various tax schemes and incentives in the country. For example, the VAT rate for companies varies from 0% to 17% depending on the annual turnover and the type of business.
Is it possible to get a business loan in Luxembourg
Source: guichet.public.lu, blog.ewub.lu
We took photos from these sources: Floriane Vita for Unsplash
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