Luxtoday

How to root in Luxembourg when you are a startup founder

Daria Saltykova
Daria Saltykova
Daria Saltykova
My name is Daria. I came to Luxembourg not so far ago, just 4 months. My main goal was to find a country that would be interested in incubating my innovative project. First I tried one of the French regions, but it didn't work out for us. Let me tell you why.

I have a startup in the IT sector. The idea is simple — to create artificial intelligence for the HR department.

How to root in Luxembourg when you are a startup founder

I am a founder of a startup, that creates artificial intelligence for human research data analyses. We basically want to modernize the old-school internal HR with new tools, to help with data for making great decisions.

Realize the need for Luxembourg

Even before the February events, our team planned to go to the European market, as we had some connections in France, and so we started from here. For a few months, I was pitching, presenting, meeting, and talking, knocking on doors in the Alsace. But I can't call it successful, especially when my french was lacking some practice. Once I pitched for 20 minutes for one of the major players, and at the end, he told me he doesn't understand English! But I was 100% sure he did.

The final straw for me was a big gathering of the startups, we went to. There was a startup, selling magical lamps for better sleep. On the stage. Funded.

My advisor and I looked at each other with a nervous smile and decided that, maybe, deep tech and artificial intelligence are simply not a hot topic for them. So we were left with few options and even less time. Opened the map and the solution came pretty fast... Luxembourg!

Figure out the documents and legalization

Actually, there is no such thing as a "startup visa" in the Grand Duchy. It is considered to be a work visa for self-employed third-country nationals. In fact, it gives you the right to come and get a residence permit without the obligatory contract with an employer in the Grand Duchy.

The main difference from most legalization methods is that in this case, you apply for both a residence permit and a business permit at the same time. Since you are so smart and you want to do your own business here, kindly provide reasons for the permit. That makes sense, right?

The process is rather fast, but it took me around 5 months. I forgot some documents in my home country and had to go back to collect and prepare them.

For a residence permit application you will need:

  • Application formula.
  • Notarized copy of international passport.
  • Recent criminal record, not older than 6 months, issued by the state (states) in which the person has resided for the last 10 years.
  • Professional CV.
  • Financial and business plans.
  • Proof that you have enough money to create a business.
  • Business permit.
  • A notarized affidavit of non-bankruptcy, not older than 6 months.
  • Proof of transfer of 24 euros to CCP Luxembourg IBAN LU 47-1111 008792 620000 - CCPLLULL with the following message: "Name Surname authorisation de commerce".
  • Documents that show that the applicant has the required qualifications and meets the conditions for access to the profession.

For a business permit application you will need:

  • Application formula.
  • The proof of payment of Droit de Chancellerie in the amount of 24 euros, can be obtained from the Office of Registration Fees, Real Estate and VAT (Administration de l'enregistrement, des domaines et de la TVA). This fee can also be paid by bank transfer to the following IBAN account: LU76 0019 5955 4404 7000 (BCEELULL) of the same authority with the following message "autorisation d'établissement" (a copy of this transaction is needed).
  • In the case of establishing a company in Luxembourg, you will need to draw up and approve its articles of association.
  • A copy of a residence permit or your ID card (both sides).
  • The lease agreement for the company's head office in Luxembourg.
  • Recent criminal record, not older than 6 months, issued by the state (states) in which the person has resided for the last 10 years.
  • A notarized affidavit of non-bankruptcy, not older than 6 months.

You probably have some questions. How can you submit all the documents, when you need a residence permit for the business permit and a business permit for the residence permit? Well, these processes and documents will surely take some time, and you will probably enclose some of the needed documents later, in a second batch for the Ministries.

To make the obtaining faster, it is recommended to notify both of the Ministries that you started the applications at the same time. You can do it with a simple note, attached to the packages that you send first. This way the state bodies can exchange the needed papers in between, and you will just send them more with time.

What is interesting about the non-bankruptcy certificate — basically it is a sworn promise, notarized by a specialist in your country, that you have never been through the bankruptcy procedure, neither had any of your businesses. Luxembourg law is very straightforward with such matters: you can not create companies if you have bankrupted them before. Lately, especially after the covid, there have been a lot of talks about changing the law and granting "a second chance" to entrepreneurs. But for now, we have what we have.

Not only does bankruptcy in the Grand Duchy count, but in the territory of any country where you have ever lived.

The next tricky moment to keep in mind is the bank statement, which proves you have enough funds to build your business in Luxembourg and not live under their fabulous bridge at the same time. You will need to show around 20 000 euros in your account. To be honest, I was a real millionaire for 10 minutes. I transferred all the money I had to a single bank account. As well as a friend of my family helped me and added some money for me to have exactly the figure needed — 1 300 000 roubles. I got the paper in the bank office and looked at the pretty number for the last time before transferring everything back to its place(((

This bank account statement in English was sufficient. Even though it was in the local bank and not in euros. Shortly after I provided all the documents, the MFA had its monthly commission meeting and I was granted permission to stay and build my startup in the Grand Duchy — an authorization to stay.

With a copy of this official letter, I went to apply for a D visa. It was fun, as I had to write myself and my contact information into the Employer field for my own application. Fight Club vibes.

Be a little reckless

The first time we had an idea to move our startup to Luxembourg, I didn't have contacts and didn't know anyone there. But I knew that the location of the country will open new doors for us in the European market. And most important they all definitely speak English! I still had one contact with an advisor from Luxinnovations, whom I met at the conference in Paris.

In Luxembourg and especially in LuxInnovations I felt the difference from the first interaction. If before I had more or less Zoom calls with no results, here I was allocated to a huge meeting room, and I got a cup of coffee. Then two people came to evaluate and listen to my idea. And they liked the potential.

At the end of the meeting we faced one "little" issue: we were not part of a local startup and innovations ecosystem and were not connected to an accelerator or incubation program. An ecosystem is a number of measures to support young businesses, grow them and help to assimilate in the market. You covered this in more detail in the interview with Alex Pospekhov.

Not a big deal, — I answered. — Could you give a hint, let's say three names of the incubators you would like to see us in, and we will meet with you again in two weeks». The names were Technoport, Luxembourg City Incubator, and Le Village by CA. Advisors looked a little surprised by the soon date, as it usually takes around 4-6 months to be enrolled. But I was scheduled on the calendar!

My self-assured idea was to go to the closest startup conference ICT Spring in a few days. At this event, I met all the actors of the ecosystem and all the heads of the incubators. I told them my idea, exchanged contacts, clinked a glass of complimentary champagne, and within a week I was unexpectedly pitching a project in the House of Startups office for LCI. There were four out of five hundred startups were selected to pitch that day, and mine was the fifth to bypass the pitch session.

It's not that easy to do all the legalization without the support of the ecosystem, personal networking, and the generous help of the people in the Grand Duchy. And when you have had a great networking talk with 6 out of 10 people in the commission for startup residents' permit approval, and they know what are you building, it's quite a different story.

So in just two weeks, I was drinking coffee once again in the Luxinnovations office with a success story and incubator we got in)))

I love the Luxembourgish approach to innovations. The ecosystem is very friendly, they do not fight for projects, success, or names. On the contrary.

If you come to an incubator that doesn't specialize in your field, for example, you have a social project, and you contacted the techies, they will refer you to the right place, and sometimes will even tell startup colleagues briefly about what you do in order to save time. This is incredibly encouraging.

Personally, I would say, that you need to be a little crazy, a little reckless maybe in Luxembourg, as well as in relocating the whole business and your life here. If one constantly seeks new connections, opportunities, and ways to be more efficient and save time (within reason) for everyone, one can achieve much. And fast. Luxembourg is about business.

Read more about work-related relocation and building networking in our relocation guide:

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