10 reasons to move your startup to Luxembourg

The entry price is reasonable, but high labour costs and pressure from the housing market could increase operating expenses, while competition for talent could complicate recruitment. These risks are manageable, but they need to be factored into the financial model and relocation plan. In this article, we will not focus on the potential challenges for business, but will concentrate on the advantages of Luxembourg as a country for entrepreneurial vision.

Reasons to relocate your start-up to Luxembourg

1. Clear corporate taxation

From 2025 onwards, the corporate income tax (IRC) rate in Luxembourg is specified directly in the tax administration's tariff: 14% if your profits do not exceed €175,000, and 16% if they exceed €200,000.

The bottom line is important for business. Taking into account all municipal fees and contributions, the real tax burden in the capital is 23.87%. For a start-up, this means predictability: you know exactly how much money will be left for hiring employees or marketing after reaching break-even point, and you can confidently quote these figures to investors.

2. The lowest VAT in Europe

According to the European Commission's VAT rates portal, Luxembourg's standard VAT rate is 17% (with reduced and "super-reduced" rates also available). By comparison, the standard rate in the Netherlands is 21% and in Ireland it is 23%.

The practical significance depends on the model. In B2C or self-serve SaaS (including digital services), VAT affects the final price and working capital; in competitive markets, a difference of a few per cent can become either a discount without loss of margin or a reserve. Even in B2B, this simplifies the cost argument for customers.

3. Operational "gateway" to Europe

Luxembourg is an efficient logistics and legal hub. For a start-up, this means a shorter chain of "lawyer/banker/regulator → contract → payment", especially when the business operates in several EU countries and does not want to maintain separate structures. The central location and compactness of the market make it convenient to use as a testing ground for product launch and subsequent scaling across the EU.

4. Access to capital through Europe's largest stock market ecosystem

Luxembourg for Finance records several parameters that are important for start-ups and investors: Luxembourg is "number one in Europe" as an investment fund centre and second in the world; assets under management in mutual funds and alternative funds are valued at €7.3 trillion (CSSF, November 2024), and Luxembourg funds are distributed in 80 countries.

ALFI, aggregating data from the CSSF and the central bank, shows that total assets under management by investment funds domiciled in Luxembourg (UCITS + AIF) amounted to €7,952 billion (October 2025).

The practical value for a start-up lies not only in the "money on the market" but also in the infrastructure: investment structuring, SPV, administration, auditing and legal framework, which investors understand and appreciate. Example: for a growth company, this increases the chance of "closing" a round faster, because less time is spent on agreeing on the structure and risks of the jurisdiction.

5. Market dynamics and government co-financing instruments

In its country profile on financing entrepreneurs, the OECD provides a level of detail on venture capital investments by stage and by year that is rare for small countries. According to this data, the total volume of venture & growth capital in Luxembourg has fluctuated in recent years: approximately €112.0 million (2018), €177.9 million (2019), €191.8 million (2020), €72.6 million (2021) and €225.3 million (2022).

An important part of the "package" is public-private instruments. The OECD profile describes, in particular, the Luxembourg Future Fund (€150 million), the Digital Tech Fund (€20 million) and a specialised fund for space technologies (Orbital Ventures, €70 million) as elements of the innovation financing ecosystem.

For a start-up, this means the opportunity to build a trajectory with grants/subsidies and co-investment without breaking the cap table in the early stages. Example: the government's press release on the Luxembourg Future Fund mentions co-investments, including Spire Global, as an illustration of the pipeline and how the instrument works in practice.

6. Fast-track business registration and flexible company forms at an early stage

Guichet.lu describes the simplified form of Sàrl-S: minimum authorised capital of €1, possibility to establish a company by private deed without a notary. The same page clearly states that a business permit from the Ministry of Economy is required, and that it is also necessary for registration in the commercial register (RCS).

From a time-saving perspective, the framework provided by the OECD is also important: the simplified Sàrl-S is known as "1-1-1" (one person, one euro, one day) and was created specifically to speed up the start-up process compared to the classic Sàrl.

In practice, it works like this: the pre-seed/seed team can formalise the company more quickly, open service contracts, issue invoices and undergo initial due diligence, and then, as the company grows, transition to a more "investor-friendly" form (for example, if a complex option plan is required).

7. Digital government and transparent registers

The government portal provides not only information, but also actual procedures: for example, it indicates that new companies must register with the RCS, and also emphasises the interoperability of the Luxembourg register with the registers of other EU countries through the BRIS system.

A separate practical detail is the digitisation of immigration and administrative processes for entrepreneurs: the procedure for self-employed third-country nationals in Luxembourg is described as a two-step process (temporary residence permit before entry, then residence permit after entry), with the possibility of submitting applications via MyGuichet.lu.

For a start-up, this reduces the risk of delays due to mundane procedures, simplifies the organisation of the compliance calendar, and relieves founders of routine tasks. This is especially important for teams building an international business with a distributed team.

8. A ready-made environment for B2B partnerships and trust

The fintech ecosystem is strengthened by a specialised hub: LHoFT Foundation describes itself as a public-private initiative and the country's "central" fintech hub. For fintech start-ups, this means quick access to a community of banks, insurers and corporate partners.

In terms of sustainable financing, Luxembourg utilises the infrastructure of the stock market: the Luxembourg Green Exchange is positioned in the financial centre's materials as the platform with the largest share of green bond listings; It also lists a catalogue of more than 3,700 sustainable securities with a total value of around €1 trillion (LGX, 2024).

The practical effect for start-ups in climate/ESG analytics, carbon accounting, and regtech solutions is that users and buyers of these tools (issuers, management companies, depositories) are nearby, and a "language of requirements" for disclosure and compliance has been formed.

9. Start-up development programmes and subsidies

Luxinnovation indicates on the Fit 4 Start accelerator page "up to €150,000" in equity-free funding plus acceleration and access to a network.

At the same time, government communications indicate that the support mechanism may be phased: the release on Fit 4 Start #16 mentions €50,000 in funding from the Ministry of Economy and the possibility of additional assistance of up to €100,000 if additional funds are raised.

10. Multilingual environment, high reputation and macro stability

The country's official portal notes the prevalence of languages (based on a 2018 study): French — up to 98% of the population, English — about 80%, German — about 78%, Luxembourgish — about 77%. For an international start-up, this reduces transaction costs in sales, recruitment and day-to-day operations.

Fiscal and financial stability is confirmed by sovereign ratings: the Luxembourg Treasury publishes a rating table with AAA levels and confirmation dates (including updates for 2025–2026).

The main drawback here is high operating costs. According to Eurostat, estimated hourly labour costs in 2024 were around €55.2 in Luxembourg, compared to €45.2 in the Netherlands and €42.5 in Ireland.