Business grants and startup funding in Luxembourg

In March 2025, the Luxembourg government presented an updated ten-point action plan aimed at supporting start-ups and scaling up innovative companies, backed by €300 million in funding from the National Credit and Investment Company (SNCI) over the next five years. This strategy, called From Seed to Scale, forms the basis for a comprehensive analysis of the support tools available to entrepreneurs in this jurisdiction.

Ecosystem architecture and key development institutions

The start-up support system in Luxembourg is highly centralised and coordinated. The main players are the Ministry of Economy and the national innovation agency Luxinnovation. Luxinnovation's role is to support companies at all stages, from idea development to entry into international markets. The agency helps identify the most relevant financial instruments, prepare applications with a high chance of success, and find strategic partners.

In addition to financial grants, Luxembourg offers a well-developed network of incubators and accelerators. The House of Startups (HoST), founded by the Chamber of Commerce, occupies a central place in this network. In 2025, this space was recognised as one of Europe's leading start-up hubs in the Financial Times ranking, taking 26th place among 150 venues. HoST houses specialised structures such as the Luxembourg House of Financial Technology (LHoFT) for fintech projects and the Luxembourg-City Incubator (LCI) for urban technologies.

Fit 4 Start flagship acceleration programme

One of the most sought-after support measures is the Fit 4 Start programme, launched by the Ministry of Economy and managed by Luxinnovation. It is a six-month accelerator focused on high-tech start-ups in the early stages of development. The programme is open to projects in the fields of digital technologies (AI, blockchain, IoT, robotics), space technologies and life sciences (HealthTech).

Terms and conditions of participation and selection criteria

To be eligible for the programme, a start-up must be less than five years old at the time of application and consist of at least two people, one of whom works on the project full-time. It is important to note that physical presence in Luxembourg is mandatory in order to participate in coaching sessions and steering committee meetings.

Financing mechanism

The total funding available under the programme amounts to €150,000 in the form of equity-free grants, which are distributed in tranches depending on the progress of the project.

To receive the full amount (the second and third tranches), the start-up must attract at least €50,000 in private co-financing and hire at least two employees. For six months, participants also receive free access to co-working space at one of the partner incubators.

Young Innovative Enterprise (YIE) regime

For companies that have already moved from the idea stage to product development, the government offers Young Innovative Enterprise status. This mechanism is designed to support the growth and commercialisation of technologies. The Ministry of Economy can co-finance up to 70% of a company's financial needs for a period of up to three years.

The maximum amount of aid is limited to €1,000,000 per company. The main criterion here is the intensity of research and development work: at least 15% of the company's operating expenses for at least one of the last three years must be allocated to research and development (R&D). This status requires confirmation from Luxinnovation, which issues a certificate confirming the innovative nature of the company's activities.

Subsidies for research and development and innovation projects (RDI)

In addition to specialised programmes for start-ups, Luxembourg has a general framework for state aid for research and innovation. The size of the subsidy depends on the size of the enterprise and the type of work carried out.

If the project is implemented within the framework of effective cooperation between companies or with the involvement of a state research institute, the rates may be increased by 15%. The minimum threshold for the requested assistance is €1,000 for small and medium-sized businesses.

Special themed competitions

The Ministry of Economy regularly initiates joint project competitions with the National Research Fund (FNR). For example, in 2026, there will be a competition in the field of data processing, artificial intelligence and quantum technologies. As part of such competitions, companies can receive up to €700,000 for a project lasting 24 to 36 months, provided that it contributes to strengthening the country's digital sovereignty.

Reasons for refusal of funding

The process of applying for state aid in Luxembourg is formalised and requires careful preparation. All official procedures are carried out through the MyGuichet.lu portal.

One of the fundamental conditions for receiving any assistance is the presence of real economic substance in Luxembourg. This implies having your own office, qualified personnel employed locally, and conducting basic research and development work by local employees. Mere conduit companies, which do not bear any risks and do not make management decisions within the country, are excluded from the list of beneficiaries.

An analysis of Luxinnovation's practice shows that the most common reasons for rejection are:

The Luxembourg model for supporting start-ups is a balanced combination of direct funding, tax incentives and infrastructure provision. For entrepreneurs, this creates conditions in which public funds act as a catalyst for private investment, while access to expert support minimises risks in the early stages of business development. Given its strategic focus on AI, space and environmental technologies, the Grand Duchy remains one of the most promising locations for launching a technology business in Europe in the 2025–2030 period.