Financial support for small businesses in Luxembourg (2024–2025)

Most of these schemes are coordinated by the Ministry of the Economy (through the General Directorate for SMEs), in cooperation with organizations such as the national innovation agency Luxinnovation and the House of Entrepreneurship at the Chamber of Commerce.

Direct grants for startups and small enterprises

Direct grants are one of the most straightforward and in-demand forms of financial aid. Luxembourg offers several types of such support, targeted at specific business models.

First initiative grant (support for new microenterprises)

For entrepreneurs launching their first business in Luxembourg, a special scheme called “Support for first-time business start-ups” is available. It is aimed at new microenterprises (with fewer than 10 employees and turnover under €2 million) in the trade or craft sectors.

The grant is paid monthly over six months — six installments of €2,000, totaling up to €12,000. This funding helps cover basic startup expenses. Importantly, the founder must meet several conditions:

• Must not have owned a business in the past 10 years
• Must not simultaneously receive a salary or social benefits
• Must complete a business management course through the Chamber of Trades or the Chamber of Commerce
• The company must operate from a dedicated non-residential space

Applications are submitted online via the MyGuichet.lu platform using a LuxTrust electronic ID, along with a set of required documents (business plan, training certificate, proof of income, etc.).

This grant can provide substantial help at the beginning of an entrepreneurial career. In essence, the state pays a modest “salary” to the budding entrepreneur.

Fit 4 Start acceleration program (grant funding for innovative startups)

For technology-driven and innovative startups, Luxembourg offers the renowned Fit 4 Start program, managed by Luxinnovation and the Ministry of the Economy. Entry is competitive, with a focus on priority sectors such as digital tech, HealthTech, and space technologies.

Selected startups receive six months of expert mentoring and coaching, a coworking space, and — crucially — up to €150,000 in funding without giving up equity.

Initially, a grant of around €50,000 is awarded. If certain milestones are reached or co-financing is secured, startups may receive additional funds — up to a total of €150,000 from the Ministry of the Economy.

Fit 4 Start supports early-stage innovators not only with money but also with valuable knowledge. An equally important benefit is network building: over six months, the team refines its product, builds a viable business model, and gains connections in the ecosystem, which can be crucial for securing long-term partnerships.

It is not mandatory to have a registered company to apply (applications can be submitted as projects). However, if the startup is already incorporated, it must be less than five years old.

Subsidies for young innovative enterprises

In addition to general startup grants, Luxembourg provides support for companies engaged in research and development (R&D) or innovation. For example, the “Jeune entreprise innovante” funding from the Ministry of the Economy may be offered as co-financing for R&D costs or as a repayable advance for product development.

The government actively co-finances promising R&D projects for small businesses — under certain schemes, a company can receive subsidies covering a significant share of innovation-related expenses (typically between 25% and 50%, depending on the project type and company size).

These financial aids are available to small and medium-sized enterprises, provided the project aligns with national priorities (e.g., development of a new product, implementation of an innovative process) and the company submits a prior application to the Ministry of the Economy.

Other targeted grants

Besides the programs above, Luxembourg offers specialized subsidies. For example, a “first-time fair participation” grant covers part of the costs for renting and setting up a booth when a company debuts at a national trade show or exhibition. This encourages small businesses to access markets and promote themselves.

There is also a subsidy for consulting services — the government finances part of the cost of hiring an external consultant to help grow the business. If a company needs an expert (e.g., to implement a new IT system or optimize production), it can apply to be reimbursed for part of the consultant’s fee.

Such targeted grants help small enterprises overcome growth barriers — whether it’s finding new clients or lacking expertise in a narrow field.

Digital transformation and innovation programs

In addition to direct financial support through grants, there are also specialized, targeted programs focused on specific aspects of a company’s operations. Luxembourg pays particular attention to business digitalization, offering dedicated programs and subsidies in the digital domain for SMEs:

Digital transformation support packages (SME packages)

Since 2019, the Ministry of the Economy — in cooperation with the House of Entrepreneurship and Luxinnovation — has developed special “SME Packages.” These are comprehensive support bundles designed to help small and medium-sized enterprises adopt modern technologies and enhance customer experience.

The support terms are generous: the state covers up to 70% of eligible project costs. Grant amounts range from €3,000 to €25,000 per package, depending on the scale of the project. In simple terms, the company pays as little as 30% of the digital upgrade costs — the rest is funded by the state. This makes adopting new technologies much more accessible and affordable.

To benefit from a package, a company submits an application outlining its project (e.g., implementing a cybersecurity system or launching AI analytics). Once approved, the company receives partial reimbursement of its expenses. These five packages target the most relevant areas of digitalization and significantly lower the financial barriers to entry.

Fit 4 Digital program (digital readiness assessment)

Another valuable initiative is the “Fit 4 Digital” program, led by Luxinnovation and the Ministry of the Economy. It allows small businesses to bring in an accredited expert who will audit the company’s digital maturity — evaluating IT infrastructure, cybersecurity, software, and identifying growth opportunities.

1️⃣ Phase 1: The consultant assesses the company’s digital maturity and creates a detailed improvement plan with cost estimates. The audit costs a flat €5,000 — fully covered by the government as a grant. For the business owner, the audit is completely free.

2️⃣ Phase 2: If the company decides to implement the recommendations (purchase software/equipment, adopt new systems), the related investments may be partially funded through other public support schemes — such as investment subsidies or consulting subsidies.

Fit 4 Digital is above all a “smart” support program. It provides expert insight and a concrete action plan, not just funding. It’s particularly useful for traditional SMEs that want to modernize but don’t know where to start their digital transformation.

Reimbursement for intellectual property protection

In the digital age, even small companies must protect their brands and innovations. The EU has established the SME Fund (EUIPO SME Fund), through which Luxembourgish — and other European — businesses can receive grants of €1,000 to €1,500 to cover patent fees, trademark registrations, or design protection costs.

For example, if a startup registers a trademark in the EU, a large portion of the fee can be recovered. Although the fund is EU-financed, it is promoted at the national level as a valuable resource for small businesses. For entrepreneurs, this means direct savings on legal costs when protecting their brand or innovation.

“Green” subsidies and environmental initiatives

Environmental sustainability is another top priority, and businesses that are “green” — or those implementing eco-friendly improvements — can benefit from a variety of state incentives.

Investment aid for environmental protection

If a business invests in green technologies or processes that reduce environmental impact (e.g., installing filters, switching to renewable energy, adopting energy-efficient equipment), it may be eligible for special financial support. This aid can take several forms:

• Non-repayable grants covering part of the costs
• Low-interest repayable advances
• Interest rate subsidies on eco-loans
• In some cases, state guarantees or preferential loans

In practice, nearly any investment that exceeds current EU environmental standards or anticipates future regulations is eligible for support in Luxembourg. For instance, if a factory installs filtration systems that outperform legal requirements, or an office building undertakes an energy-efficiency upgrade, the state may cover 30% to 50% of the related expenses, depending on the project.

To receive aid, the company submits a project description and cost estimate to the Ministry of the Economy. Once approved, the business completes the project and receives the subsidy. These eco-grants make environmental innovations more accessible to small businesses by reducing the payback period of “green” projects.

Fit 4 Sustainability program (sustainable development)

Similar to the digital audit program, Luxinnovation offers “Fit 4 Sustainability,” which helps businesses assess and improve their environmental performance. Participating companies receive expert consultations to analyze energy use, waste generation, potential for circular processes, and more — resulting in a concrete improvement plan.

The sustainability audit is also state-subsidized, and follow-up investments (e.g., purchasing more efficient equipment) may qualify for additional grants or favorable “green” loans.

Subsidies for electric vehicles and eco-friendly transport

These subsidies are most relevant for companies that rely on transportation, whether for daily operations or occasional use.

The Luxembourg government actively supports the transition to zero-emission transport. Small businesses can receive financial aid when purchasing electric vehicles, electric vans, or hybrid commercial vehicles. The “Zero-Emission Vehicles” subsidy is a fixed-sum grant awarded upon purchase of a new electric or hydrogen-powered vehicle for business purposes. The exact amount depends on the vehicle type (passenger, commercial, two-wheeled, etc.).

Additionally, there are support programs for installing charging stations on company premises — partially financing the cost of chargers for employees and clients. Taken together, these measures allow even small firms to gradually transition their vehicle fleets to eco-friendly alternatives with government backing.

Support for social entrepreneurship

A separate category — distinct from traditional subsidies — is support for social enterprises that aim not just for profit, but for social impact (addressing societal or community challenges). In Luxembourg, such entities can take on a specific legal form: the “Société d’Impact Sociétal (SIS),” or Social Impact Company.

Companies granted SIS accreditation enjoy significant tax benefits: they are exempt from corporate income tax, the municipal business tax, and the net wealth tax. In simple terms, as long as a social enterprise reinvests its profits into its mission and does not pay dividends (SIS status imposes strict limits on profit distribution to founders), the state waives all major business taxes.

This is a major advantage for projects in social economy, ecology, education, or support for vulnerable groups — allowing them to direct maximum resources toward their mission instead of taxes.

However, obtaining SIS status is not easy: applicants must meet strict criteria (a clearly defined social purpose, capped executive salaries, a capital structure with impact-based shares, etc.). The status is awarded by the Ministry of Family and Social Solidarity.

SIS companies are also eligible for many standard SME support schemes — including grants for young enterprises, investment subsidies, and consulting aid.

Preferential financing: loans and guarantees

In addition to direct subsidies, small businesses in Luxembourg can access preferential loan instruments and guarantee support to raise capital for launching or expanding operations.

SNCI loans for startups and investments

The Société Nationale de Crédit et d’Investissement (SNCI) — the National Credit and Investment Corporation — is a public development bank that offers financing to SMEs on favorable terms. Its portfolio includes startup loans, expansion credits, innovation funding, export financing, and more.

Typically, SNCI co-finances a project alongside a commercial bank: the entrepreneur applies for a loan, the bank involves SNCI, and the public bank covers a significant portion of the amount (e.g., 50%). Interest rates are usually below market level, and repayment may be deferred depending on the agreement.

SNCI also provides investment loans (for purchasing equipment or real estate), business transfer loans (to acquire existing businesses), and financing for innovative projects.

Nevertheless, SNCI’s involvement significantly eases access to capital — by sharing risk with banks, it encourages them to lend to small businesses. This gives entrepreneurs a realistic chance to secure funding even if they lack collateral or a strong credit history.

Applications can be submitted through partner banks or directly to SNCI, along with project justifications, a financing plan, and guarantees.

Guarantee fund for SMEs (Mutualité des PME)

One of the oldest support schemes (in place since 1949) is the mutual loan guarantee system for SMEs. Mutualité des PME is an organization that acts as a guarantor for bank loans taken by small enterprises that lack sufficient collateral.

It provides a loan guarantee of up to 50% of the loan amount (up to a maximum of €250,000), essentially covering the gap in collateral. Originally founded by the national craft federation and the state to support small workshops and shops, the Mutualité is now open to all SMEs in need of financing for investment or growth.

Here's how it works: an entrepreneur applies for a loan; if the bank requires a guarantor, a request is submitted to the Mutualité de Cautionnement. If approved, the Mutualité guarantees repayment of half the loan to the bank. Thanks to this system, hundreds of small businesses receive loans that would otherwise be inaccessible.

Naturally, not every application is accepted — the guarantee fund reviews projects carefully and only backs viable businesses with growth potential. A small fee is charged for the guarantee, but it's negligible compared to the financing it unlocks.

Microcredits and social loans

For very small projects or entrepreneurs from vulnerable groups, Luxembourg has Microlux — a microfinance institution that offers loans of up to €25,000. While not a direct government program (Microlux is supported by banks and the European Investment Fund), it is worth mentioning. If a traditional bank rejects a request due to low amounts or perceived risk, Microlux can be a solution.

This is not one of those predatory microloan operations — the terms are flexible, and borrowers are paired with a business mentor. The government indirectly supports such initiatives, recognizing the importance of inclusive financing — giving people with little capital or credit history a real opportunity to start a business.

Taxes and relief for small businesses

Luxembourg is known for its business-friendly tax environment, and in recent years has introduced further relief measures tailored to small businesses and startups.

Reduced corporate tax rates for low income levels

Starting from the 2025 tax year, the corporate income tax (CIT) rate for small businesses has been reduced. Previously, profits up to €175,000 were taxed at 15%. Now, this rate is lowered to 14%. For profits above €200,000, the standard rate drops from 17% to 16%. Combined with municipal business tax and the employment fund contribution, the overall tax burden on profitable small firms decreases by roughly one percentage point.

While the change may seem small, the savings are tangible — allowing companies to retain more capital for reinvestment. Additionally, Luxembourg imposes no capital duty on company formation, and the annual minimum wealth tax for active small businesses is low.

Investment and innovation tax credits

Luxembourg’s tax system rewards companies that invest in development. From 2024, an updated investment tax credit regime is in effect. Businesses that invest in capital goods, technology, or innovative projects can reduce their corporate tax by a set percentage of the investment amount.

The base investment credit is now 12% of qualifying investment value. Previously, it was 7% plus a bonus on the first €150,000 — the new rule simplifies and increases this rate.

So, if a small business invests in digitalization or sustainability, it can reduce its tax bill by 18% of those costs. Eligible expenses include software purchases, cloud infrastructure, IT staff training, and energy-efficiency improvements.

For tangible assets (e.g., equipment, machinery), a combined rate applies: 12% base + 6% bonus = 18% total. This structure encourages modernization by essentially reimbursing nearly one-fifth of qualifying investments through reduced taxation.

It’s important to note that tax credits are not direct payments — they reduce the tax owed. If the business is not yet profitable, the unused credit can be carried forward for up to 17 years. This ensures that when the company does become profitable, it can still benefit from its earlier investments.

Simplified VAT regime for microbusinesses

As of 2025, Luxembourg has raised the VAT exemption threshold for small turnover. Businesses with annual turnover below €50,000 are now effectively exempt from charging and paying VAT.

This greatly simplifies life for micro-entrepreneurs and freelancers: no need to file quarterly VAT returns or issue VAT invoices. They simply operate without VAT, indicating their exempt status.

The new €50,000 threshold (with a one-time grace period up to €55,000) replaces the previous lower limit, making the exemption accessible to more businesses. Service providers, consultants, and small retailers stand to benefit most.

This regime allows them to lower prices (no VAT) or increase profit margins — and, most importantly, to avoid red tape in the crucial early years.

Registration for this small business VAT scheme is done via the AED (Luxembourg Tax Authority) portal. Of course, if turnover exceeds the threshold, the business will need to switch to the standard VAT regime the following year. But for startups, this exemption offers breathing room to grow without immediate tax pressure.

Other tax relief measures

The new government is also considering tax holidays for brand-new entrepreneurs — temporary waivers of certain advance tax payments to help avoid cash flow issues in the first year or two. While these proposals are still under discussion, the overall trend is clear: tax policy is becoming more SME-friendly, giving businesses room to grow and reinvest earnings.

Sàrl, Sàrl-S, or sole proprietor: does the form affect eligibility for support?

Small businesses in Luxembourg can operate under different legal structures — the traditional Sàrl (limited liability company), its simplified version Sàrl-S, or as a sole proprietor (entreprise individuelle).

So the question arises: does the legal form affect access to government support? In general, state programs are designed around the size and activity of the business — not its legal form. This means that Sàrl, Sàrl-S, and sole proprietors are all eligible for the same grants and benefits, provided they meet the criteria (e.g., SME status, no prior business ownership, etc.).

The main distinction of the Sàrl-S is the simplified setup, which in itself is a form of entrepreneurial support. The Sàrl-S (société à responsabilité limitée simplifiée) can be established with as little as €1 in share capital, compared to the standard €12,000 required for a traditional Sàrl. Moreover, founding a Sàrl-S does not require a notarial deed — a private agreement is enough, which saves money on legal fees.

The Sàrl-S structure is available only to individuals (not companies) and is intended for very small startups with limited resources. However, this simplicity comes with conditions: the capital of a Sàrl-S cannot exceed €12,000 — once it grows beyond this amount, the business must be converted into a regular Sàrl. Additionally, all profits must remain in the company until it reaches the €12,000 capital threshold. By law, no dividends can be distributed before that — profits must be reinvested.

Sole proprietor (micro-entrepreneur). In Luxembourg, this legal form is typically referred to as entreprise individuelle — a natural person with a business license. The individual is personally liable with all their assets but is also exempt from corporate accounting requirements.

To be eligible for government support, the key factor is whether the sole proprietor holds a valid commercial or craft business permit (autorisation d’établissement). If so, they are officially considered a “business” and can apply for subsidies.

For example, the owner of a small artisan workshop can receive the €12,000 startup grant, since the scheme is explicitly intended for “new microenterprises,” which includes sole proprietors.

The real difference lies in taxation: sole proprietors pay income tax on a progressive scale, while Sàrl entities pay corporate income tax. For low turnover, the effective tax rates are comparable, and sole proprietors can more easily qualify for the VAT exemption — staying below the €50,000 threshold and avoiding VAT entirely.

They also benefit from lower administrative burdens (no full balance sheets or trade register filings required), which simplifies operations in the early years.

Luxembourg aims to offer equal opportunity: whether you form a Sàrl, open a Sàrl-S, or operate as a licensed craftsman, assistance is available to all who show growth potential and economic contribution. 

The choice of structure depends more on convenience and business plans.  

• Sàrl-S is ideal for a quick, capital-light start (though with reinvestment obligations).
• Sàrl suits those with sufficient capital seeking more formality (banks may favor the traditional Sàrl due to its equity base).
• The state will support any viable project — the ultimate goal is to grow small businesses as engines of the economy.

Sole proprietorship is a good fit for small, personal ventures with minimal red tape.

In 2025, Luxembourg’s small enterprises have access to an unprecedented toolbox of support. The government continues to implement a deliberate strategy: remove financial barriers at the outset, incentivize innovation (both digital and ecological), reduce tax pressure, and help entrepreneurs grow by creating jobs. If you’re launching a business in Luxembourg, it’s essential to explore available programs — a significant portion of your expenses may be covered by public funds or tax relief.

It’s important to note that accessing support requires meeting specific conditions and going through administrative steps. Entrepreneurs should review eligibility criteria in advance (detailed guidance is available at Guichet.lu) and prepare the necessary documents. But the effort is worth it — state-backed financial cushions allow you to focus on developing your business rather than just surviving.

Despite its small size, Luxembourg has built a comprehensive ecosystem for small businesses, combining financial and educational support. By tapping into these resources, entrepreneurs can accelerate the growth of their ventures. The key is not to hesitate in seeking help — in the Grand Duchy, this isn’t a privilege for the few, but standard business practice. As the saying goes: “A smart startup takes everything on offer — especially when it’s official and comes with favorable terms.”