Business

Incorporating a business in Luxembourg for Saudi Arabians: a complete guide for entrepreneurs

Are you from Saudi Arabia and considering setting up in Luxembourg? You will probably have questions about the process but don't worry, we are here to help. In this guide, we will review the topic from top to bottom, from the statistics of Saudi investment in Luxembourg to the types of companies, the requirements for setting up a company and even corporate taxation.

Table of content

Although we will review many aspects related to opening a company in Luxembourg, it is highly recommended that you consult with a specialized advisor. This professional will be able to advise you on the best type of legal structure, indicate the special procedures required for the type of company chosen and even give you recommendations on the drafting of the articles of association.

Luxembourg as a business hub of Europe

When thinking about setting up a company abroad, there are many countries to choose from. However, Luxembourg is an option that stands out for a multitude of reasons such as its political and economic stability, its strategic geographical position, the speed of administrative procedures, support for entrepreneurship and innovation and a favorable regulatory and fiscal environment. Let's look at these points one by one:

Political and economic stability

Luxembourg enjoys a stable political system that has managed to achieve a low level of public debt along with steady economic growth reflected by one of the highest GDP per capita in the world. In addition, it is part of the European Union, which gives it access to the European market and regulatory guarantees. This stability ensures a predictable and ideal environment for companies that can plan long-term investments and operations.

Strategic location

Luxembourg is at the heart of Europe, which facilitates access to European Union (EU) markets. It is ideal for companies looking to operate at a European and global level, thanks to its proximity to Germany, France and Belgium.

Speed of administrative procedures

The government has worked on digitizing and simplifying its processes, centralizing many of them on platforms such as Guichet.lu, greatly facilitating all kinds of procedures such as tax registration, social security procedures, or applications for establishment authorizations.

Support for entrepreneurship and innovation

The government seeks both to support established companies and to stimulate the creation of new business initiatives and attract foreign investment through advisory and training services, creating opportunities for networking and through incubators. Some of the institutions involved are the House of Entrepreneurship, Luxinnovation, the Chambre de Commerce, the Chambre des Métiers, the House of Sustainability, the House of Training, the House of Startups (HoST), the House of Startups (HoST) and the Luxembourg-City Incubator (LCI).

Tax advantages

Luxembourg offers a favorable tax system with a competitive corporate tax and various tax exemptions. In addition, there are double taxation agreements with more than 80 countries, which helps to avoid double taxation in international activities.

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Why Saudi Arabians choose Luxembourg for business

When looking at Saudi entrepreneurship in Luxembourg, one of the first aspects to evaluate is the scale of this phenomenon and an indicator that provides an initial level of understanding is the direct investment position indicator.

The direct investment position indicator reflects the accumulated stock of Foreign Direct Investment (FDI) that a country has made in another at a given time. This indicator shows the total capital committed in business assets, such as shares, subsidiaries or projects, and allows us to measure the degree of economic involvement of one country in another.

In the case of Saudi entrepreneurship in Luxembourg, this indicator serves to estimate the level of Saudi business commitment in Luxembourg, indicating how much Saudi capital has been invested there and in which sectors it is concentrated. Eurostat data shows that the level of direct investment has been steadily increasing since 2013, reaching a maximum of 8.784 million euros in 2022 and highlighting a sharp drop in 2023.

Source: Eurostat

Now that we have an initial idea of the levels of Saudi entrepreneurship in Luxembourg, it is worth exploring the reasons that may encourage Saudis to set up in the country, as well as the drawbacks or disadvantages they will face.

Pros and cons

Favourable tax environment: Luxembourg offers a competitive tax regime with incentives for international companies and multiple double taxation agreements, including one with Saudi Arabia .

Strategic location in Europe: Luxembourg facilitates access to the European Union (EU) market and more than 500 million consumers

Advanced financial infrastructure: Luxembourg is a global financial centre, ideal for Saudi entrepreneurs interested in banking, fintech or other related sectors.

Multilingualism and diversity: Luxembourg is an extremely multicultural country where almost half of the population is made up of foreigners. Although the local languages are French, German, and Luxembourgish, the majority of the population speaks English. Most administrations provide information in this language so that for an English-speaking Saudi, it should not be difficult to communicate and operate in the country.

Confidentiality and security: although Luxembourg has implemented more transparent regulations in compliance with international standards, it is still a destination that offers high standards of privacy and financial security. According to the Tax Justice Network's Financial Secrecy Index 2022 , the country ranks fifth out of 144 countries thanks to its policies that still offer discretion within a regulated environment.

High cost of living and operation: Luxembourg is one of the most expensive countries in Europe, which can mean high initial costs for setting up and operating a business.

Intense competition: the country's great appeal attracts numerous international companies, which increases competition and can make it difficult for Saudi entrepreneurs to compete in certain sectors.

Limited market size: with a small population, of 672,050 inhabitants in 2024, the domestic market is limited and depends on access to other European markets.

Regulatory and bureaucratic requirements: although it is foreigner-friendly, setting up a business may require compliance with specific EU regulations that can be complex for Saudis who are not familiar with them.

Cultural and climatic differences: the cultural differences between Saudi Arabia and Luxembourg, as well as the European climate, can pose adaptation challenges for some Saudi entrepreneurs and their teams.

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Types of companies in Luxembourg

One of the most important steps in the formation of a Luxembourg company is choosing the right type of legal structure. Below we will look at the main types of legal structures available in Luxembourg:

Private limited liability company (SARL)

This is one of the most common forms of company in Luxembourg and is designed for small and medium-sized enterprises. In this structure, the liability of the shareholders is limited to their capital contributions, which means that they are not liable with their personal assets for the debts of the company.

Simplified limited liability company (SARL-S)

This type of company is very similar to the SARL but differs mainly in that it frees entrepreneurs from certain limitations associated with the creation of the company, for example with a minimum share capital reduced to one euro and a constitution that can be done by private deed, without the intervention of a notary.

Public limited company (SA)

Together with the SARL, this is one of the most common legal forms in Luxembourg. As with an SARL, there is a limitation of liability up to the amount of capital contributed, but a big difference is that an SA can issue shares that are listed on the stock exchange, making this legal form the preferred option for companies wishing to raise capital through the stock market.

Simplified joint stock company (SAS)

This is a form of company very similar to the public limited company (SA) characterized by its great flexibility in structure and governance. SAS are particularly suitable for start-ups, joint ventures and small or medium-sized companies looking for a less formal structure than the SA, but with sufficient capacity to develop complex projects. SAS allow shareholders to freely define the rules of governance and transfer of shares through the statutes, although they cannot be listed on the stock exchange. Shareholders' liability is limited to the amount of their investment.

Limited partnership (SCS)

A company made up of two types of partner, limited partners, whose liability is limited to their contributions, and general partners, who have unlimited liability. It is a suitable structure for certain investments or businesses in which some partners wish to limit their risk while others are more involved in the management.

Special limited partnership (SCSp)

This is a limited partnership that does not have legal personality, which means that it is not considered a separate entity from its partners from a legal and fiscal point of view. Like the SCS, it is made up of limited partners who can be considered passive investors and general partners who manage the company.

Partnership limited by shares (SCA)

This is similar to the SCS, but allows limited partners to own shares in the company, making it a hybrid structure between a limited partnership and a public limited company. It is mainly used in more complex investment structures.

Cooperative society (SCOP)

This is a form of company where the partners come together to achieve a common goal, such as offering services or products. Cooperatives operate democratically and tend to be popular in areas such as the agricultural or service sectors. The main characteristics of a cooperative society (SCOP) are a variable number of partners, variable contributions and the absolute non-transferability of shares to third parties.

How to open a company in Luxembourg as a Saudi Arabian in 2025

Once the legal structure of the company has been decided, it will be necessary to obtain the necessary documents and the minimum capital required. Afterwards, it will be possible to register the company in Luxembourg. Let's look at these steps one by one:

Necessary documents

Before registering the company in Luxembourg it is essential to obtain the following documents:

Check the list carefully

All the documents are mandatory

*The mandatory items are marked with red asterisks.

Document certifying the availability of suitable premises for the exercise of the activity and for use as the company's registered address.

Company name and certificate of availability issued by the Luxembourg Business Registers (LBR).

Articles of association drawn up.

Check the list carefully

All the documents are mandatory

*The mandatory items are marked with red asterisks.

The main institution involved in the process is the Trade and Companies Register (RCS)

Financial requirements for opening a company

In addition to the documents, it is also necessary to have a minimum capital that varies according to the type of legal structure chosen:

Company	Minimum capital for incorporation	Amount in SAR
SARL	12,000€ minimum, fully subscribed and fully paid-up at incorporation	46,764
SARL-S	From 1€ to 11,999€, fully subscribed and fully paid-up at incorporation	3.89 to 46,760
SA	30,000€, at least 25% paid up	116,910
SAS	30,000€, at least 25% paid up	116,910
SCS	No minimum requirements	-
SCSp	No minimum requirements	-
SCA	30,000€, at least 25% paid up	116,910
SCOP	Variable, no min. or max. requirements.	-

It is essential to open a bank account in the name of the company being formed and to deposit the share capital before the company can be registered.

Registration process

Once all the documents and the required money are in place, several steps are necessary in order to register the company in Luxembourg and begin operating:

Opening a bank account and depositing the share capital:
Before the company can be registered, it is necessary to open a bank account in the name of the company in formation and deposit the share capital. When this is done, the bank will issue a certificate blocking the funds, which must be presented to the notary as proof. The final statutes of the company are not required for this step, but it is necessary to at least present a draft of them.
Signing of the statutes:
The statutes must be signed privately or before a notary, depending on the type of legal form chosen.
Registration in the trade and companies register (rcs):
Once the statutes have been signed, it is necessary to register the company in the Luxembourg Trade and Companies Register (RCS), although it is not always necessary to do so personally. If a notary was used to sign the statutes, the notary is usually also in charge of the registration. However, it should be borne in mind that as of November 12, 2024, it is necessary that as part of the process any person associated with the company to be registered (partner, director, manager, authorized representative, auditor, etc.) provide a Luxembourg national identification number (LNIN).
Saudi nationals who have never lived in Luxembourg will most likely not have a LNIN and will therefore have to submit an application to the RCS to obtain one as part of the company registration procedure. To make this application, it is necessary to present an identity document showing the full name, date, place and country of birth, sex, nationality and postal address. In addition, if the postal address does not appear on the identity document, it is necessary to present proof of address dated less than 6 months ago, which can be:
- A certificate of residence issued by the municipality in which you live
- A sworn statement by the interested party, stamped or countersigned by the regional authority responsible for confirming residential addresses, by an embassy, by a notary or by a police station.
- A water, electricity, gas or internet bill if none of the above documents can be presented.
Publication in the RESA:
Once registered in the RCS, the incorporation of the company must be published in the Recueil Electronique des Sociétés et Associations (RESA), which is the official gazette of Luxembourg where all company-related acts are published. This publication is a necessary step to make the public aware of the existence of the company and to guarantee transparency regarding its constitution, its address, its share capital and its administration. In Luxembourg, the notary is generally in charge of coordinating this publication.
Application for an establishment permit if necessary:
In certain cases, depending on the type of activity of the company, it is necessary to apply for an establishment permit. This permit is compulsory for commercial, industrial and craft activities and for some self-employed activities.
There are two ways to apply for an establishment permit: either by submitting an online application via MyGuichet.lu from the professional area or by sending an application for an establishment permit by post to the General Directorate for SMEs, Crafts and Trade.

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Tax obligation for entrepreneurs in Luxembourg in 2025

Regardless of the legal form chosen, all companies are subject to the same taxes. The only legal form that differs on one point is the SCSp, as it lacks legal personality, which makes it transparent for tax purposes and it is not subject to corporation tax, however, it is subject to other taxes. These are briefly presented below:

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Tax	Description
Fixed registration fee	This is an indirect tax that is collected when a company is incorporated. It amounts to 75 euros and must be paid to the Administration of the Registry, of the Domains and of the TVA (AED).
Property tax	This is a tax collected by the local authorities on all real estate, built or not, owned by individuals or legal entities. Obviously, if the company does not own any real estate, it will not have to pay this tax.
Corporate income tax (CIT)	This is a direct tax on the profits obtained by companies in Luxembourg. From 2025 the tax rate will fall by one percentage point to 14% for companies with a tax base of less than 175,000 euros and 16% for those with a tax base of more than 200,000 euros. Between these two income levels there is a smoothing mechanism. In addition, all legal persons based in Luxembourg must contribute to the employment fund, so this rate must be increased by 7% in favor of this fund. This brings the normal tax rate from 16% to 17.12%.
Communal business tax	The rate of this tax depends on the municipality, in the municipality of Luxembourg it amounts to 6.75%. However, a tax allowance of 17,500 euros on taxable profits must be taken into account.
Net wealth tax	This tax is applied to the company's net worth and is calculated as follows: 0.5% on the part of the net worth less than or equal to 500,000,000 euros and 0.05% on the part of the net worth greater than 500,000,000 euros.
VAT declaration	In Luxembourg, all companies must register to collect VAT regardless of their economic activity, however there is an exception that exempts small entrepreneurs whose annual turnover before tax does not exceed 35,000 euros from this obligation. However, these companies must inform the authorities of the amount of their turnover for the previous calendar year.

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Choosing an accountant in Luxembourg

Accounting services are of great importance when creating a company as they guarantee the correct financial management of the company by helping to keep an accurate record of all transactions and facilitating strategic decision-making. However, this is not their only advantage; these services are important for many other reasons, some of the most relevant being the following:

Planning and forecasting

accounting services allow companies to develop budgets and forecasts.

Strategic decision-making

accounting services provide accurate financial data that allows owners and managers to make informed decisions about investments, expansions and other strategic issues.

Tax compliance

accounting services prepare and file the necessary tax returns accurately and on time, ensuring compliance with tax laws and thus avoiding penalties and fines.

Tax optimization

accounting services have the ability to advise companies on tax strategies that can legally reduce the tax burden.

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There are many opportunities in Luxembourg for Saudi Arabian nationals wishing to establish a company. In this guide, we have reviewed some of the most important ones, together with the necessary requirements and the process to follow, and we have seen that the procedures are not as complicated as they seem. However, it is impossible to summarize everything that one needs to know when starting a business in the country in a single guide and it is always advisable to seek advice from specialized consultants or from one of the different Luxembourg entities dedicated to entrepreneurship such as the House of Entrepreneurship, the Chambre de Commerce, the Chambre des Métiers or Luxinnovation.