International tax advice

Head office transfer

Any type of company can transfer its registered office to Luxembourg and becomes a company duly incorporated under Luxembourg Law.

Company Law

Whether the company is based in a EU member country or outside the EU, there are two types of legislation : the countries which adopt the theory of the seat of incorporation and the others which adopt the theory of the principal seat of establishment.

Seat of incorporation: these countries consider that the legislation under which the company has been incorporated cannot be changed. The first incorporation at the local register of company is the legislation under which the company is set. These countries consider that as soon as the company is removed from the local register the company has lost its personnality; it does not exist anymore. Nevertheless, the place from where it is effectively managed is a question of facts.

Seat of principal establishment

The countries consider that the companies may change their registered office depending where they are effectively managed.

Fiscal Law

In general, the company is taxable on its worldwide income in the country where it has its principal seat of management : place where the strategic decisions are taken, where the AGM are held,…

When a company is taxable in a country, it can also benefit of the double tax treaties and of the EU directives (if placed in a EU Member State).

Possibility of Re-Domiciliation of a Foreign Company Seat to Luxembourg

A foreign Company can transfer its registered office or set its main place of management in Luxembourg.

This allows the company to cut any links with his country of first incorporation. Unless a permanent establishment stays in this country, the company is not taxable anymore.
If the registered office or its principal establishment is set in Luxembourg, the company becomes a taxable entity (on its worlwide incomes) under the Luxembourg law.

Consequences and Advantages

It is taxable at the normal corporation tax rates but can enjoy the benefits of the exemptions under Luxembourg law: subject to conditions, exemption of incoming dividends, exemption of capital gain on participations, exemption of real estate incomes for estates established in a foreign country,…

This allows the company to enjoy any advantages linked to the vast tax treaty network that Luxembourg has signed with other countries.

Moreover, this allows the company to enjoy the benefits of the European Directives

Procedure

The procedure is fairly simple. Once the process is realized in the country of origin (AGM mentioning the decision of transfer in Luxembourg), a notarial deed is signed in Luxembourg and thus make the company an entity duly set up under Luxembourg Law. This deed is then followed by a registration as a company in the "Registre de Commerce et des Sociétés" and an attribution of a fiscal number. The company can then obtain a fiscal residency certificate.

Other points to be considered before transfer

The transfer of seat from Luxembourg to a foreign country
Likewise, a Luxembourg company can transfer its registered office to abroad.

The transfer of seat is assimilated to a liquidation which drag the taxation of any latent capital gains on its assets (except on participations meeting the exemption conditions) except if the company goes on carrying a permanent establishment conserving its assets (under conditions).

To be noted that there is no taxation on the boni of this 'liquidation' and that the reserves and other profit carried forward by the company are free of any withholding taxes.

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