Luxembourg Branch Office

A Branch - Succursale

The term branch means any secondary establishment, any dependent commercial facility, any office whatsoever from which operations are performed, established in a stable and proper manner in a fixed place, where there is an employee who represents the company there and deals with the public on the company’s behalf. A branch is not a legal entity that is separate from its parent company.

Opening a Luxembourg Branch of a Foreign Company

A branch can be set up to conduct business in Luxembourg, but there are many drawbacks in comparison to a Luxembourg limited company. The parent company of a branch office holds full liability for the branches operations and complicated and time consuming dealings with the tax authorities may be needed regarding the branches tax obligations.

The Disadvantages of a Branch Office are:

• The parent company is fully liable for the liabilities of the branch
• The branches representatives may be held jointly and severally liable for tax debts
• The financial statements of the parent must be lodged at the Companies Registry
• The branches obligations are the same as the parent, including filing VAT returns, employees returns and corporation tax returns, so there are few savings in administering a branch
• Banks and clients may prefer dealing with a Luxembourg company rather than a foreign branch
• A branch is rarely ideal for substantial projects because the parent company runs the entire risk
• Upon registration of a branch, evidence has to be provided of the legal existence of the parent
• Any public act by the branch, is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease

Registering a Branch

Any foreign company that wishes to create a branch in Luxembourg is required to register with the Trade and Companies Register.

As a general rule, branches created in Luxembourg by companies governed by the law of another EU Member State, registration with the Trade and Companies Register consists in filing two copies of the application form. This form must be accompanied by a certificate of registration (extrait) intended for disclosure which should contain the following information:

• Branch address
• Branch’s activities
• The register with which it is registered and the company’s registration number with this register
• The name and form of the company
• Name of the branch if it is different from that of the company
• The appointment, termination of duties and the names of the individuals who have the power to commit the company as regards third parties
• The permanent representatives for the activity of the branch with an indication of the scope of their powers

Various documents will need to be translated, the documents include:

• Your parent's registration certificate
• Your company's Articles of Association
• The names of the company's directors and secretary

Luxembourg branches of foreign companies that are not governed by the laws of an EC Member State must also file the company’s certificate of incorporation and charter and any amendment of these documents with the Trade and Companies Register, for the purpose of disclosure.

It should be noted that, under the simplified procedure, branches are required to file the company’s financial statements with the Trade and Companies Register and to arrange to have them disclosed by means of a notice, regardless of the origin of the foreign company.

Features of a Branch Office in Luxembourg

A branch is usually an adequate vehicle for low cost projects. However, it is not the ideal choice for substantial projects because the parent company and branch offices activities are not differentiated, the parent company is fully liable for the branches liabilities.

From a tax point of view, branches are permanent establishments of non-resident companies and a Luxembourg branch is not a separate legal company from its parent.

The branch must have the same name as the parent company.

A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.

After your Branch is registered

All stationery, order forms and similar documents used by your branch are required to show: 

• The place of registration of the parent
• The number with which it is registered
• The legal classification of the company
• The address of its registered office
• The place of registration of the branch, and its registration number

Also the following particulars must be shown at the branch office:

• The company name
• The name of the country in which the company is incorporated
• The parent of the branch has limited liability