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Shell Companies in Luxembourg: What You Need to Know in 2025

Luxembourg has long been a favored jurisdiction for international businesses, investors, and holding companies. Among the different types of corporate entities that can be established or acquired, the concept of a “shell company” often comes up and sometimes with confusion or controversy. But what exactly is a shell company in Luxembourg? Is it legal? And why would someone choose this route over launching a traditional business?

In this guide, we’ll break down the essentials, from legal structures to administrative procedures, and the reasons why shell companies are still a strategic vehicle in 2025.

What Is a Shell Company?

A shell company is a legal entity that exists only on paper, it has no significant operations, no active business, and no employees. However, it can hold assets, own subsidiaries, or be used as a vehicle for tax planning or asset protection.

Common Use Cases:

  • Holding intellectual property (IP)
  • Real estate ownership
  • Private wealth structuring
  • M&A transactions
  • Intra-group financing

In Luxembourg, shell companies are often structured as SOPARFIs (Société de Participation Financière) or Special Purpose Vehicles (SPVs) within regulated frameworks.

Are Shell companies Legal in Luxembourg?

Yes, shell companies are legal, as long as they comply with:

  • Anti-Money Laundering (AML) laws
  • Substance requirements
  • Transparency obligations, including UBO (Ultimate Beneficial Owner) registration

Since 2022, Luxembourg has significantly reinforced its rules around economic substance, making it mandatory for companies to prove real presence (e.g., office, staff, board meetings).

New Business vs. Acquiring a Shell Company

If you’re considering a presence in Luxembourg, you have two main options:


1. Start a New Business


Pros:

  • Full control over the structure and compliance
  • Clean track record
  • Tailored to your activity



Cons:

  • Lengthy administrative process (2–6 weeks)
  • Requires business licence and regulatory checks
  • Initial VAT registration, RCS (Register of Commerce and Companies), and tax declaration




2. Acquire a Shell Company (Pre-registered entity)


Pros:

  • Immediate operational setup
  • VAT number and RCS already obtained
  • Can be repurposed quickly for M&A, investment, or holding



Cons:

  • Must conduct due diligence (ensure no liabilities)
  • May need to update the company’s legal structure or purpose
  • Must ensure compliance with new economic substance rules

Key Steps to Acquire or Establish a Company in Luxembourg

Whether you opt for a new business or a shell entity, these steps are essential:

  1. Legal Structure Selection: S.A., S.à r.l., SOPARFI, SCSp depending on activity and objectives
  2. Business Licence Application (for operational businesses)
  3. VAT Registration and Tax Declaration
  4. Luxembourg Business Register (RCS) Registration
  5. Bank account opening and capital deposit
  6. UBO registration and AML documentation

Risks and Compliance Considerations

Luxembourg is under EU and OECD scrutiny for its financial transparency. Any misuse of shell companies can lead to:

  • Tax audits and penalties
  • Denial of treaty benefits (BEPS measures)
  • Banking restrictions
  • Reputational damage

Hence, working with an experienced advisor is essential when setting up or acquiring a shell company.

Shell Company Alternatives in 2025

Depending on your goals, consider:

  • SOPARFI: Tax-efficient holding company
  • RAIF: Reserved Alternative Investment Fund (light regulation)
  • SCSp: Flexible limited partnership for private equity
  • Luxembourg Branch: For foreign companies

Final Thoughts

A shell company in Luxembourg can be a powerful tool for structuring, investing, or holding — but it must be handled with care. In today’s regulatory climate, substance, transparency, and compliance are not optional — they’re mandatory.

Whether you’re an investor, fund manager, or entrepreneur, choosing between building from scratch or acquiring an existing entity depends on your timeline, strategy, and risk appetite.

Looking to explore shell company options in Luxembourg?Let’s schedule a consultation and identify the best vehicle for your goals.

Frequently Asked Questions (FAQ)

Q: Can a shell company own property in Luxembourg?Yes. Many SPVs are used for real estate holding purposes.

Q: How much does it cost to acquire a shelf/shell company in Luxembourg?Prices vary from €5,000 to €15,000 depending on the structure and services included.

Q: How long does it take to activate a shelf company?Typically 3–5 business days, provided KYC/AML checks are complete.