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SLC-English> Company Formation in Europe> Company Formation in Luxemburg > Luxemburg - Legal Principles
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Luxemburg, with its 450,000 inhabitants with the area of 2,600 km2, is one of the smallest but simultaneously one of the prosperous countries of Europe.
In particular after the steel industry, which is important for the luxemburg economy, lapsed in seventieth years of previous century, the government aimed its attention for support of foreign investments. A light industry, which is environmentally friendly, and the providers of services in the high-tech branches (finances, media, electronic business) are particularly welcomed.

The biggest advantages provided by Luxemburg to the foreign investors are – regardless to the financial support - first of all:

- central geographic location in Europe,
- excellent traffic channels and infrastructure,
- developed industrial territory with a long tradition,
- highly developed financial sector and sector of services,
- stable economical and political general conditions,
- generally open borders towards the other European markets,
- friendly tax legislative,
- well educated, productive and inhabitants with outstanding language skills.

Legal Principles

The Luxemburg legal system refuses the Belgian and the French law (code Napoléon), but the parts of commercial law, e.g. the tax rates, are based on the German law. Within the European integration, even more laws based on respective European directives are adopted.

Sole Proprietorship:,

When compared with Austrian law, the assignment according to Luxemburg law is realized upon agreement on the price and the subject of purchase between the buyer and the purchaser (conclude a contract ). Therefore in principles there is no possibility to enforce the sole proprietorship concluded between two parties against the third persons. In case of bankruptcy the seller can assert its rights against sole proprietorship of other creditors and also by virtue of this to get the exception, when the seller requires the goods back in time (see the special report „Proprietorship and support in Belgium and Luxemburg”). As a security and as it were, as an compensation of sole proprietorship, other means can be used according to situation, which require a special formal conditions; e.g. cancellation of contract in case of failure to pay in compliance with respective contractual provisions, the right of lien, (applicable only for certain goods). In a sporadic case we recommend to communicate with the Austrian Foreign Trade Office.

Procedural Law:

The principle that is valid in Austria and that says that the party, which lost the legal dispute, should pay the legal charges, the Luxemburg law does not know. The guilty person can mostly rely on the fact that the creditor will not litigate because of minor demands, as he must be afraid that the costs accrued to him will exceed the amount of his demand.

Arbitration Jurisdiction:

Luxemburg has accepted the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, i.e. the arbitral award of a judge in Austria is fully executable in Luxemburg (and vice versa). This applies also to the awards, which were rendered also on the territory of other countries accepting the convention. The competency of national institutional arbitration courts, The International Arbitration Court of Economical Chamber of Austria or the Ad-Hoc Arbitration Courts can be thus consolidated.


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