By EB5 Investors Magazine Staff
With the world’s only Grand Duchy, the multicultural country of Luxembourg is known not only as being one of the safest countries in the world but also for its economic and political stability. Located in the heart of Europe and bordered by Germany, France and Belgium, experts say the small country may be an interesting option for international investors.
“It is an interesting country if you like to do business because it is characterized by having a business-friendly administration and having approachable Ministers,” says Alexandre Pirotte, a Belgium-based lawyer, who works in Deloitte’s International Migration and Social Security team.
To attract quality investors from third countries, Luxembourg recently adopted a new law granting a residence permit if certain criteria are met. The requirements include the option of investing at least 500,000 euros for at least five years in an existing company registered in Luxembourg; or investing 500,000 euros in a newly created company with its head office registered in Luxembourg and having a commitment to create at least five jobs within three years of establishing the company.
“The law does not oblige the investor to manage the company, Pirotte said. “Simply investing the money is sufficient. These options are definitely very interesting because of the low threshold.”
Other options include investing at least 3 million euros in a new or existing investment and management structure with a head office registered in Luxembourg and locally maintaining an appropriate structure; or investing at least 20 million euros as a deposit in a Luxembourg financial institution and maintaining the investment for a minimum of five years. The eligibility requirements exclude real estate investments.
Pirotte says the option of maintaining 3 million euro in an investment vehicle “is a threshold which is easy to attain for high net worth individuals and not higher than the threshold in other countries people mainly invest in.” He says holding 20 million euro in deposits with a Luxembourg financial institution is also a threshold that can easily be met by ultra-high net worth individuals.
“Luxembourg is known as being a hub for the financial sector with fund/asset management and has a large amount of banks – StateStreet, Fidelity, Northern Trust, BNP Paribas, ING, you name them, they are there – and a lot of private banks,” says Pirotte.
A 2016/2017 study by fDi Magazine ranked Luxembourg City 9th on its list of the European cities of the future. According to the World Economic Forum 2017, the country ranks 20th on the Global Competitiveness Index. Luxembourg also has one of the highest GDP’s in the world.
“Foreign investors will usually invest in fund structures or holding, Soparfi, companies. With regard to the ‘jobs’ visa, there is some request to create fintech companies, but I have not yet seen any further development in this respect,” says Joram Moyal, partner at Moyal & Simon, an independent Luxembourg law firm.
Moyal says the the residence permit is issued for an initial period of three years and is renewable for the same period. He says the ministry “will regularly process the application within three months.”
Christine Sullivan, attorney and manager, Global Private Client Practice for Fragomen worldwide in Belgium says an exception can be made for the third country nationals who have already obtained a long-term residence permit in another EU member state and authorization to stay as an investor in Luxembourg, before entering the Luxembourg territory.
“In this case, the third country national can immediately ask for the issuance of a long-term residence permit, which is valid for a period of five years,” says Sullivan.
Sullivan says the Luxembourg program is part of a larger trend that they have seen, which is European countries creating routes to residency based on economic activities.
“We see this as a very positive development, because traditionally immigration schemes have been focused on employment or family reunification which excludes the self-employed or independently wealthy from establishing in countries that would benefit from investment,” says Sullivan.
The benefits for investors, she says, is that they can obtain residency in a stable European country that provides tax advantages for the wealthy. Also, Sullivan says the residence permit can be a route to Luxembourg nationality, which yields broader benefits of EU nationality.
For investors, Luxembourg may be worth looking into. Luxembourg is indeed a multicultural nation with inhabitants from over 170 countries residing in the country. Pirotte says Luxembourg is an interesting country to live in and as a business-friendly country, “they will actively help you to navigate through this process.” With some 500 million European consumers, it is considered a gateway to the European market.
“It is centrally located and close to London, Paris, Brussels and many cities in Germany,” says Pirotte.
He says it also has good international schools and inhabitants that speak several languages including French, German, English and Luxembourgish. He adds, “In that sense, it is very different from Malta, Cyprus, Portugal.”
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