Thierry Stas participates in IR Global Guide: International Expansion: Building your Business Overseas

Thierry StasPartner, Maprima

Foreword by Andrew Chilvers

Despite these uncertain times, expanding overseas can be a key driver for future growth for an ambitious business. International expansion can breathe new life into a company, drive huge value and set it on a path of continued success.

Expanding a business overseas is a strategic opportunity that will help diversify revenue streams, revitalise product development and give high returns on investment. But expanding a business into different jurisdictions takes time – this is a long distance run, not a sudden sprint to the finish line. Furthermore, expanding operations into a new jurisdiction can be fraught with challenges and risks that need to be addressed long before the first boots are on the ground.

For any company turning up in a foreign country, a multitude of tax and legal issues need to be addressed. This can be a labyrinthine experience and not for the faint hearted – but then faint hearted businesspeople seldom set their sights on overseas expansion.

Tax and compliance have to be at the top of any board’s agenda, ensuring the correct steps are taken the moment the company representatives land in-country. It’s pivotal to learn these issues to avoid any costly mistakes from the start.

What are the main government incentives available in your jurisdiction to attract multi- nationals and FDI investment?

Luxembourg offers various incentives and financial support programmes for companies starting businesses.

They range from employment / recruitment / training programmes, for example: the creation of a work-integration job for a long-term unemployed person, support for the re-employment of older unemployed people, re-employment support, deducting relocation expenses for highly skilled workers recruited or posted from abroad, financial assistance for company-sponsored continuing vocational training, and subsidies for Luxembourg language courses.

There are also financial support programmes for R&D and innovative projects. The programme can cover a percentage of the eligible costs, depending on the size of the company and the type of project or programme.

There are also programmes dedicated to SMEs, such as investment financial assistance, consultancy services for SMEs, assistance to businesses which participate in a trade fair for the first time, assistance to new businesses and financial assistance to tourism infrastructure related projects.

Luxembourg also offers investment assistance for the protection of the environment, as well as within the context of the greenhouse gas emission allowance trading scheme.

Financial support for regional investments is available to large businesses and SMEs that invest in specific regions within Luxembourg.

There are also specific schemes called “Fit 4” aid schemes dedicated for start-ups (Fit 4 Start), for digitalization (Fit 4 Digital), schemes assisting with the improvement of customer services, and a scheme supporting innovation (Fit 4 Innovation).

The Government has also implemented State-backed or State-guaranteed financing, such as those provided by the SNCI (Société nationale de Crédit et d’Investissement).

As you can see, there are a lot of incentives that cannot be detailed, but together with the various government bodies Maprima can assist any foreign company expanding in Luxembourg.

What industries do you feel there are opportunities in for international investors/ businesses in your jurisdiction? What factors do you think contribute to inward investment?

Luxembourg is a small but extremely multi-cultural country located at the heart of Europe and is the centre of the so-called “Greater Luxembourg”, an economically integrated area of more than 11 million people spanning regions located in four countries. Bordered by France, Germany and Belgium, the Grand Duchy is a founding member of the European Union and a member of all major international organizations. Over the years, the migration flows of highly skilled workers have turned Luxembourg into an open-minded and cosmopolitan center of excellence.

The Luxembourg business market has always been open to foreign investors. Over the course of the last 100 years, Luxembourg governments – irrespective of their backgrounds – have worked to generate a favorable, stable business environment, flexible and proactive policies, as well as an attractive tax regime for both individuals and businesses. Luxembourg also boasts a healthcare and social security system which is one of the most comprehensive in the world.

The government has always pushed for a diversified business market. Indeed, the financial sector represents a big part of the GDP; this includes the Private Banking sector, the Fund industry but also the Insurance sector.

Also worthy of note, Luxembourg has always promoted the ICT sector, R&D-driven businesses and Fintech. The country has one of the best digital infrastructures in the world with an important presence of Tier IV data centres in the country.

The startup ecosystem in Luxembourg is vibrant and dynamic. The country has developed the infrastructure and ecosystem required to facilitate the creation of startups.

Being located in the middle of Europe and at the crossroad of important rail and road arteries, has evolved Luxembourg into a logistic hub. This has been further developed by its air cargo infrastructure and facilities (Luxembourg is the 4th air cargo center in the EU by volume).

Why is it important to hire a local firm to support international expansion? How can you help smooth the process for your clients and overcome common pitfalls?

Entrepreneurs and investors typically deal with many legal and tax aspects in their home market, and for many they become a routine operation. When moving or expanding their business into other jurisdictions, they may run into differences in culture, customs and bureaucracy. Having boots on the ground who can recognize these differences upfront can save a lot of time, money and headaches.

Whether choosing the correct type of legal entity, registering a new company with the trade register, or advising on the specifics of labour law, statutory filing requirements or tax regulations, having a local firm with in-depth knowledge, and who speaks the language and knows the culture can really make a difference.

Especially for these types of entrepreneurs and investors we have developed the concept of corporate liaison services. Although companies usually have an internal officer looking after their (foreign) affairs, these officers may not always be fully up to speed with all the local regulations and procedures abroad. Our corporate liaison service can advise these officers, if and when needed, on our local legislation and procedures so that they become familiar with them. This service is provided on demand, meaning that we only step in when we’re needed.

Our involvement is often requested when companies need the assistance of specialized lawyers, tax advisors, real estate agents, insurance brokers or other consultants, but do not know who to engage or what specific questions to ask. Depending on the issue at hand, a very seasoned specialist may be needed, whereas in less demanding situations a generalist will do. This is where we can help, by recommending the most suitable (and not necessarily the most expensive) specialist from our extensive network of advisors.