Luxembourg as online offshore zone

A lot of Internet companies, dealing in Europe are trying to reduce their VAT. Opening a company in Luxembourg is a good choice, they have just 15% and they’re respectable European country, nothing like strange islands, which could be covered by occasional tide wave.

However, you have to consider a lot of additional problems, such set-up could create:

  • Lux bureaucracy is very slow. If you think you can start up your e-shop in a couple of months, think again.
  • Credit Card aquireres don’t like Lux start-ups much, they could ask huge amount of bank guaranty in case you default and all your credit card payments have to be charged back.
  • PSPs don’t like Lux companies either, although they don’t care much, because they don’t have any financial risk. But they may also ask for additional guarantee for payments for their services. In countries like Germany or Netherlands you could just give your bank account, and this will be enough.
  • You still have to somehow support European local methods, like iDeal or ELV. It’s possible by opening accounts in all those countries, but it takes time and money.

Of course, if you’re making millions with your shop 6% of additional turnover is very important.

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