Aid for young businesses

The Minister of the Economy and the Minister of Finance can grant financial aid to young businesses with strong growth potential, which can already provide at least 2 balance sheets and which have not taken over the activity of another business. The aid granted aims to support the young business in its growth phase. The amount of aid depends on the amount of capital brought by the business ("matching clause").

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Who is concerned

Eligible businesses

This aid is intended for small and medium-sized enterprises (SME) holding a business permit granted by the General Directorate for Small and Medium-Sized Enterprises (Direction générale des Classes moyennes) and which are not active in any excluded activity in accordance with the general terms and conditions applying to aid for SMEs.

Each small business (a business that employs less than 50 persons with an annual turnover not exceeding EUR 50 million or an annual balance sheet total not exceeding EUR 43 million) which:

  • is established in Luxembourg;
  • is not listed;
  • has not been registered for more than 5 years;
  • has not yet distributed profits; and
  • does not come from a corporate concentration;
  • can already provide 2 annual balance sheets;
  • has a strong growth potential.
In the case of eligible businesses for which registration is not compulsory, the 5-year eligibility period can be considered as beginning on:
  • the moment the business commences its economic activity;
  • the moment it becomes subject to taxation for the economic activity in which it is engaged.

Eligible costs

All costs borne by the young business are eligible for the duration of the project with the exception of excluded expenses as stipulated by Grand-Ducal regulation.

Prerequisites

In order to receive aid for young businesses, the business must observe and fulfil the general terms and conditions applicable to all aid for SMEs.

How to proceed

Filing an application

The Ministry of the Economy makes available a sample application template for the project in question.

The completed application and accompanying documents must be dated and signed by a person authorised to sign on behalf of the company and must be submitted before work starts on the project to the Minister of the Economy by post or email. In the event of a submission by post, the following must be indicated on the envelope:

Ministère de l'Economie
Demande d'aides d'Etat
L-2937 LUXEMBOURG

Supporting documents

Applications for aid must include the following information and documents:

  • the name and size of the business (any document deemed necessary may be requested for the determination of the size of the business);
  • a description of the investment project, including its start and end dates;
  • a description of the operating conditions of the investment project and the economic potential;
  • the location of the project;
  • the total project cost;
  • a business plan;
  • the form and the amount of financial aid required for the investment project;
  • any other relevant information which would help the ministers in charge to understand the qualities or the specific aspects of the investment project or programme and its incentive effect.

The business must grant the Minister of the Economy and the Minister of Finance the authority to verify with the Luxembourg Inland Revenue, the Registration Duties, Estates and VAT Authority and the Joint Social Security Centre that the business has not avoided its tax and social obligations. If not, the business must attach the certificates issued by these administrations providing proof that all tax and social charges have been duly paid.

Maximum amount of financial aid

The amount of subsidies granted in the form of a gross subsidy equivalent (amount before tax and other contributions) cannot exceed EUR 400.000. The capital grant is based on the "matching" principle, i.e. if the business successfully collects new funds, the Ministry will grant an equal amount up to a maximum of EUR 400,000.

For each investment project, the amount of aid will not be less than EUR 1,000.

Payment of aid

The aid can take the following forms:

  • loans whose interest rates are not compliant with the market conditions in force and for a maximum duration of 10 years;
  • guarantees whose premiums are not compliant with the market conditions in force and for a maximum duration of 10 years;
  • subsidies, in particular in the form of equity capital investments or quasi-equity capital investments, or in the form of interest rate reductions and guarantee premiums;
  • a recoverable advance payment;
  • interest relief. The aid may be paid out by an intermediary, such as a credit institution or a financial establishment under public law.

Capital subsidies and recoverable advances are paid out after completion of the investment project. However, one or more advance payments may be made as the investments are made.

The business and the Minister of the Economy agree together, at the time the aid is granted, on the repayment terms of the recoverable advance payment if the project is successful.

Should the business have outstanding debts concerning social security and tax contributions, the granting of the aid may be subject to the full payment of the debts or to a repayment plan set up by the administrations concerned. The business concerned can opt for a repayment in full or in part of the debts by transferring the aid received to the administrations concerned.

The payment of financial aid must be requested, on pain of ineligibility, within a period of 5 years from the date of payment of the expense for which aid is requested. The beneficiary of the aid can apply for an extension of this deadline on written request to the Minister of the Economy.

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