How to create a company (SARL) in Luxembourg?

The Limited Liability Company is the favorite legal status of companies in Luxembourg, just like in France. 

Working with an operation that nearly equals it, it remains more advantageous to create your SARL in Luxembourg.

What is an SARL?

An SARL, like its counterpart in France, the Belgian SRL or the LTD in United Kingdom, is a commercial company established in the form of capital contributed by partners against the issuance of shares. In the event of any loss, each partner's liability is limited to that person's contribution amount.

The SARL: definition

A minimum of 2 partners and a maximum of 100 partners can create the SARL, it can also be a one-person company: The EURL does not exist in Luxembourg ! 

The general operation is defined by the Statutes, offering flexibility and freedom in company organization. The minimum capital is €12,000.

The minimum capital must be 12000 €. 

Unlike in France, where managers must be natural persons, in Luxembourg, managers may be legal persons. The manager, or "administrator" in Luxembourg, doesn’t have to be a Luxembourg national; however, they must be of legal age.

A SARL with over 60 partners must undergo mandatory statutory auditing.

The simplified SARL

The Simplified SARL (SARL-S) has differences aimed at easing the administrative burden, particularly for young entrepreneurs. The minimum share capital is €1, the maximum is €12,000, and creation formalities are simplified. This form is reserved for natural persons, as legal persons cannot manage the company.

The minimum share capital is set at €1 symbolic, the maximum is €12,000, and the formalities for creation are simplified. The simplified form is reserved for natural persons, the management of the company cannot be carried out by a legal person. 

Moreover, to help you with the legal structure, you can analyze the different offers according to several fundamental criteria and choose the legal partner that suits you for your creation of an SARL. 

The benefits of the SARL in Luxembourg

An SARL in Luxembourg, rather than in France, enjoys several fiscal and social security advantages. With social security contributions considered, Luxembourg’s rates are among the lowest in the EU, at 25-28%. 

Corporate tax rates are 20% on operating income under €15,000 and 21% above this amount. Municipal business tax applies with an allowance of €17,500 for companies, and membership in the Chamber of Commerce is compulsory. Luxembourg's VAT is favorable compared to France: 3% for food, 8% for fashion, 14% for intermediate costs, and 17% for services.

Income tax (IR) on annual income up to €9,750 is not taxed, while income above €34,500 is taxed at 38%.

Establishing a SARL in Luxembourg

The conditions for creating a SARL in Luxembourg

To set up an SARL, its statutory office and place of operation must be in Luxembourg; a simple address won’t suffice. The minimum capital of €12,000 must be fully paid up at incorporation and deposited in a Luxembourg bank.

Steps to Set Up an SARL in Luxembourg

1. Business Permit: Apply for a business license required for commercial, industrial, craft, and certain liberal activities, via the General Directorate for SMEs and Entrepreneurship of the Ministry of the Economy. The manager, director, and majority shareholder must meet legal qualifications and good repute. If no response within three months, authorization is granted.
2. Check Company Name Availability: Verify the name availability with the Luxembourg Trade and Companies Register. Before drafting articles of association, block the capital in a Luxembourg bank account. The account is unblocked upon registration with the RCS.
3. Draft Articles of Association: SARL requires notarial drafting of articles. For SARL-S, notary involvement is optional but recommended for accuracy. If the notary handles the draft, they will register it with the RCS within a month. For SARL-S without a notary, articles can be registered online for €20-€80.

✍ In short 

Despite similar operation to France, establishing a SARL in Luxembourg remains advantageous. The Luxembourg SARL is a commercial company in which each partner’s liability is limited to their contribution amount. Two types of SARL exist in Luxembourg: classic SARL and simplified SARL, each offering notable tax and social benefits.

In Luxembourg, there are two types of SARL: the classic SARL and a simplified SARL.

The creation of a SARL in Luxembourg has many advantages, particularly in tax and social matters.

Please note that in order to create your SARL in Luxembourg, its registered office and a place of operation must imperatively be located in Luxembourg: having a simple address there is not enough.