Many entrepreneurs in Luxembourg start a business as a Société à Responsabilité Limitée (SARL). This is the most popular type of company in Luxembourg, with around two-thirds of businesses operating under this model. A SARL in Luxembourg lets you separate your business from your personal finances and limits the liability of shareholders. However, setting up a SARL also involves dealing with lots of legal and tax issues, which can be scary for new business owners.
Legal definition of SARL in Luxembourg
A Société à Responsabilité Limitée (SARL) is a type of limited liability company popular in Luxembourg. A SARL protects shareholders' personal assets from business debts because their liability is limited to the amount of capital they have contributed. A SARL can be set up by one or more shareholders, with a maximum of 100, and requires a minimum share capital of 12,000 euros.
A SARL is usually run by one or more managers, who may or may not be shareholders. The accounting and tax obligations of a SARL depend on the size of the business. All SARLs are subject to corporate taxes. Another important thing about a SARL is that you need the approval of most shareholders to transfer shares. This makes the company structure more stable.
The decision to create a SARL in Luxembourg depends on the nature of the business. The point is to have a good understanding of the characteristics, advantages and disadvantages of this type of company to be able to make an informed decision.
| Pros | Cons |
| Limited liability for investors Shareholders are only liable for the money they have invested. | Restrictions on share transfers Shares cannot be freely transferred without the approval of the majority of shareholders, which can complicate the entry or exit of partners. |
| Management The SARL has a structure with one or more managers, who can be shareholders or professionals. | Strict regulation While smaller SARLs have fewer accounting requirements, they are still subject to strict regulations, which can be challenging for some business owners. |
| Business taxes Luxembourg has a good tax system for businesses, known as a "tax haven" in Europe. | Initial costs and bureaucracy Despite its flexibility, setting up a SARL in Luxembourg involves significant legal and administrative costs, along with a certain degree of bureaucracy. |
| Low minimum share capital A SARL costs less than 12,000 euros to set up and is ideal for many entrepreneurs and small businesses. | Limited number of shareholders A SARL is limited to 100 shareholders, which may not be ideal for companies seeking a large number of investors. |
| Stable company structure The restriction on share transfers provides stability to the company and protects the interests of existing shareholders. | Less attractive to external investors Due to the restricted transferability of shares and its closed structure, a SARL may be less appealing to external investors or those looking to raise capital by selling shares. |
What taxes and opening costs will you pay for a SARL?
If you want to say goodbye to your boss to start your own company and develop your long-awaited project, you should be aware that there are some costs to foresee. It is essential to factor these expenses in, as they will affect your initial budget and overall financial planning. Below, we outline the key costs of setting up a SARL in Luxembourg.
- Minimum capital for a SARL One of the first financial considerations is the contribution of share capital. This capital is provided by the shareholders and must be deposited in a bank account opened in the name of the company. The funds are then immobilized until the company is officially incorporated. The minimum capital for a SARL in Luxembourg is 12,000 euros, making it accessible for many entrepreneurs. This initial capital acts as a foundation for the company’s operations and provides financial security. Though this capital is deposited for the incorporation timeline, it can be freely used after the procedure is done.
- Notarial fees A SARL in Luxembourg must be incorporated through a notary. The notary is responsible for drafting the company’s statutes and registering them with the Trade and Companies Register (RCS). Notarial fees for incorporating a SARL typically range from 1,800 euros to 3,000 euros, depending on factors such as the company’s share capital and the complexity of its structure. If the company has a complex structure these fees may be higher. Notary fees include the costs of filing with the RCS and registration fees.
- Costs for obtaining administrative authorizations In Luxembourg, you must obtain authorisation to set up a company, particularly if you intend to carry out a commercial or craft activity or certain liberal professions. This authorisation procedure requires you to meet certain criteria relating to your qualifications and professional reputation. We strongly recommend that you seek the assistance of a professional when applying for the authorisations you may need to carry out the activities you intend to carry out.
Summary of the main expenses associated with the creation of a SARL in Luxembourg
| Expense | Cost (euros) |
| Minimum capital for a SARL | 12,000 (minimum) |
| Notarial fees | 1,800 – 3,000 |
| Administrative authorization | Between 1,500 and 2,000 euros if professional assistance is required |
| Total | A minimum of 12,000 of share capital and a minimum of between 2,000 and 5,000 for expenses |
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Learn moreRequirements for SARL opening in Luxembourg
Before starting any procedure, it is fundamental to know the legal requirements for a SARL in Luxembourg. Then you will need to take the necessary steps to comply with each one, but for now, let's see what these requirements are.
- Number of partners A SARL in Luxembourg can be formed by one or more shareholders, with a maximum limit of 100. These shareholders can be either natural persons or legal entities, offering flexibility in ownership structure.
- Minimum capital amount The minimum capital for a SARL in Luxembourg is 12,000 euros. This capital can be contributed in cash or in-kind and must be fully subscribed and paid up at the time of incorporation. Before signing the deed of incorporation, the share capital must be deposited in a bank account opened in the name of the company in formation.
- Registered physical office A SARL must have a registered office in Luxembourg, which serves as its principal place of business. This address must be provided when registering the company with the Luxembourg Trade and Companies Register (RCS). In some cases, it is possible to register the company at a residential address, but this is subject to certain conditions, including municipal regulations or condominium rules allowing business activities at that location. If the premises are rented, the landlord must explicitly agree to the business being domiciled there.For certain types of businesses, the law requires a physical infrastructure from which the company operates. For instance, a service-based company must operate from an office, while a commercial business needs a suitable premise such as a shop, warehouse, or office. Similarly, craft businesses must have a workshop or storage space appropriate for their specific needs.
- Business permit Depending on the type of business activity, an establishment permit may be required. This permit is mandatory for commercial, industrial, and craft activities, as well as certain self-employed professions.
- Managers A SARL must appoint at least one manager, who can be a shareholder or an external person. The manager is responsible for the day-to-day administration and operations of the company.
- Company statutes The creation of a SARL requires the drafting of its statutes by a notary. These statutes must include essential information such as the company name (business name), registered office address, business purpose, duration of the company, and details about the share capital and shareholding structure. For a step-by-step overview, read our guide to starting a business in Luxembourg.
How to create a SARL in Luxembourg in 2024
Now that we’ve covered the requirements for establishing a SARL in Luxembourg, it's time to outline the step-by-step process for creating one in 2024. This guide will help you navigate through the necessary actions to ensure a smooth setup.
1. Prepare the project
The first step is to define the structure of your SARL. You need to determine the number of shareholders (minimum of 1 and a maximum of 100), the share capital (minimum 12,000 wuros), and the business activity (company purpose). Additionally, you must choose a company name, determine the registered office, and appoint a manager who will be responsible for the daily operations of the company. Simplify the process of starting your company with our professional Incorporation services.
2. Make sure the business name is not taken (officially)
Before moving forward, it's essential to check whether the desired company name or trade name is available. This can be done by submitting a name availability request electronically through the Luxembourg Business Registers (LBR). Ensuring your company name is unique and not already in use is a crucial step to avoid legal issues later on.
3. Draft the articles of incorporation
Next, the articles of incorporation must be drafted by a notary. These documents will include essential information such as the company name, registered office address, company purpose, duration of the company, share capital, and shareholdings. It’s crucial to have these details prepared in advance during the project preparation stage.
4. Open bank account and deposit funds
Before signing the articles of incorporation, you must open a bank account in the name of your company in formation and deposit the required minimum share capital (12,000 euros). The bank will issue a deposit certificate, which you will need to present to the notary as proof of capital contribution.
5. Register with social security
If your SARL will be employing staff, you must register the company with the National Health Fund (CNS) to comply with social security obligations, including pension contributions. This registration is crucial to ensure that your employees are covered under Luxembourg’s social security system.
