What is a SARL-S business
Initially let’s briefly talk about what a SARL business is.
There are also two sub-forms of the classic SARL, one called ‘single-member’ SARL, which is an exception to the company law, allowing one single associate to set up a SARL, and SARL-S, which is a simplified version of the traditional SARL, with minimum initial investment one euro - that is why it is also called ‘SARL for a euro’.
The SARL-S was introduced in 2016, in order to lower financial obstacles for new businesses. With the capital to start a SARL-S business being minimal, entrepreneurs can benefit from limited liability while at the same time they keep the cost low. This business form is ideal for small businesses, such as sole entrepreneurships, family businesses, startups and also freelancers.
Comparison between SARL and SARL-S in Luxembourg
| Matter | SARL | SARL-S |
| Minimum Capital needed | 12,000 euros. | 1 euro. |
| Maximum Capital allowed | No limit. | 12,000 euros or you must become a SARL. |
| Who is it best for | Individuals or companies (natural or legal persons), maximum 100 partners, ideal for medium sized and large enterprises. | Limited to individuals (natural persons) only, maximum 100 partners, ideal for startups and smaller businesses with limited resources. |
| Opening and development process | High administrative costs, requires a notary for incorporation, more credible to banks, partners and investors due to higher capital. | Simple and with low cost, no notary needed, less credible due to lower financial requirements, must convert to a SARL when the capital exceeds 12,000 euros. |
| Liability | Limited to the partners’ contributions. | Same as SARL. |
| Management | Managed by one or more individuals who can either be external collaborators or partners or legal entity. | Same as SARL. |
| Restrictions | No restrictions for business activities, flexibility for both individuals and companies to be partners. | Limited to specific activities, only individuals can be partners. |
| Taxes | Community income tax, local business tax and VAT obligations. | Same as SARL. |
Pros and cons of opening a SARL-S in Luxembourg
The SARL-S form of business is specifically designed to make a new business easily accessible at minimal cost and processes. The limited liability protection is the number one advantage of a SARL-S business and the set up process being very straightforward and easy makes this type of business especially attractive to small business owners. However, its capital is restricted which means it limits access to larger partnerships.
| ✅ Advantages | ⚠️ Disadvantages |
| Limited liability. It can protect partners’ personal assets from potential company debts as their liability is limited to the amount of capital they initially invested. | Capital limitations. In order for the company to remain a SARL-S, the capital cannot exceed 12,000 euros otherwise the company needs to convert to a standard SARL. |
| Flexibility. Ideal for small to medium size businesses, it usually has one or more managers, either partners or not - they don’t have to be. | Limited activities. The SARL-S status does not permit any kind of business, so there is a chance that your activity might not be eligible. |
| Low set up cost and simple formation process. The initial set up cost is less just one euro therefore ideal especially for small businesses. Also, it is faster and easier to set up, with minimal cost. | Credibility and profit distribution. The low capital can make the company less attractive to banks, investors and larger business partners. |
The final decision of opening a SARL-S in Luxembourg heavily depends on the type, size and conditions of your business. Starting a business is never an easy decision and it requires a lot of research and preparation in advance, so it is great to have a good understanding of the advantages and disadvantages of this type of company to be able to make an informed decision. A SARL-S can definitely be a great option for a new business set-up, if it matches your specific requirements and financial needs.
FAQ
I am a freelancer in Luxembourg. Is my best option a SARL-S then?
What is the minimum capital needed for a SARL-S company in Luxembourg?
Who can I ask for more information regarding opening a SARL-S business in Luxembourg?
Useful contacts
Guichet.lu (Luxembourg Government Portal)
This is the main, official governmental portal in Luxembourg, which provides step-by-step guides on setting up a SARL-S, including legal, administrative, and tax requirements.
🌐 Website: guichet.lu
📞 Contact: Reach out via their online contact form, where you could also book an appointment for a physical meeting.
Luxembourg Business Registers (RCSL)
The RCSL is responsible for registering all businesses, including SARL-Ss, therefore they can assist you during the registration process.
🌐 Website: lbr.lu
✉️ Email: helpdesk@lbr.lu
Chamber of Commerce (Chambre de Commerce)
The Chamber of Commerce offers resources, training, and support for entrepreneurs in Luxembourg.
🌐 Website: cc.lu
✉️ Email: info@cc.lu
📞 Phone: +352 42 39 39 310
