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 shareholder to set up a SARL, and SARL-S, which is practically 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 2017, 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 | No limit |
| Who is it best for | Individuals or companies (natural or legal persons), maximum 100 shareholders, ideal for medium sized and large enterprises | Limited to individuals (natural persons) only, maximum 100 shareholders, 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 shareholders’ contributions | Same as SARL |
| Management | Managed by one or more individuals who can either be external collaborators or shareholders | Same as SARL |
| Restrictions | No restrictions for business activities, flexibility for both individuals and companies to be shareholders | Limited to specific activities, only individuals can be shareholders |
| Taxes | Corporate taxes, municipal business taxes and VAT obligations | Same as SARL |
Steps to open a SARL-S in Luxembourg
- ✅ Check your eligibility first – Ensure you meet all requirements before starting your business journey.
- 💡 Have a specific business idea and structure.
- 📊 Do market research and planning.
- 🌐 Apply online for a business permit here.
- 📝 After you get your permit, register your company here by providing your business name, proof of identity and address, and potential notarized documents.
- 🏢 Look into possible necessary licenses depending on your company’s specific business activities.
- ⚖ Ensure company compliance with industry rules and regulations.
- 📜 Draft association documentation.
- 📢 Publish a notice of incorporation.
- 💰 Register for declaring income tax at the Luxembourg Inland Revenue.
- 🏥 Social security registration in Luxembourg for both employees and self-employed entities is done through CCSS.
- 💶 Look into potential financial aids – Luxembourg, both privately and the State, offers quite a few options.
- 🏦 Open a business bank account.
- 🔐 Develop GDPR policies.
- 👥 Quite a few more steps in case your company has employees, such as adherence to local employment laws, contracts, salaries, work permits and more. It is worth hiring a lawyer, an accountant and maybe an employer of record as well, for those parts of setting up the business.
- 🏠 If you need a physical office, one of the latest steps would be to find a home for your company, taking into consideration not only the rental price, but other costs, lease terms, workplace safety and more.
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 and its business activities are limited as well, preventing the business from growing.
| ✅ Advantages | ⚠️ Disadvantages |
| Limited liability. It can protect shareholders’ personal assets from potential company debts as their liability is limited to the amount of capital they initially invested. | Restricted shareholders. Since the approval of the majority of shareholders is required, even though it generally indicates stability and it’s also an advantage, it can cause confusion between partners. Also, there can be a maximum 100 shareholders and that limits potential partnerships and collaborations. |
| Flexibility. Ideal for small to medium size businesses, it usually has one or more managers, either shareholders or not - they don’t have to be. | 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. |
| Tax haven. All businesses in Luxembourg admittedly enjoy a great tax system and great benefits. | 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, and then, until the company reaches 12,000 euros, all profits must be reinvested - fact that limits early dividend payouts. |
| Ability for scale-up. If a SARL-S is doing pretty well then it can be converted into a standard SARL when reaching 12,000 euros in capital. |
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
