Capital increase by contribution in kind in Luxembourg

Capital increase by contribution in kind in Luxembourg: how does it work?

A capital increase by contribution in kind in Luxembourg requires four documents: a valuation of the asset contributed, a report drawn up by an approved statutory auditor for companies limited by shares, a shareholder decision passed by the required statutory majority, and a notarial deed amending the articles, filed with the Trade and Companies Register within one month of signature.

A contribution in kind means any asset, tangible or intangible, other than money: a building, a going concern, a portfolio of securities, a trade mark, equipment. Both on the incorporation of a commercial company and on a capital increase, shareholders contribute funds or assets to the company in exchange for corporate rights, and those contributions enter the capital to make up equity. The valuation of what comes in carries the risk of the whole file: it sets the number of securities issued, the entry value of the asset on the balance sheet and, as a consequence, the base for future depreciation.

One boundary often surprises, and it is worth settling before the operation is even characterised. Each share must be paid up by at least one quarter, either by a cash contribution, including by set-off against claims on the company that are certain, liquid and due, or by a contribution in kind, or by the incorporation of reserves, profits or share premium.

Converting a loan or a current-account balance into capital is therefore not a contribution in kind but a cash contribution by set-off, subject to three cumulative conditions: the claim must be certain, liquid and due. Our article on the shareholder current account sets out what that last condition requires by way of documentation.

We regularly see files where the valuation report is commissioned after the date chosen for the meeting, because the timetable was built around the notary's availability. The order is the other way round: the valuation precedes the decision it has to support, and it is the valuation that sets the earliest possible date for the meeting. The order of magnitude of fees for such a file is set out in our pricing schedule; what makes it vary is the nature of the asset contributed, rarely the amount of the increase.

Is the approved statutory auditor's report always mandatory?

In Luxembourg, the approved statutory auditor's report on a contribution in kind is mandatory for companies limited by shares, subject to two exemptions: listed securities valued at the previous day's price, and assets valued at fair value less than six months earlier.

The report is drawn up in accordance with article 420-10 of the amended law of 10 August 1915, and the approved statutory auditor is appointed by the board of directors or by the management board, depending on the governance model adopted. Three items are expected: a description of each proposed contribution, the valuation methods adopted, and a statement whether the values obtained correspond at least to the number and nominal value or, failing that, to the accounting par and, where applicable, to the share premium of the shares to be issued in exchange.

It is that last item that makes the report a control document rather than a mere expert opinion: the auditor does not only say what the asset is worth, it says whether what it is worth covers what is issued in exchange.

The first exemption covers securities within the meaning of Directive 2014/65/EU whose fair value is determined from prices quoted on an active market on the date preceding the effective contribution. The second covers assets other than securities or money market instruments already valued at fair value by an approved statutory auditor, subject to two cumulative conditions: a fair value set no more than six months before the effective contribution, and a valuation carried out in accordance with the valuation principles and standards generally recognised in Luxembourg for that type of asset.

The SARL follows a different logic, and this is the question that comes up most often in practice. For that form, contributions in kind are valued in the articles of association, whereas other forms require a valuation by an approved statutory auditor; contributions of industry do not contribute to the formation of the capital and call for no independent valuation.

One deadline completes the picture: shares paid up by a contribution in kind must be fully paid up within five years of the decision to increase the capital. Our article on the statutory auditor and supervisory auditor thresholds separately distinguishes this one-off engagement from the statutory audit of the accounts, which is not subject to the same conditions.

What procedure and what deadlines apply to a capital increase?

The procedure for a capital increase in Luxembourg runs through an extraordinary general meeting and a notarial deed, since it amends the articles: the deed recording completion is drawn up within one month of the close of the subscription, and filed with the register.

The majorities are not the same across company forms, and that is the first point to check in the articles. Capital increases are dealt with at extraordinary general meetings, and amendments to the articles must be made in writing and recorded before a notary. In a société anonyme, shareholders have a pre-emptive subscription right, save for a justified limitation decided by the extraordinary general meeting.

In a SARL, decisions amending the articles are taken by a majority of the shareholders representing at least three quarters of the share capital, but any increase in the shareholders' commitments requires unanimity: in no case may the majority compel a shareholder to increase their share.

Two deadlines then frame the deed itself. Completion of the increase is recorded by a notarial deed, drawn up at the request of the board of directors or the management board, on production of the documents evidencing the subscriptions and the payments; that deed must be drawn up within one month of the close of the subscription, or within three months from the day the subscription opened.

Where the articles provide for authorised capital, the authorisation to increase the capital is valid only for a maximum of five years from the publication of the articles or of their amendment or, if the articles so provide, from the date of the articles; it may be renewed one or more times by the general meeting.

That leaves publicity, whose timetable is most often underestimated. The original of the notarial deed is first submitted for registration by the notary in paper form, then filed electronically with the Trade and Companies Register no later than one month after signature; registrations, entries and notifications must be made within the month following the event. The filed deed is then published in the Electronic Register of Companies and Associations on the day of filing itself or on a date set by the filer, within fifteen days. It is that publication, not the signature alone, that the bank and the third party consulting the register read.

Subscribed capital or share premium: how is the contribution split?

Splitting a contribution in kind in Luxembourg follows the standard chart of accounts: the nominal value of the securities issued goes to account 101 "Subscribed capital", and the excess of the contribution over that nominal value goes to a premium account under heading 11.

The standard chart of accounts is presented as a catalogue of accounts spread over seven classes, class 1 grouping the accounts for capital, provisions and financial debts. Within that class, account 101 carries the subscribed capital of companies limited by capital for its total amount, and heading 11 carries the premiums: 111 for share premiums, 112 for merger premiums, 113 for contribution premiums, and 115 for unremunerated equity contributions. That last account is the one to know when a shareholder strengthens equity without receiving securities in exchange: the operation is then not a capital increase, and it calls for neither a notarial deed nor a report on the contribution.

The split is not a presentation question. Subscribed capital is the amount the company undertakes not to return to its shareholders without going through a capital reduction, with the formalities and creditor protection that come with it. Issuing a smaller number of securities carrying a high premium therefore preserves more later flexibility than an issue of the same amount booked entirely to capital, at the price of a different effect on the balance between shareholders. It is a shareholders' decision, not a bookkeeping entry: it is taken in the minutes, not at the moment of posting.

One point is worth settling with the auditor and the notary before the deed. The law requires a statement whether the values obtained correspond at least to the number and nominal value or, failing that, to the accounting par and, where applicable, to the share premium of the shares to be issued: the report therefore covers the total issued, premium included, and not the nominal value alone.

We find this to be a frequent cause of a draft deed being reworked, because the premium is settled after the report has been drafted. The presentation of those accounts in the financial statements is then governed by the rules described on our annual accounts page.

At what value does the contribution enter the tax balance sheet?

A contribution in kind made during the life of a Luxembourg company enters at its operating value: that value is the asset's acquisition price and serves, where applicable, as the basis for computing future capital gains and depreciation.

The rule differs according to when the contribution is made, and that distinction changes the outcome. On the creation of the company, the assets contributed are valued at a maximum of their operating value, the taxpayer retaining the option of assigning them a lower value. During the life of the company, the assets must be valued at their operating value, which will constitute the acquisition price of the asset and will serve, where applicable, as the basis for computing future capital gains and depreciation allowances. The margin of choice that exists at incorporation therefore no longer exists on a capital increase.

The practical consequence runs both ways, and that is what makes the trade-off delicate. A contribution value set high increases the depreciation base in the receiving company, but it increases to the same extent the consideration received by the contributor, and therefore the gain the contribution may crystallise in its hands. A value set low produces the opposite effect, with a reduced depreciation base for the years ahead. This is not a trade-off to be posed at the moment of the entry: it is handled before the valuation report is drafted, and that report must be consistent with the treatment adopted on both sides.

Two points are not settled by the official pages consulted and are therefore not asserted here. The regime applicable to the gain realised by the contributor, and in particular whether a contribution of an isolated asset can benefit from a neutrality regime, is not addressed by those pages. Nor is the treatment of a contribution whose operating value would fall short of the amount issued in exchange. In both cases, the question is settled with the competent tax office before the deed, on the basis of the file, and not after the event.

What registration duties and what VAT apply to a contribution in kind?

A contribution in kind in Luxembourg bears a fixed specific registration duty of 75 euros as a company deed, to which a proportional registration duty and a transcription duty are added where the contribution covers real estate.

Company deeds, whether an incorporation, an amendment to the articles or a transfer of the registered office to Luxembourg, are subject to a fixed specific registration duty of 75 euros collected by the Registration Duties, Estates and VAT Authority. Since a capital increase is an amendment to the articles, it is that fixed duty that falls on the deed, not the amount contributed. This cost line is therefore the same for an increase of 15,000 euros and for an increase of 15 million.

Taxation changes as soon as an asset changes hands to become the property of the company. Where the deeds relate to a contribution of immovable or movable property, the receiving company is liable for proportional registration duties and transcription duties, the amount of which varies according to whether the contribution is pure and simple or for consideration and according to the nature of the assets. The table below sets out the rates the official source states for a pure and simple contribution of real estate. That is the line that tips the cost of a real estate file, and it is quantified before the meeting, not after it.

VAT, for its part, resolves into three cases. Most contributions are made free of tax: the contribution of a universality of assets by a taxable person is exempt, and the contribution of isolated assets by a non-taxable person is outside the scope. That leaves the case that costs, and it is not rare: the contribution of isolated assets by a taxable person may be subject to VAT. A contribution of equipment or inventory by an operating company therefore calls for its own analysis, carried out before the draft deed is written, because it changes the cash profile of the operation.

Sources and verification

Written for Financial Services Luxembourg and reviewed before publication by Mickaël LOC, licensed accountant (authorisation 10077274). The documentary review dated 5 October 2026 relies on the accessible sources identified below. Points not confirmed against primary texts are explicitly identified in this section.

The sources consulted, all read on 5 October 2026, are the following. On Guichet.lu: "Société anonyme (SA)" for the obligation to have contributions in kind valued by an approved statutory auditor in a report, the pre-emptive subscription right and its justified limitation decided by the extraordinary general meeting, and the notarial deed recording completion, drawn up at the request of the board of directors or the management board on production of the documents evidencing the subscriptions and the payments, within one month of the close of the subscription or within three months of its opening;

"Société à responsabilité limitée (SARL)" for the valuation of contributions in kind in the articles of association, as opposed to the forms that require an approved statutory auditor, and the exclusion of contributions of industry from the capital; "Assemblée générale des associés d'une SARL ou d'une SARL-S" for the three-quarters majority of the capital, the unanimity required for any increase in the shareholders' commitments and the impossibility of compelling a shareholder to increase their share; "Assemblée générale des actionnaires d'une SA" and "Dépôt et modifications des statuts au RCS" for the handling at extraordinary general meetings and the written instrument recorded before a notary;

"Dépôts modificatifs et rectificatifs au RCS", "Dépôt des statuts coordonnés au RCS" and "Publication et publicité des dépôts au RCS" for the prior registration of the paper original, the electronic filing no later than one month after signature, the entries to be made within the month following the event and the publication in the Electronic Register within fifteen days of the filing; "Financement par fonds propres — Imposition des apports" and "Droits d'enregistrement" for the operating value on creation and then during the life of the company, the fixed duty of 75 euros on company deeds, the proportional and transcription duties on a contribution of real estate and the three VAT cases.

The amended law of 10 August 1915 on commercial companies gives the payment of at least one quarter of each share and the ways of doing so, the report under its article 420-10 with its content and its two exemptions, the full payment within five years of the decision, and the maximum five-year duration of the authorisation to increase the capital. The standard chart of accounts annexed to the Grand Ducal Regulation of 10 June 2009, in its version published in 2020, gives accounts 101, 111, 112, 113 and 115 and the structure in seven classes.

Five points could not be verified in their primary source and are therefore not asserted here. The full text of the sources first: the domains guichet.public.lu, legilux.public.lu, impotsdirects.public.lu and cnc.lu are blocked by the network proxy of our editorial environment, and these pages were read through indexed extracts using a search restricted to official domains; the statements above reproduce those extracts without extrapolation. Then come the numbering of the articles of the coordinated law of 1915 other than article 420-10, the only one the extracts name;

the amount of the filing fee for an amending filing with the Trade and Companies Register, which the extracts do not unambiguously attach to that type of filing; the regime of a contribution in kind on a capital increase in a SARL, the official page addressing the valuation stated in the articles at incorporation without our inferring from it the absence of any obligation later; the choice between accounts 111 and 113 for the premium on a contribution in kind remunerated by new securities, the chart of accounts naming both without separating them;

and the treatment of the gain realised by the contributor, which none of the pages consulted addresses. These points can be verified in the coordinated texts of the laws of 10 August 1915 and 4 December 1967 on legilux.public.lu and impotsdirects.public.lu, on the Guichet.lu pages cited above, with the Trade and Companies Register for the filing fees, and with the competent tax office for an individual file.

This article sets out the state of the law at the date of publication and does not constitute personalised legal or tax advice: whether a report on the contribution is needed, the contribution value adopted, the split between subscribed capital and premium, the registration duty and VAT treatment, and the applicable majorities all depend on the legal form of the company, on its articles, on the nature of the asset contributed and on the status of the contributor. Report an error to contact@financialservices.lu: the correction is dated in the article.