How to set up a company (SARL) in Luxembourg?

The Limited Liability Company is the preferred legal status for companies in Luxembourg as in France. With a roughly equivalent operation, it is still more advantageous to create your SARL in Luxembourg.

What is an SARL?

 As in France, the Luxembourg SARL is a commercial company, set up on capital contributed by the partners, in exchange for shares. In the event of a loss, the liability of each partner is limited to the amount of his contribution. 

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 articles of association: the legal form is rather flexible and the partners have a certain freedom in the organisation of the company. 

The minimum capital must be 12000 €. 

Whereas in France the manager(s) are necessarily natural persons, they may be legal persons in Luxembourg. The manager, called the "administrator" in Luxembourg, is not necessarily a Luxembourg national, he or she can be a foreign national. On the other hand, he must be of age. 

Its role is defined by the articles of association. A SARL with more than 60 partners is subject to the mandatory audit by an auditor. 

The simplified SARL

 The Simplified SARL, SARL-S or the "SARL a 1 €" is a particular form of SARL, with some differences in the rules that govern it. Its objective is to free the company from a heavy administrative burden in its creation phase: it is intended to facilitate the access of young entrepreneurs to economic activity. 

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 advantages of the SARL in Luxembourg

 Creating an SARL in Luxembourg rather than in France has several advantages, including tax and social security benefits. All social security contributions included, Luxembourg's rates are among the lowest in the European Union, between 25% and 28%.

As in France, the SARL is subject to corporate income  tax, which is called corporate income tax. Its rate is 20% on the operating income, if the taxable income of the company does not exceed €15,000, and 21% above that. 

To this must be added the municipal business tax, calculated on the operating profit, with an allowance of €17,500 for companies. The membership fee for the Chamber of Commerce is compulsory. VAT is very advantageous compared to the French tax, with 3% for the food sector, 8% for the fashion and aesthetics sector, 14% for intermediate costs and 17% for services and others. 

For income tax (  IR), annual income less than or equal to €9750 is not taxed, and income above €34,500 is taxed at 38%. 

The incorporation of a SARL in Luxembourg

The conditions for creating a SARL in Luxembourg

 A company can only be created in Luxembourg if it has its registered office there, as well as a place of operation: it is not enough to have a simple address there! 

The minimum capital of €12000 must be fully paid up and subscribed to when the company is incorporated. It must be deposited in a bank account in Luxembourg.

Formalities for setting up an SARL in Luxembourg

 The first step in the creation of SARL and SARL-S is the application for a business permit, which is mandatory for commercial, industrial, craft and some liberal activities. This can be done online or by mail to the General Directorate for SMEs and Entrepreneurship of the Ministry of the Economy. To obtain the authorisation, the manager, the director and the majority shareholder of the company must meet the legal conditions of professional qualification and good repute for the activity to be carried out. The place of operation is also controlled, against "letterbox companies". If there is no response within 3 months, the authorisation is considered tacit. You must then check that the company name or sign is available, by making a request to the Luxembourg Trade and Companies Register. A certificate of availability is transmitted. Before embarking on the articles of association, the capital must be blocked in a bank account domiciled in Luxembourg . A certificate is issued, and the account will be unblocked after the company is registered with the RCS. For both the SARL and the SARL-S, the third step is the drafting of the articles of association. While an SARL – S is exempt, the SARL must have its articles of association drawn up by a notary . For a SARL-S, it is still advisable to contact a professional for the drafting of the articles of association : each company has its own personality, the articles of association must reflect this! In the event that the notary has taken charge of drafting the articles of association, he or she will apply for registration with the Trade and Companies Register, and register and file the articles of association with the RCS. The deposit must be made within one month of signing. After filing, the deed of incorporation – the articles of association – are published in the Electronic Collection of Companies and Associations : as in France, this is what makes the company enforceable against third parties. For SARL-S that do not go through a notary, the filing of the articles of association and registration can be carried out directly online, in electronic version. It costs between €20 and €80 for the filing of articles of association. A receipt is sent to the depositor: that's it, the company exists!

✍ In short 

Despite a relatively similar operation, creating your SARL in Luxembourg rather than in France remains more advantageous The Luxembourg SARL is a commercial company in which the liability of each of the partners is limited to the amount of his contribution

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.