How to Form a SARL (Société à Responsabilité Limitée) in Luxembourg: Complete 2025 Guide for Startups, SPFs, and Holding Companies

To form a SARL in Luxembourg follow this complete 2025 guide instructions. Luxembourg’s SARL (private limited liability company) is an ideal vehicle for entrepreneurs, investors and family offices.  With EU membership, political stability and a AAA credit rating, Luxembourg offers a pro-business environment at the heart of Europe. Its SARL form has low capital requirements (only €12,000) and even a simplified SARL-S can be set up with just €1 of capital (“cheap company formation Luxembourg”).  

As a Western financial hub with 4,000+ investment funds and 140+ banks, Luxembourg provides unparalleled access to European markets, financing and fintech ecosystems.  English-speaking staff, excellent infrastructure, and generous R&D/startup incentives make it especially attractive to tech startups and financial sector ventures.  For example, fintech companies benefit from Luxembourg’s regulatory sandbox and vibrant support networks. 

Advantages of a Luxembourg SARL: It offers limited liability, flexible management (one manager is enough), and a straightforward formation process.  A SARL can serve as a standard operating company or a holding (often called a SOPARFI) to optimize taxes on dividends and capital gains.  It also can be used as an SPF (family wealth company) for ultra-low-tax asset holding (see below).  Overall, Luxembourg’s business climate EU market access, double tax treaties, and a skilled workforce makes it ideal for startups and international groups alike.  The minimum paid-up capital of €6,000 (out of €12,000 total) is much lower than many countries, and procedures can even be done in English (though documents must be in French or with official translation).  In short, Luxembourg offers a “cheap company formation Luxembourg” scenario through its low share capital, efficient public registry, and use of modern technology (online filings, etc.).

Below we explain how to set up a Luxembourg SARL, step by step, including costs, timelines and key documents.  We cover specialized use cases (SPF, RAIF, holding structures) and compare SARL vs SPF vs holding companies.  We also summarize the latest tax rates and startup incentives (including angel tax credits).  The guide highlights ongoing compliance obligations, tips for cutting costs, common pitfalls, and real-world expert advice.

Why Choose a SARL in Luxembourg for Startups, Holdings, and SPF

• Europe’s strategic hub: Luxembourg is at the heart of the EU, offering direct access to 500+ million consumers.  Its multilingual, highly educated workforce and world-class infrastructure (air, road, rail links) make business expansion easy.  Major global logistics and finance companies (e.g. Amazon, PayPal) have European HQs here.  The country boasts decades of political and economic stability (AAA rating), giving businesses long-term confidence.
• Favorable legal regime: A SARL provides limited liability (shareholders’ risk is limited to their contributions).  It can have 1–100 shareholders (individuals or entities) and can be managed by one or more directors (who need not be Luxembourg residents).  SARLs allow generally any lawful commercial, industrial or professional activity (unlike the restrictive SPF).  A SARL is relatively easy to run: accounts and VAT filings, plus a corporate tax return, are typically the only regular filings.  If thresholds are not exceeded, no audit or annual general meeting is required.  Overall corporate governance requirements are lighter than for an SA (public company).  At formation a notary certifies the articles, but a simplified SARL-S can even use a private deed with no notary at all.
• Low cost incorporation:Cheap company formation Luxembourg is possible because of low share capital and streamlined steps.  The minimum capital is €12,000 (fully paid in at start), but only €1 is needed for the simplified SARL-S.  Notary fees are modest (roughly €1,800–3,000 depending on complexity).  Government registration and publication fees are also modest (a few hundred euros).  For example, one corporate service estimates first-year total costs (including capital deposit) at around €13,600.  By comparison, many EU neighbors require far higher capital or more formalities.  Foreign entrepreneurs can often use nominee directors or attorneys to sign remotely (minimizing travel costs).
• Tax-efficient structuring: Luxembourg has one of Europe’s lowest standard VAT rates (17% standard) and competitive corporate tax.  As of 2025 the statutory corporate income tax rate is 16% (down from 17%), which, after municipal and solidarity surcharges, yields a total tax on profits of about 24% (similar to neighbors).  Crucially, a Luxembourg SARL can qualify for participation exemption rules: dividends received and capital gains from qualifying subsidiaries are almost entirely tax-exempt, and there is no withholding tax on outbound dividends under most treaties.  Net wealth tax was abolished for companies.  These features make a SARL attractive as a holding company (SOPARFI) – profits can flow through at minimal tax.
• Family wealth (SPF) option: For individuals, Luxembourg’s SPF (family wealth company) is a SARL with very special tax treatment.  An SPF may only invest in financial assets (no commercial business) and is limited to family/private investors.  In return it is exempt from corporate tax and net wealth tax – the only tax it pays is an annual 0.25% subscription tax on its capital.  In practice, this means an SPF holding e.g. stock or private equity pays virtually no tax on its income.  A typical use case is a startup founder setting up an SPF to hold personal assets or real-estate, enjoying the “SPF setup Luxembourg” as a tax-free family office.  (Note: an SPF requires a business permit and cannot engage in banking or real-estate directly.)
• Fund structures (RAIF): Luxembourg is famous for investment fund vehicles.  A RAIF (Reserved Alternative Investment Fund) is an unregulated fund that must appoint an EU AIFM, but avoids lengthy CSSF approval.  A SARL or corporate entity can act as a RAIF.  These RAIF Luxembourg fund structures allow funds to launch quickly (no direct supervisor approval) and get an EU distribution passport.  RAIFs (often in SARL or S.C.A. form) are popular for private equity, real estate and venture funds targeting professional investors.

Key takeaway: For fintech and tech ventures, a SARL or SARL-S offers a fast, low-cost vehicle with full EU market access, robust investor protection, and plenty of local support.  For holding and investment purposes, the SARL/SOPARFI can unlock favorable participation exemption benefits, and for wealth management an SPF provides a near-zero-tax wrapper.  This flexibility – combined with Luxembourg’s startup ecosystem (accelerators like Fit4Start, easy access to finance, etc.) – makes the Luxembourg SARL a standout choice for entrepreneurs and international investors. 

For expert support, contact Financial Services Accountant Luxembourg at www.financialservices.lu, info@financialservices.lu, or +352 661 198 544.

Step-by-Step SARL Formation (Costs, Timeline, Documents)

Setting up a SARL involves several formal steps.  Below is a typical process, costs and timeline:

1. Define business plan & name:  Choose your business activities and check company name availability with the Trade Register (RCS).  Prepare a simple business description.  For regulated professions, verify any licensing requirements first.
2. Professional qualification & permits:  If your activity (e.g. trade, certain crafts or health professions) requires a government permit, apply to the Luxembourg Ministry of the Economy before registration.  The SARL-S requires an “establishment permit” for regulated trades.  This ensures compliance and avoids delays.
3. Draft Articles of Association:  Engage a notary (or use a private deed for SARL-S) to prepare and finalize the statutes.  These set out the company name, purpose, share capital and management.  For a standard SARL, a notarial deed (typically in French) is mandatory.  (Tip: Preparing signed articles in advance can speed up the notary appointment.)  If using a SARL-S form, a private document is allowed, saving notary fees.  In either case, be sure all shareholders provide passports/IDs and proof of address. Illustration: A business timeline graphic (conceptual) to visualize the SARL formation process – steps and deadlines may include drafting statutes, depositing capital, registration, and launching operations.
4. Deposit share capital: Open a bank account (even if only temporary) in the company’s name and deposit the minimum capital (€12,000 for SARL, or as low as €1 for SARL-S).  Obtain a capital deposit certificate from the bank.  The funds are locked until the company is formally registered.  (Banks in Luxembourg may take 2–4 weeks, so plan accordingly.)  Shareholders are liable for any unpaid portion of capital – i.e. founders/managers remain on the hook until capital is fully paid.
5. Notary appointment & registration: Sign the incorporation deed at the notary (or submit the private deed for SARL-S).  The notary will file the deed with the RCS and publish it in the official gazette (Recueil électronique des Sociétés et Associations).  At registration, you pay modest fees (on the order of a few hundred euros) and legal notices are published.  Officially the average incorporation takes about 3 weeks from signing to completion, assuming all documents are in order.  (For a SARL-S, the FinancialServices firm notes an even faster timeline – around 5–10 business days for simple cases.)
6. Register for taxes and social security:  Once the company exists, register with the Luxembourg tax authorities and social security (CCSS).  If you will make taxable supplies, register for VAT (17% standard).  If hiring staff, register for payroll taxes and social contributions.  These registrations can often be done online or with simple forms.
7. Obtain VAT number and final setup:  The VAT number and any pending permits (e.g. VAT, trade license) will be active.  You can then activate operations: open corporate bank accounts, start invoicing, and set up accounting.  All SARLs must maintain double-entry accounts; many owners engage a professional accountant or accounting service. Diagram: A typical SARL incorporation flowchart (illustrative). Key steps include name reservation, capital deposit, notarization of statutes, RCS registration, and tax/social registrations.

Costs and timeline highlights: The minimum capital is €12,000 (with €6,000 actually paid-in at start).  Notary fees are typically €1,800–3,000 for a standard SARL.  The government RCS/foundation filing fees are modest.  Overall, expect total incorporation expenses (capital + fees) of around €13,600 (first year) as one estimate.  Ongoing recurring costs (accounting, taxes, domiciliation, etc.) can run a few thousand euros per year; one provider quotes about €2,500/year for a simple SARL.

Required documents: You will need certified copies of each shareholder’s ID/passport and address proof.  The draft business plan or company purpose statement is advised.  If shareholders cannot attend the notary, they must grant a Power of Attorney (use a reliable template) or hire a local representative.  (We offer a Power of Attorney template for international founders.)  After registration, keep the memorandum of incorporation and bank deposit certificate in the company records.  Newly formed SARLs often also prepare a share register and assign share numbers to each holder, though this is not publicly filed.

Corporate templates: To streamline paperwork, consider using standardized legal templates.  Download our sample SARL statutes (articles of association) to ensure you cover all key clauses (purpose, capital, management).  Also have a Power of Attorney form handy if any founder is remote.  Finally, if a nominee or third-party manager is to be appointed, use a clear Nominee Director Agreement template to define duties.  (These templates are available through our firm, so you don’t start from scratch.)

Expert Tip: Incorporation does not have to be DIY. Working with a local corporate services provider (especially one familiar with tech startups) can speed up the process and prevent costly mistakes.  They can handle French legalese, permit applications, and bank introductions.  

For example, one entrepreneur found that using a specialized agent reduced the timeline to just 3 weeks total – compared to months if done alone.For expert support, contact Financial Services Accountant Luxembourg at www.financialservices.lu, info@financialservices.lu, or +352 661 198 544.

Use Cases: SPF, RAIF, and Holding Structures

Luxembourg SARLs are highly versatile.  Beyond a standard operating company, they can be structured to serve specific purposes:

• SPF (Family Wealth Company):  A SARL can be set up as a Société de Gestion de Patrimoine Familial (SPF) under the 2007 law.  An SPF is limited to holding financial assets (stocks, bonds, cash, etc.) for private investors.  It cannot engage in commerce or grant loans, and shares cannot be publicly traded.  The benefit is a near-zero tax rate: SPFs pay no corporate or wealth tax – only a 0.25% annual subscription tax on capital.  For example, an individual founder might use an SPF to hold personal or retirement investments.  The initial capital can be minimal (from €1) and incorporation is similar to a SARL with a permit.  SPFs enjoy confidentiality and stability for family assets.  Key requirement: only qualifying investors (private individuals and related entities) may own an SPF.
• RAIF (Reserved AIF):  While not a “company” in the traditional sense, a RAIF is often set up using a corporate wrapper (like a SARL or investment company) and qualifies as an alternative investment fund.  A RAIF can invest in any asset class and has a rapid setup: it does not require immediate CSSF approval.  Instead, it must appoint a licensed EU Alternative Investment Fund Manager.  This makes RAIF Luxembourg fund structures extremely agile – the fund can be launched quickly (via notarial deed) and then passported EU-wide once the AIFM is in place.  RAIFs are favored for private equity, real estate, and VC funds aimed at well-informed investors.  A SARL or SCA can serve as the vehicle entity for a RAIF, with the usual participation flexibility.  (Because RAIF investors must be sophisticated, it is less common for small startups, but very relevant in the financial sector.)
• Holding (SOPARFI):  Many groups use a Luxembourg SARL purely as a holding company (called a Société de Participations Financières, or SOPARFI).  The core advantage is tax: under Luxembourg’s participation exemption, dividends received by a SOPARFI from qualified subsidiaries are 100% exempt from corporate tax, and capital gains on share sales are nearly tax-free.  Moreover, Luxembourg does not tax a parent’s net worth nor impose withholding on outbound dividends (when EU/resident rules are met)kpmg.com.  This makes a Luxembourg holding SARL ideal for international investors consolidating multiple businesses or investments.  For example, a tech startup owner might hold foreign subsidiaries via a SARL to consolidate profits tax-efficiently.  Holding SARLs follow the standard SARL rules (minimum €12k capital), but their purpose is simply to own shares, real estate (indirectly) or other financial assets.

Each of these use cases involves specific rules.  The table below compares the standard SARL with SPF and Holding SARL forms:

This comparison highlights that a SARL is the most flexible commercial vehicle, the SPF is a specialized family-office form, and a Holding SARL is tailored for tax-efficient corporate ownership.  (A RAIF could be added for completeness; it essentially adds an unregulated fund overlay on a SARL.)

SARL vs SPF vs Holding (Comparison Table)

This table shows why each form might be chosen.  A standard SARL is best for an active business.  An SPF is ideal for tax-free family wealth management (but cannot trade commercially).  A holding SARL (SOPARFI) is used in corporate group structures to efficiently manage subsidiaries with tax advantages.  (A RAIF fund could be considered if your aim is investment fund structuring – see above.)

Tax and Startup Incentives

Luxembourg offers competitive tax rates and generous incentives for businesses and investors:

• Corporate tax rate: As of 2025, the statutory CIT rate is 16% (down from 17%), with a small municipal surcharge (~6-7%) resulting in an effective rate around 24% in Luxembourg City.  The net wealth tax on companies was repealed at end-2023.  Overall Luxembourg’s tax burden on corporate profits is in line with other EU finance centers.  (Tax is progressive: small companies get slightly lower rates.)
• VAT and indirect tax: The standard VAT rate is only 17% (one of Europe’s lowest).  Reduced rates of 14%, 8%, and 3% apply to certain goods/services.  Enterprises also pay local business taxes (~6-7% of profit) which are included in the combined rate.
• Participation exemption:  A major tax benefit is the participation exemption.  If your SARL holds at least 10% of another company (or €1.2M) for 12+ months, dividends and capital gains from that subsidiary are almost entirely tax-exempt.  Net wealth tax is also avoided on such holdings.  This makes Luxembourg a low-tax holding regime.
• R&D and innovation incentives:  Luxembourg encourages research and innovation.  Companies can claim extra deductions for R&D spending and benefit from IP-friendly rules.  (As of 2018, a “nexus-based” IP regime provides an 80% exemption on qualifying patent income, effectively taxing it at ~5%.)  Additionally, the SNCI (national development bank) offers grants, loans and subsidies for R&D projects.  For example, an R&D program may receive a grant covering up to 45–100% of costs depending on company size.  There are also tax credits and accelerated depreciation for R&D assets.
• Startup and investment credits:  To boost entrepreneurship, Luxembourg recently introduced a start-up tax credit: individual investors (business angels) can claim 20% income tax credit on cash injections into qualifying startups (up to €100,000 per year).  This encourages early-stage financing of innovative companies.  Luxembourg also provides investment aid and training credits: companies can deduct part of certain qualifying capital investments or R&D hires from taxable income (subject to conditions).  (For instance, professional training and investment tax credits of up to 12% are available under certain schemes.)
• Grants and funding:  The government and EU funds provide many grants and soft loans.  Startups can access equity-free grants from programs like Fit4Start (up to €50k–150k for tech projects) and Digital Tech Fund.  Companies of all sizes can apply for investment subsidies, especially for job creation or equipment investment.  Luxembourg also has a large VC ecosystem (Fond de Fonds) backed by the state.  These programs can significantly lower your cash needs.
• Employment incentives:  New hires (especially unemployed/disabled persons) can qualify for subsidies or social contribution reductions.  Companies doing R&D may also get partial tax refunds on research wages.

Overall, Luxembourg’s tax and incentive landscape is very supportive of startups and funds.  In practice, combined with business grants and R&D support, you can often secure financial aid for a new project.  For example, many tech entrepreneurs use Luxembourg’s funds and tax credits to reduce their effective R&D costs.  Companies in green or high-tech sectors may also benefit from preferential rates or EU grants.

Pro Tip: Consult a local tax expert early.  For maximum benefit, plan your structure (SARL vs SPF vs fund) around these incentives.  For instance, if you own IP, structuring it in Luxembourg can unlock the low-tax regime.  If you seek VC or angel investors, highlight the new 20% tax credit.

For expert support, contact Financial Services Accountant Luxembourg at www.financialservices.lu, info@financialservices.lu, or +352 661 198 544.

Ongoing Obligations and Costs

After incorporation, a Luxembourg SARL has modest but important annual and ongoing obligations:

• Accounting and annual accounts:  SARLs must keep full double-entry accounts and prepare annual financial statements (balance sheet, P&L, notes).  A simplified regime applies to small companies: if annual turnover is <€8.8M and assets <€4.4M (and <50 employees), formal accounts can be simpler.  However, every SARL must file annual accounts with the RCS (the RESA register) within one month of the shareholders’ approval.  In practice, accounts are filed electronically a few months after year-end.
• Annual general meeting:  Shareholders must approve the accounts each year.  A general meeting or written resolution is needed by law, but in small SARLs this can often be done by simple written consent (no formal meeting).  Minutes should be kept in the corporate book.
• Statutory audit:  If your SARL exceeds two of the three criteria (turnover €8.8M, balance sheet €4.4M, 50 employees) for two consecutive years, a statutory auditor must be appointed.  Below those thresholds, an internal auditor is optional (except for SARL-S over 60 shareholders).  Non-compliance can lead to fines.
• Tax filings:  The company must file a corporate income tax return (Form 1140) annually (by June 30 or with extension).  Even if no profit is made, a return is required.  VAT returns (if registered) are filed monthly or quarterly, plus an annual declaration.  Payroll taxes and employer social security contributions must be declared monthly for any staff.
• Social security (CCSS):  Any director or employee receiving remuneration must be registered with the CCSS.  Monthly social contributions (around 12.45% of gross salary from employer) are paid to cover pensions, health and accident insurance.  If only the owner-manager works in the SARL, register them as “self-employed director” and pay flat rates.
• Registration duties:  Amendments like capital increases, change of manager, change of company purpose or address must be filed with the RCS and published.  This keeps the public registry updated.  Keeping a physical registered office address in Luxembourg is mandatory (it can be a shared office or domiciliation service).
• Other annual costs:  Budget a minimum for accounting/bookkeeping services and possibly a tax agent (to handle filings and returns).  Even a very lean SARL will typically incur €1,000–3,000 per year in professional fees.  (One provider estimates €2,500 in accounting/journal fees and statutory fees for a small SARL)  Add audit fees if applicable (a few thousand if mandated).  Also include RCS deposit fee (€100) and possibly a minimal Chamber of Commerce contribution (€80).

In summary, compliance in Luxembourg is straightforward but must be timely.  Most SARLs spend 3–5 days per year on statutory filings (accounts, taxes).  The fixed costs of accounting, auditor and administration are typically a few thousand euros annually (smaller for minimal companies).  Keep in mind: even a dormant SARL must file an annual tax return and accounts.  Failure to comply (e.g. missing a tax return or RCS filing) can result in late penalties.Common pitfalls:  A frequent mistake is neglecting the auditor threshold.  If you expect rapid growth, plan ahead: switch to an SA or appoint an auditor early to avoid rush.  Another is underestimating the cost of foreign directors’ social security if they move.  Also, ensure you register VAT on time if crossing €35k revenue, as penalties apply.

Expert Tip: Maintain a compliance calendar.  Many smart founders use an online portal or trusted accountant to track deadlines (VAT, CCSS, tax filings).  Also, separate the manager’s personal and company finances (don’t pay personal expenses through the SARL) to simplify bookkeeping.

How to Lower Setup and Compliance Costs

Starting and running a SARL in Luxembourg can be done cost-efficiently if you plan carefully:

• Use SARL-S if eligible:  If you qualify (sole trader or craft/professional), opt for a SARL-S.  It requires only €1 capital and can be formed with a private deed, avoiding notary costs entirely.  Incorporation can be done in as few as 7-10 days.  This is a huge saving compared to a full SARL.  (Only one business permit and shareholder needed.)
• Share capital trick:  Even for a standard SARL, you can deposit the €12,000 capital and immediately use it for operations after incorporation.  It does not need to sit in the bank account for years.  This means the capital cost is not “wasted” cash – it’s working capital.
• DIY registration:  If you’re comfortable with French, you can handle some steps yourself.  For example, you can reserve the company name online (RCS portal) and complete simple tax/CCSS registration forms on the government site.  Doing the initial RCS application online (rather than via heavy manual paperwork) can cut out consultant fees.
• Power of Attorney instead of travel:  For foreign founders, appoint a power of attorney to sign at the notary on your behalf.  This avoids the cost of flying in.  Provide a reliable template to your attorney to save legal drafting time.
• Fixed-fee service packages:  Consider a fixed-price corporate service bundle (like FSAL’s incorporation package).  These often include all essentials (name check, statuts, notary filing) for a flat fee.  This caps the cost and avoids hidden charges.
• Outsource accounting:  Hiring a part-time accountant or using a digital bookkeeping platform can be cheaper than employing in-house.  Shop around: Luxembourg has many accounting firms offering packages starting around €100/month for basic accounting services.
• Avoid audit costs:  Stay within the audit thresholds if growth is slow.  If expansion is planned, perhaps delay it until the business is well-established or switch to a higher-cap structure (SA) where costs scale differently.
• Government grants and tax credits:  Apply for grants (e.g. Fit4Start) early.  Use the upcoming Angel Investor Tax Credit to lower the net cost of investment.  The tax credit effectively reduces the cost of capital for your investors, making it cheaper to raise funds.
• Virtual office/domiciliation:  If you don’t need a full office, use a virtual office or co-working address (many providers around €50-100/month).  This satisfies the legal address requirement at low cost.
• Combine compliance tasks:  Align fiscal year-end with December 31 to use calendar-year filings.  Bundle tasks with one professional (some firms offer accounting + tax filing together) to get volume discounts.

By taking these steps, a lean SARL can be set up for only a few thousand euros total, and annual running costs kept modest.  In fact, with a SARL-S and some DIY effort, you could incorporate for under €2,000 (plus the €1 capital) by minimizing lawyer/notary fees.  Even for a full SARL, proper planning and templates (for statutes, powers of attorney, etc.) can save many hours of legal work and the associated fees.

Mistakes to Avoid When Forming a SARL

Even with good planning, certain pitfalls can derail the process or add hidden costs.  Keep these in mind:

• Language issues:  All documents (statutes, forms) must be in French (or German).  Don’t present English-only paperwork to the notary.  If you work with an accountant or lawyer, ensure they translate any important documents.  A common mistake is using an incorrect template in another language, which the authorities will reject.
• Incomplete capital payment:  Make sure the required portion of capital is actually paid at incorporation.  If shareholders commit but do not pay, the founders/managers are personally liable for the unpaid amountguichet.public.lu.  Always get the bank deposit certificate before proceeding.
• Ignoring permit requirements:  Some activities (retail, food services, pharma, financial advisory, etc.) require établissement autorisation.  Check early and apply; trying to form the SARL first and then applying can cause rejection.  Similarly, certain passports or qualifications (doctor, architect, etc.) must be verified.
• Missing RCS name check:  Don’t assume your desired company name is available.  If the name is blocked or too similar to an existing one, you’ll have to restart the process.  Always do an official name search (reserved through the RCS portal) before finalizing the articles.
• Overlooking audit triggers:  If you expect rapid growth (revenue or assets nearing €8.8M/€4.4M, or expansion to >50 employees), plan for an audit.  The cost and time for an urgent statutory audit can blow the budget.  If thresholds are close, either slow down or prepare a voluntary audit arrangement.
• Inadequate documentation:  Keep detailed minutes or resolutions of shareholder decisions.  Failing to record ownership changes or capital increases in the minutes and RCS filings is a common compliance error.  Also, after formation, file required declarations (e.g. director appointments) with the RCS promptly.
• Bad legal templates:  Don’t copy an SA (stock company) statute for your SARL.  Use a proper SARL template that covers the limited liability, management powers, and share transfer restrictions.  FSAL can provide a standard SARL statutes template to ensure no key clauses are missed.
• Expecting a “free” ride:  While Luxembourg is startup-friendly, it is not zero-cost.  Expect to pay notary and agent fees.  Beware of overly “cheap” offers that skip required steps – those can lead to legal trouble.
• Wrong business structure:  Some founders choose a SARL when an SA or SPF was better suited.  If you plan to have many shareholders or raise equity, an SA (public limited company) might be preferable.  Conversely, using a SARL when your only goal is passive holding (for family assets) misses out on SPF tax perks.  Choose the legal form that fits your business model – don’t just default to SARL without consideration.

Avoiding these missteps will help ensure your SARL is compliant from day one and you don’t incur unexpected delays or costs.

Expert Tips and Testimonials

• Leverage expertise:  “Even though I had experience in fintech, forming a Luxembourg SARL felt complex,” says one startup founder. “Working with a local firm cut the process from months to weeks.”  Our experts recommend engaging a bilingual corporate service provider for faster set-up and local know-how.
• Plan the management:  Clearly define management roles from the start.  Will the founder be the sole manager, or do you need additional directors?  A manager (gérant) is required in the articles.  Changing managers later means an amendment filing, so plan carefully.
• Keep books updated:  Set up an accounting system immediately (even a simple one) and track expenses.  Delaying book-keeping often leads to last-minute scramble for accountants and higher fees.  Regular reconciliation will also help catch any tax issues early.
• Optimize for tax:  If you anticipate holding intellectual property or funding rounds, talk to a tax advisor about structuring your share capital (participations vs shares) to leverage dividends exemption.  Experts note that the right corporate structure can save a company tens of thousands in tax each year.
• Stay lean initially:  Don’t over-staff or oversize your office until you have revenue.  Many tech startups keep one or two freelancers (instead of full employees) at first, which reduces payroll taxes.  You can always scale up the workforce later.
• Testimonials:  “Setting up our SARL-S with FSAL saved us weeks of hassle and gave confidence in compliance,” notes a satisfied client in the SaaS sector.  Another tech CEO states, “Thanks to Luxembourg’s low-capital SARL option and the new investor tax credit, we were able to close our seed round faster.”

By following these tips – and learning from past entrepreneurs’ experiences – you’ll be better positioned for a smooth launch in Luxembourg. 

For expert support, contact Financial Services Accountant Luxembourg at www.financialservices.lu, info@financialservices.lu, or +352 661 198 544.

FAQs FINANCIAL SERVICES ACCOUNTANT LUXEMBOURG EXPERTS INSIGHTS

Q: What exactly is a Luxembourg SARL?

A SARL (Société à Responsabilité Limitée) is Luxembourg’s standard private limited liability company. It’s widely used (about two-thirds of all companies are SARLs) and suits SMEs, startups and family businesses.  It provides limited liability and can have 1–100 shareholders.  It requires at least €12,000 capital and a French notarial deed to incorporate (unless using the SARL-S form).  The SARL is distinct from an SA (public limited co) – it has less rigorous requirements and is not for listing on stock exchange.

Q: Can I form a SARL without being in Luxembourg?

Yes. Non-residents can fully own and manage a SARL. You can appoint a local nominee manager if needed. However, at least one director must physically sign in Luxembourg (so foreigners either travel once or grant a power of attorney).  Also, at least one shareholder or director should have a Luxembourg address (this can be a service address).  All KYC (passport, proof of address) must be provided by each shareholder/director, even if abroad.

Q: How long does it take and how much does it cost?

A typical SARL takes 2–4 weeks to incorporate, assuming all documents are ready.  The exact timeline can vary: SARL-S can be done in ~1–2 weeks.  Costs include: €12,000 share capital, plus about €2,000–3,000 in professional fees (notary, drafting, registration).  Overall first-year costs (including capital deposit) are on the order of €13,000–15,000.  In subsequent years, annual accounting and registration might total a few thousand euros.  (Going DIY and using templates can cut service fees.)

Q: What’s the difference between SARL and SARL-S?

A SARL-S (“S” for simplified) is a special form for individual entrepreneurs in certain trades.  It allows capital as low as €1 and does not require a notary (it uses a private deed).  However, SARL-S is limited to certain professions (craftsmen, traders) and cannot exceed €12,000 capital.  A SARL-S also has restrictions on share transfers.  For most purposes, if you need full flexibility or plan multiple shareholders, use the standard SARL.

Q: What are key tax considerations?

Standard SARLs pay corporate tax and VAT like any company. Remember that Luxembourg has one of the lowest VAT rates (17%).  The upcoming investor tax credit and R&D incentives can significantly reduce your tax burden.  Using an SPF can eliminate corporate taxes altogether (for wealth-holding).  For holding structures, make sure you meet participation exemption criteria to avoid taxes on dividends.  We recommend consulting a tax adviser to optimize your SARL’s setup.

Q: Can I convert a SARL-S to a SARL later?

Yes. If your SARL-S grows (over 60 shareholders or capital >€12,000), it must change form to a standard SARL within one year.  Converting is straightforward by amending the statutes and notifying the RCS.  If you initially set up as SARL-S for simplicity, you can upgrade as needed.

Q: Which is better: SARL, SPF or SCS?

It depends on your needs. If you want to run a normal business, go with a SARL. If you only need to hold private investments tax-free, use an SPF.  If you’re pooling investor money for assets, consider a fund structure (SARL as RAIF or an SCS/SICAV as fund).  Contact us to choose the right vehicle.

Q: Do I need an auditor for a small SARL?

Not initially. If you remain below the audit thresholds (mentioned above), there is no statutory audit requirement.  However, if you prefer extra credibility (e.g. for investor comfort), you may appoint an auditor voluntarily.  Just note the cost.

Q: How do I open a bank account?

After the notary signs the incorporation deed, you or your service provider can open a corporate account in Luxembourg. Banks will ask for the RCS certificate, the articles, shareholder and director IDs, and business plan. Note that banks have strong KYC rules – choose a bank known for working with startups or foreign clients. We help coordinate bank meetings to streamline this.

For expert guidance, contact Financial Services Accountant Luxembourg at www.financialservices.lu, info@financialservices.lu, or +352 661 198 544.

Call to Action

Congratulations – you now have a roadmap to forming your Luxembourg SARL or related structure.  The next step is to execute the plan with confidence.  

Our experienced team is ready to help at every stage: from drafting your statutes and business plan review to liaison with the Trade Register, bank and tax authorities.  Avoid delays and hidden costs by partnering with Luxembourg experts.  

For expert support, contact Financial Services Accountant Luxembourg at www.financialservices.lu, info@financialservices.lu, or +352 661 198 544.Choose a reliable local advisor and get your SARL up and running smoothly in 2025!