Learn the three-stage liquidation process in Luxembourg: dissolution, liquidation, and closure. Step-by-step legal guide with expert insights.
The three-stage liquidation process in Luxembourg is the formal procedure for closing a company in compliance with the Law of 10 August 1915 on commercial companies. Whether through voluntary dissolution (initiated by shareholders) or judicial liquidation (ordered by the court), liquidation follows a clear three-phase structure:
Dissolution decision – the shareholders formally resolve to close the company.
Liquidation phase – debts are settled, assets sold, and final accounts prepared.
Closure (radiation) – the company is deregistered from the Luxembourg Business Register (RCS).
Understanding these stages is essential for entrepreneurs, investors, and directors, as each phase carries specific legal, tax, and financial obligations. Mistakes can lead to delays, penalties, or even personal liability for directors.
In this guide, we provide a detailed, expert-level overview of each stage, enriched with case examples, compliance tips, and insights from practice.
The first step in the liquidation process is the formal decision to dissolve the company.
Adopted in an extraordinary general meeting (EGM) before a notary.
Requires a qualified majority, depending on company type (SARL, SA, etc.).
Resolution specifies:
Decision to dissolve.
Appointment of a liquidator.
Liquidator’s powers and remuneration.
The decision is filed with the Luxembourg Business Register (RCS).
Published in the Recueil Électronique des Sociétés et Associations (RESA).
From this point, the company enters into liquidation status and must include “in liquidation” in its name.
Tip from practice: Drafting the resolution carefully avoids disputes over the liquidator’s authority later.
This is the most complex stage, during which the company’s affairs are wound up.
The liquidator replaces the directors and becomes the legal representative. Duties include:
Settling outstanding debts with suppliers, banks, tax authorities, and employees.
Collecting receivables.
Selling assets (properties, equipment, intellectual property, participations).
Preparing interim and final liquidation accounts.
Reporting regularly to shareholders.
Creditors must be paid according to legal priority:
Secured creditors (mortgages, pledges).
Employees (wages, severance).
State (taxes, social contributions).
Unsecured creditors.
Once debts are cleared, remaining assets are distributed to shareholders in proportion to their shares.
Distributions can include cash or in-kind transfers (e.g., real estate).
Preparation of liquidation accounts under LuxGAAP.
Filing of final corporate tax and VAT returns.
Potential capital gains taxation on distributed assets.
Case Study: A holding company with €5M assets and €200k debts successfully liquidated in 9 months, distributing €4.8M tax-efficiently after early consultation with tax advisors.
Once liquidation is complete, the company must be officially removed from the register.
Liquidator presents final accounts to shareholders in a general meeting.
Shareholders vote to discharge the liquidator from responsibilities.
Final accounts filed with the Luxembourg Business Register (RCS).
Notice published in the RESA.
Company ceases to exist as a legal entity.
Practical Insight: Incomplete deregistration filings are a common cause of delays. Always ensure taxes, CCSS, and RCS obligations are closed simultaneously.
Stage | Actions | Estimated Duration |
|---|---|---|
Stage 1: Dissolution | Shareholder resolution, appointment of liquidator, RCS filing | 1–2 months |
Stage 2: Liquidation | Settlement of debts, sale of assets, tax compliance | 6–18 months |
Stage 3: Closure | Final accounts, deregistration at RCS | 1–2 months |
Total duration: 8–24 months (simpler companies may complete in under a year).
Hidden debts discovered late in the process.
Tax mismanagement, leading to reassessments or penalties.
Shareholder disputes about liquidator’s powers.
Cross-border assets complicating liquidation.
Expert Tip: Engage an experienced liquidator early to avoid costly mistakes.
Simplified liquidation for small companies (no employees, no disputes, few creditors).
Merger or restructuring to transfer activities instead of liquidation.
Bankruptcy (faillite) in case of insolvency.
The three-stage liquidation process in Luxembourg requires coordination between shareholders, notaries, accountants, tax advisors, and the RCS. Errors in filings or tax compliance can delay closure or expose directors to liability.
At Financial Services Accountant Luxembourg, we:
Act as liquidator or assist in liquidator appointments.
Prepare liquidation accounts and tax filings.
Coordinate with notaries, auditors, and authorities.
Ensure efficient, compliant, and tax-optimized closures.
Dissolution decision, liquidation phase, and closure (radiation).
Typically 8–24 months, depending on company size and complexity.
A shareholder, professional accountant, or external fiduciary appointed by the general meeting.
Contracts must be terminated and employees paid before closure.
Voluntary is shareholder-initiated for solvent companies; judicial is court-ordered when insolvent.
The three-stage liquidation process in Luxembourg provides a structured pathway to close a company while protecting creditors and ensuring compliance with local laws. From the shareholder resolution to the final deregistration, each stage requires careful handling of legal, financial, and tax obligations.
At Financial Services Accountant Luxembourg, we simplify this complex process for entrepreneurs, investors, and international groups.
Get a call with an expert and let our experts manage your liquidation with precision and efficiency.
“The three-stage liquidation process in Luxembourg is designed to combine structure with transparency. From the decision to liquidate, through the appointment of the liquidator, to the final closure of accounts, each step ensures compliance, protects stakeholders, and provides a clear framework for bringing business matters to an orderly conclusion.” Mickaël LOC Managing Director Financial Services Accountant Luxembourg
They talk about us on Le Figaro, read the full article Financial Services Luxembourg, expert en création d’entreprise et services comptables
See also: Voluntary Liquidation Luxembourg
See also: Judicial Liquidation Luxembourg
See also: Bankruptcy Luxembourg
See also: Simplified Liquidation Luxembourg