Voluntary dissolution in Luxembourg is the process by which shareholders decide to close a solvent company that has either achieved its purpose, completed its business cycle, or is no longer needed. Unlike judicial liquidation, which is imposed by the court in case of insolvency, voluntary dissolution is a shareholder-driven process carried out under controlled conditions.
A company may choose voluntary dissolution when:
Its business objectives have been achieved.
Activities are no longer profitable or strategic.
The shareholders wish to retire, restructure, or redirect investments.
The entity is no longer required within a larger group structure.
Key point: Voluntary liquidation is only possible if the company is solvent, meaning it can fully settle its debts before distributing assets to shareholders.
Voluntary liquidation in Luxembourg is governed by the Law of 10 August 1915 on commercial companies. It requires:
Extraordinary general meeting (EGM) of shareholders.
A resolution to dissolve the company.
The appointment of a liquidator to oversee the process.
The decision must be filed with the Luxembourg Business Register (RCS) and published in the Recueil Électronique des Sociétés et Associations (RESA).
Held in an extraordinary general meeting before a notary.
Approval by a qualified majority of shareholders (depending on company form).
Can be a professional, lawyer, or accountant.
Responsible for settling debts, collecting receivables, and selling assets.
Payment of suppliers, employees, banks, and tax authorities.
Confirmation that no outstanding liabilities remain.
Once debts are cleared, remaining assets are distributed to shareholders according to their participation in the share capital.
Preparation of liquidation accounts under LuxGAAP/IFRS.
Approval of final accounts in a general meeting.
Filing with the RCS and publication in RESA.
The company is officially struck off the register.
The entity ceases to exist as a legal person.
The liquidator acts as the legal representative of the company during the process. Duties include:
Collecting outstanding receivables.
Selling assets and negotiating settlements.
Preparing liquidation balance sheets.
Reporting regularly to shareholders.
Ensuring compliance with filing obligations.
Typically 12–18 months, depending on the complexity of assets and outstanding matters.
Can be shorter for small companies with limited assets and liabilities.
Incomplete debt settlement may expose shareholders or directors to liability.
Failure to publish in RESA can invalidate the process.
Tax mismanagement (capital gains, VAT, corporate tax) can lead to penalties.
Lack of proper documentation may delay deregistration.
Although voluntary liquidation appears straightforward, it requires:
Mastery of Luxembourg company law.
Accurate preparation of financial statements.
Coordination with the RCS, notaries, and tax authorities.
At Financial Services Accountant Luxembourg, we guide shareholders through each step, ensuring that:
Debts are settled correctly.
Liquidation accounts are compliant with LuxGAAP.
All legal filings are completed without error.
1. What is the main difference between voluntary and judicial liquidation?
Voluntary liquidation is initiated by shareholders when the company is solvent; judicial liquidation is ordered by the court when the company is insolvent.
2. Who appoints the liquidator?
The shareholders in a general meeting appoint the liquidator, who must then be approved in the notarial deed.
3. How long does voluntary dissolution take?
On average 12–18 months, depending on the company’s complexity.
4. Can foreign shareholders initiate a voluntary liquidation?
Yes, foreign shareholders can dissolve Luxembourg companies, provided local formalities are respected.
5. What happens to employees during the process?
All employees must be paid and contracts terminated according to Luxembourg labour law before the company can be deregistered.
Voluntary dissolution in Luxembourg offers shareholders a structured way to close a company on their own terms, provided the entity is solvent. By appointing a liquidator and following the proper legal framework, debts can be settled and assets distributed smoothly.
At Financial Services Accountant Luxembourg, we provide end-to-end support for voluntary dissolutions, ensuring full compliance and a seamless process.
Request a confidential consultation today to plan your company’s voluntary liquidation with confidence.
See also: Judicial Liquidation Luxembourg
See also: Company Takeover Luxembourg
See also: Tax management