Company Formation in Luxembourg

Types of Companies in Luxembourg

Luxembourg offers several legal forms adapted to the needs of entrepreneurs and investors. The three most common forms are the SARL, the SA, and the SARL-S.

SARL - Private Limited Liability Company

The SARL is the most popular legal form in Luxembourg, representing approximately 66% of businesses. It is perfectly suited for SMEs and subsidiaries of international groups.

Characteristic	Details
Minimum capital	€12,000 (fully paid up)
Number of shareholders	1 to 100
Liability	Limited to contributions
Shares	Not freely transferable (approval required)
Corporate bodies	Manager(s) + Shareholders' meeting
Incorporation deed	Notarial deed required

SA - Public Limited Company

The SA is intended for larger companies, particularly those considering a stock exchange listing or requiring a structure with multiple shareholders.

Characteristic	Details
Minimum capital	€30,000 (minimum 25% paid up)
Number of shareholders	1 minimum, unlimited
Liability	Limited to contributions
Shares	Freely transferable
Corporate bodies	Board of Directors or Management Board + Supervisory Board
Stock exchange listing	Yes

SARL-S - Simplified Limited Liability Company

Introduced in 2017, the SARL-S is designed for individual entrepreneurs and small businesses. It offers fast and economical setup with a minimum capital of only €1.

Characteristic	Details
Minimum capital	€1 to €12,000
Number of shareholders	1 to 100 (natural persons only)
Legal reserve	5% of profits until €12,000
Incorporation deed	Private deed possible
Limitation	A person can only be sole shareholder in one SARL-S

Formation Process

Step 1: Preparation

Choice of legal form
Name reservation with the RCS
Drafting of articles of association
Opening a bank account for capital deposit

Step 2: Incorporation

Signing of articles before notary (except SARL-S)
Deposit of share capital
Publication in the Mémorial C (RESA)

Step 3: Registration

Registration with the RCS (Trade and Companies Register)
Application for business establishment authorization at the Ministry of Economy
Tax registration (Administration of Direct Taxes)
VAT registration if necessary

Formation Costs

Item	SARL	SA	SARL-S
Notary fees	~€1,500	~€2,000	€0 - €500
RCS registration	~€200	~€200	~€75
Establishment authorization	~€50	~€50	~€50
Legal fees	€1,500 - €3,000	€2,500 - €5,000	€500 - €1,500
Minimum capital	€12,000	€30,000	€1

Corporate Taxation

Luxembourg companies are subject to several taxes. In 2025, the overall effective rate for companies established in Luxembourg City is approximately 23.87%.

Tax	2025 Rate
Corporate income tax (IRC)	16% (income > €200,000) / 14% (income < €175,000)
Employment fund contribution	7% of IRC
Municipal business tax	~6.75% (Luxembourg City)
Net wealth tax	0.5% (net wealth > €500M)

Advantages of Luxembourg

Attractive taxation: Among the lowest CIT rates in Western Europe
Holding regime: Exemption on dividends and capital gains (participation exemption)
Tax treaties: 103 treaties to avoid double taxation
IP Box: Favorable regime for intellectual property (4.2%)
Political stability: Stable and predictable legal environment
Multilingual: Administration in French, German, and English
EU access: European passport for financial services

Required Documents

For individuals

Copy of passport or ID card
Proof of address less than 3 months old
Criminal record extract (for the manager)
CV and professional qualifications

For legal entities (corporate shareholder)

Extract from the trade register
Certified articles of association
List of directors and beneficial owners
Board resolution authorizing the incorporation

Frequently Asked Questions

What is the minimum capital to start a company in Luxembourg?

The minimum capital depends on the company type: €12,000 for an SARL, €30,000 for an SA, and only €1 for an SARL-S (simplified limited liability company). The capital must be fully paid up at incorporation.

How long does it take to create a company in Luxembourg?

Company formation typically takes 3 to 4 weeks. This includes document preparation, name reservation, notary appointment, registration with the RCS (Trade and Companies Register), and obtaining the business establishment authorization if required.

Can a foreigner create a company in Luxembourg?

Yes, foreigners (EU and non-EU) can create a company in Luxembourg without restriction. There is no residency requirement for shareholders. However, the manager must be able to demonstrate professional integrity.

What is the difference between an SARL and an SA?

The SARL is suitable for SMEs (1-100 shareholders, min. capital €12,000, shares not freely transferable). The SA is for larger companies (min. capital €30,000, shares freely transferable, can be listed on stock exchange). The SARL offers more flexibility for daily management.

What is an SARL-S and what are its advantages?

The SARL-S (Simplified Limited Liability Company) is designed for individual entrepreneurs and small businesses. Advantages: minimum capital of €1, no mandatory notarial deed (private deed possible), fast and economical setup.

Is a business establishment authorization required?

Yes, to conduct commercial, artisanal, or industrial activities in Luxembourg, a business establishment authorization from the Ministry of Economy is required. This authorization verifies the professional qualifications and integrity of the manager.

What documents are needed to create a company?

Required documents: ID of shareholders/managers, proof of address, business plan (for certain activities), proof of capital (bank certificate), diplomas/professional qualifications for the establishment authorization.

What is the total cost of creating a company?

The total cost ranges from €3,000 to €8,000 depending on the company type. This includes: notary fees (~€1,500 for an SARL), RCS registration fees (~€200), legal fees, and establishment authorization fees (~€50).