Private Limited Liability Company in Luxembourg
A Private Limited Liability Company (Société à responsabilité limitée – SARL) is one of the most common company types in Luxembourg.
A company, being a distinct legal entity, can gain, own, enjoy and alienate property in its own name. The shareholders aren’t the owners of the SARL’s property. The company itself is the true owner. In the company form of organization, it is possible for a company to make a valid and effective contract with any of its members. It is also possible for a person to be in control of a company and be in its employment. Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company. An SARL can be formed for any business purpose. However, insurance companies, savings companies and investment companies cannot be formed as Private Limited Liability Company.
Private Limited Liability Company incorporation procedure
Here is Private Limited Liability Company incorporation procedure divided into 3 main stages:
Stage 1: Bank account
The first step to register a SARL in Luxembourg is to open a corporate bank account where the share capital will be deposited.
Stage 2: Company name
The second step is to choose and reserve the company name, followed by preparation of the Articles of Association, which together with the shareholders and directors or managers’ details have to be filed with the RCS. Lawyers in Luxembourg or a public notary must prepare the incorporation documents.
Stage 3: Business license
The last steps of the company registration process comprise applying for the business license with the Ministry of Economy and filing with the tax authorities in Luxembourg.
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Register Private Limited Liability Company (SARL) in Luxembourg jurisdiction with our professional assistance.
Private Limited Liability Company management
A Private Limited Liability Company is managed by one or more managers, who may or may not be shareholders, appointed by the shareholders, either in the articles of association or by subsequent deed, for a limited or unlimited term.
The manager
A legal person may be appointed to manage an SARL company. Except for actions requiring a decision by the shareholders, as provided for by law or in the articles of association, the manager/s may undertake any action they deem necessary or useful for achieving the corporate purpose. They represent the company regarding third parties and in the courts. There are no restrictions on the nationality of an SARL’s managers – they may be EU nationals, Luxembourg nationals, or nationals of any third country. Company managers can only be removed from office for legitimate reasons, such as – obvious incapacity, unfair competition to the detriment of the SARL company or misappropriation of funds, unless otherwise specified in the articles of association.
Shareholders
A Private Limited Liability can have 2 to 100 shareholders. There is also simplified a form of SARL known as Société à responsabilité limitée simplifiée – SARL-S. The simplified SARL is an exception to the traditional idea of a company in company law, in that it is an SARL that can be set up by a single shareholder and have a share capital of at least 1 Euro.
Shareholders' meeting
The shareholders’ decisions are taken at the general meetings.
The general meeting decides on:
- amendments to the articles of association;
- changes in the company name;
- changes in the share capital;
- changes in the legal form of the company;
- the appointment or dismissal of managers;
- the liquidation of the company, or changes in its nationality.
The shareholders are permitted to a share of the profits.
The shareholders are entitled to information on the inventory, balance sheets and reports made by the supervisory board, if such a board exists.
In SARLs with over 60 shareholders, a general meeting of shareholders must be held at least once a year. The time of year at which the meeting is held is specified in the SARL’s articles of association.
Other meetings of shareholders are assembled by the manager/s. Unless the articles of association have been amended to state otherwise, it is not obligatory to hold a general meeting in SARLs with fewer than 60 partners. In this case, the partners are requested to send in their votes in writing, after having received the text of the resolutions or decisions to be taken. All shareholders may take part in the decision-making process. Each shareholder has several votes equal to the number of shares they hold. Decisions are validly taken by majority vote representing 50% of the capital. In Private Limited Liability Company with a single shareholder, the latter wields the powers vested in the general meeting of shareholders.
Private Limited Liability Company registration conditions
Private Limited Liability Company with more than 60 shareholders are subject to compulsory oversight by one or more internal auditors, whose names are specified in the articles of association. The auditors can or cannot be shareholders.
Any SARL company which, on the balance sheet closing date after two consecutive years of operation, exceeds the thresholds specified in two of the three criteria mentioned below, is legally obligated to have their accounts verified by a statutory auditor:
- balance sheet total: EUR 4.4 million;
- net turnover: EUR 8.8 million;
- average number of full-time employees: 50.
Share capital
Incorporating as an Private Limited Liability Company requires a minimum share capital of 12 000 Eur. The share capital has to be fully subscribed and paid up at the time of incorporation. An SARL can issue shares either with or without a nominal value. Contributions can be made in both cash and kind. Kind contributions must be valued in the articles of association.
Contributions “in industry”, such as services, do not form part of the share capital and don’t need to be valued separately by a statutory auditor. Industry contributions:
- entitle the contributor to non-transferable shares;
- entitle the contributor to share in the profits and net assets of the SARL entity, and obligates them to contribute to covering its capital losses.
Form of company shares
The shares in the capital are issued as registered shares, with or without a nominal value. An SARL may issue profit shares. The profit shares don’t form part of the company’s share capital. The rights attaching to the profit shares have to be specified in the articles of association. Bonds or public issues of shares are not permitted. Private bond issues are allowed, but demand the shareholders’ approval with convertible bonds.
Transfer of company shares
SARL shares are not freely negotiable. They may only be transferred inter vivos to non-shareholders with the permission of the general shareholders’ meeting representing at least 75% of the share capital. However, if provided for in the articles of association, the proportion of the share capital needed for approval can be lower (but not less than 50 %). Unless otherwise specified in the articles of association, the shares can be freely transferred between the shareholders. Share transfers must be recorded in a private deed or in a notarized deed.
Documents
An SARL must be set up in the presence of a notary.
The deed of incorporation must contain certain legally demanded information:
- the identity of the natural or legal person/s who signed the deed, or on whose behalf the deed was signed;
- name and the form of the company;
- the address of the company’s head office;
- the company/business purpose;
- the amount of subscribed share capital;
- the different classes of shares;
- details of contributions in kind;
- details of any other non-cash considerations at the time of company registration;
- the sum of securities or shares that do not form part of the share capital, and the rights attached thereto, if applicable;
- when not provided for by law, the obligations governing the operation, administration and oversight of the SARL company;
- the duration of the company;
- at least an approximation of the company’s costs.
The articles of association have to be filed in full with the Trade and Companies Register for publication.
Company name
An SARL must have a company name that is formed in its deed of incorporation. The name must differ from that of any other existing company. Availability of company name can be found in RCS.
Cost
Setting up an SARL involves certain costs, including:
- a share capital contribution of at minimum at EUR 12,000;
- notary fees;
- the address of the company’s head office;
- trade and Companies Register (RCS) publication cost;
- statutory auditor fees (if statutory audits are required);
- any costs relevant to the issuance of administrative permits.
Value Added Tax
VAT, based on the following norms:
- if its annual turnover excluding taxes is less than 112 000 Eur: VAT returns must be filed annually;
- if its annual turnover excluding taxes is between 112 000 Eur and 620 000 Eur: VAT returns must be filed quarterly;
- if its annual turnover excluding taxes exceeds 620 000 Eur: VAT returns must be filed monthly.
Timeline
The period of register LLC Company in Luxembourg engagement approximately 4 weeks. It is consisting of Engagement planning company incorporation, corporate bank account approval, corporate internet banking approval, engagement completion.
Duration of Private Limited Liability Company
An SARL can be registered for a limited duration or an unlimited duration.
Conversation
Private limited Liability Company is able to change its corporate form in the course of its lifetime with shareholder decision.
If the number of shareholders exceeds 100, the PLLC has one year to change its legal form.
The rules on mergers and demergers, which are likely to bring about a change in legal form, apply to PLLCs.
Dissolution
An SARL may be dissolved for:
- expiry of the company’s duration;
- completion or extinction of its business purpose;
- judicial ruling to dissolve the SARL company for legitimate reasons;
- voluntary dissolution agreed on by the single shareholder or all of the shareholders at the meeting.
An SARL isn’t automatically dissolved in the disqualification’s event, bankruptcy, insolvency or death of one of its shareholders. The following administrative certificates must accompany any document establishing the voluntary dissolution of the company:
- a certificate issued by the Data-Processing, Membership and Contributions Centre of the Joint Social Security Centre (CCSS) in Luxembourg;
- a certificate issued by the Administration des contributions directs;
- a certificate issued by the Registration Duties, Estates and VAT Authority (TVA) in Luxembourg.
Consultation about company registration
The specialists of our law company have many years of experience and the necessary knowledge to register a company in Luxembourg quickly and easily. Our lawyers, accountants, and business consultants will help you with the process of registering a company in Luxembourg and with the further conduct of your business.
Accountancy
A SARL must provide a balance sheet, a profit-and-loss statement, along with its annexes, in principle, a management report. These documents have to be approved by the general shareholders’ meeting.
Taxes
SARLs are subject to a fixed registration fee, property tax, business tax, net wealth tax, corporate income tax.
Bank account
If you decide to open a company in Luxembourg, you have to create a Corporate Account. This type of account needs for the main business of the company, for internal expenses, payment for services, and providing net income for private entrepreneurs.
Other types of companies
If you feel like Private Limited Liability Company does not fit your needs, click the button below and you will see other legal forms like Public Limited Company, Simplified Limited Liability Company, Branch Office, Holding Company and more.
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