Would you like to register a company in Luxembourg? Please apply for our assistance, as our partners in Luxembourg are a reliable law firm specializing in company registration. We will offer you a turnkey solution for your business development.
In the text below, we discuss the specifics of registering a SARL company in Luxembourg that is a limited liability company. If any questions remain after you read the article, please do not hesitate to contact us at the email address that you can see above.
What are the reasons for registering an SARL in Luxembourg?
Luxembourg is a small European country with the population of around 700,000 people. It is a dukedom located between Belgium and Germany. Even though officially it is a monarchy, Luxembourg has a Prime Minister and a Parliament whose members are elected.
A limited liability company in Luxembourg (an SARL) will have to following advantages:
- The owners’ liabilities are limited to the amount of capital that they have contributed to the company formation.
- An SARL can be registered in the name of a single person who will thus have full control over it.
- The minimum required charter capital is 12,000 euros.
- As the ownership structure is quite simple, the formalities associated with the company formation are minimal.
- Company owners’ confidentiality protection: the Articles of SARL incorporation do not have to contain the names of the company stockholders.
- About two thirds of all companies registered in Luxembourg are registered as SARLs, which makes it the most popular form of company ownership in the country.
- An SARL combines the properties of a public corporation (abbreviated as SA in Luxembourg) and a partnership borrowing beneficial characteristics from both.
An SARL can be established for any business purposes with the exception of insurance, banking, and investment services.
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Specifics of registering a SARL in Luxembourg
The name of a limited liability company in Luxembourg shall end in GmbH or SARL and it has to be approved by the Company Register. When choosing the name for your Luxembourg company, you have to check with the Register for its availability. The name of the company must be different from the name of other companies registered in Luxembourg. Two or three days after you place the request with the Register, you will be informed if the name that you will have suggested is available.
Change of company ownership form
An SARL can transform into a company of another form of ownership at some point in time. In case the number of company stockholders exceeds 100 people, the company will have to change its ownership structure within one year. Company merger and division rules are applicable to SARLs in Luxembourg.
The founders of the company have to draw up its By-laws and submit them to a notary public for approval. If the By-laws are written in English, for example, a translation into French, German, or Luxembourgish has to be supplied.
Company owners’ liabilities
The liabilities of the SARL founders are limited to the amounts of their respective contributions to the company charter capital.
A SARL can remain functional for an unlimited term of for the term specified in the By-laws. Death, non-ability or bankruptcy of one of the company founders does not have to lead to the company closure.
Having one company founder is permitted. In this case, the company will be fully in his/ her hands. The maximum permitted number of SARL stockholders is 100. Physical persons and legal entities can act as SARL founders. One of the company founders can act as its director or the director can be a hired person.
A Luxembourg-based SARL shall have a charter capital of at least 12,000 euros. The charter capital has to be deposited in full before the company can be registered. Ownership shares of equal worth shall be issued provided that each share is worth not less than 25 euros.
The charter capital deposited in the bank will be blocked until the company is registered. The company founder has to bring a bank statement certifying the deposit to the notary. Opening a bank account where the charter capital is to be deposited takes the largest portion of the time required for setting up a company in Luxembourg. The bank has to conduct the KYC (Know Your Client) and due diligence procedures, which takes between one and two weeks usually.
The company charter capital can be deposited in any national currency provided that the converted amount equals or exceeds the sum specified above.
The company By-laws can specify the number of managers that the company will have and define the scopes of their authority. The document can also indicate if the company founders have to act as its managers or managers should be hired. At the same time, company By-laws do not have to contain this information, as these issues can be determined at Annual General Meetings.
A person of any nationality can act as the company director. If the company director is a corporate entity, it can be domiciled in any country. Company managers are considered company agents. The SARL is responsible for the actions of its managers performed on behalf of the company even if these actions fall outside the scope of their authority. The following professionals cannot act as SARL directors in Luxembourg: attorneys, judges, government employees, notaries, military personnel, nor state officials.
Registered legal address
Every SARL in Luxembourg must have a registered legal address in the country and the Trade Register must have the information about the address.
Business licenses in Luxembourg
Everybody who wants to engage into commercial activities in Luxembourg (be it a private individual or a business company) has to acquire a business permit. Business permits are issued not to the companies but to the people working for these companies, holding their ownership shares, or just owning the companies. The application for the business permit has to be filed within three days since the date of the company registration.
The procedure of registering an SARL in Luxembourg
If you would like to register an SARL in Luxembourg, please apply for our assistance. We will provide a consultation to you, sing a service agreement and launch the company registration procedure with the help of our partner firm in Luxembourg.
Please mind that the charter capital has to be deposited before the company can be registered in Luxembourg. We will gladly assist you in setting up a foreign bank account for this purpose.
With the Power of Attorney that you will have issued in the name of our representative, he or she will submit the corporate documents to the Trade and Companies Register in Luxembourg thus applying for registering a SARL in the country.
The Memorandum of Association can be written in any language but a translation in German, French or Luxembourgish (the three official languages in the country) has to be supplied. This document will be published in an official bulletin just the way it is done in other European states.
The company By-laws have to be signed by the company founders and the notary public. The founders’ agent will submit it to the Register. When the company registration procedure is completed, the company will become operable.
The SARL also has to be registered with the tax authorities in Luxembourg within one month since the date of company registration.
Company registration timeframe in Luxembourg
Setting up an SARL company in Luxembourg can take one week. The period can be extended, however, if you have to set up a corporate bank account where the company charter capital will be deposited. The due diligence and KYC procedures that the bank has to carry out take some time. Please inquire about the details pertaining to opening a foreign bank account by writing us to firstname.lastname@example.org.
The costs of registering a SARL in Luxembourg
In addition to the costs of the consulting services and the services of the registration agent, registering a SARL in Luxembourg will entail the following expenditures:
- Deposit of company charter capital – minimum 12,000 euros.
- Notary fees.
- Company registration documents publication.
- External auditor’s fees (if audit is required).
- Other state duties.
Taxes that a SARL in Luxembourg is liable to
A limited liability company in Luxembourg is subject to a corporate tax of 29.22% per year. The tax is composed of the following elements:
Corporate profit tax
The corporate tax on profit that exceeds 15,000 euros per year is 21%. If the profit is below the specified amount, the tax is 20%. Minimal corporate profit tax for resident private companies in Luxembourg is 3,210 euros (3,000 euros plus a 7-percent solidarity tax).
Municipal business tax
All resident companies in Luxembourg are subject to a municipal business tax at the rate of 6.75%.
The withholding tax on dividends is 15% in Luxembourg. Royalties, interests, and the earnings from company liquidation (partial liquidation) are not subject to the withholding tax in the country.
A Luxembourg-based SARL that has an office in the country and that is managed from there is subject to the property tax on all property that it owns, within or outside Luxembourg. However, a private company that is not resident in the country is only taxable on the property that it owns in Luxembourg. The tax rate is 0.5%.
Non-resident companies in Luxembourg are taxed only on the profit that they obtain from the business operations within the country.
Luxembourg-based SARLs have to keep the counting records. An annual report has to be submitted to the Register including the balance sheet, the profit and loss statement, and additional documents. The financial information of the companies is published in Luxembourg.
The annual report is made at the General Meeting and it has to be confirmed by the company owners. The General Meeting has to confirm the correctness of the annual report not later than six months after the end of the previous fiscal year. A large company has to have the report audited by a qualified auditor (réviseur d’entreprises) before it is submitted to the authorities.
An abridged financial report can be filed and no audit is required if two of the following three criteria are satisfied by the end of the fiscal year:
- Total company assets: up to 3,125,000 euros.
- Net company turnover: up to 6,250,000 euros.
- Number of full-time company employees: up to 25 people.
Please learn more about registering an SARL in Luxembourg by contacting the experts of InternationalWealth portal. You are welcome to send us an email, call us on the phone, or use the live chat. We always reply promptly!
What is the difference between an SA and an SARL registered in Luxembourg?
SA and SARL are two most popular company ownership forms in Luxembourg. An SA is a public company that can publicly trade its shares while an SARL is a private company and it has to go public before it can trade its shares.
How long does it take to register an SARL in Luxembourg?
If you already have a corporate bank account in Luxembourg, the procedure of company formation is going to take a few days. However, if you have to set up a bank account for your prospective company, prepare to wait longer as the bank’s due diligence and KYC procedures are time consuming. Please consult us on opening a foreign bank account for your company.
What is required to set up a company in Luxembourg?
What you have to do is apply for our assistance in the matter. We have reliable partners in Luxembourg and we will gladly register a SARL for you in the country with their help. You will only have to supply a few documents to us.