SARL Formation in Luxembourg

The société à responsabilité limitée, or SARL, is a Luxembourg private limited liability company. It is commonly used for an operating business, a subsidiary or a company with a small group of owners. It is legally separate from its shareholders, whose liability for company debts is limited to their contributions.

That protection does not cover a personal guarantee. It also does not release a manager from liability for personal misconduct. The SARL separates the company’s assets from those of its shareholders without cancelling commitments made outside that protection.

For a foreign company expanding into Luxembourg, the choice between a branch and a subsidiary comes before selecting the subsidiary’s legal form.

The SARL framework

An SARL may have between 1 and 100 shareholders. They may be individuals, called natural persons in legal texts, or legal entities such as companies. The company can therefore be owned by one entrepreneur, a family, another company or a limited group of investors.

The company must have a Luxembourg registered office. Its articles of association, which set out its internal rules, describe the permitted activities in the corporate object. The legal form does not itself authorise a regulated business. A business permit or sector licence may still be required.

The consolidated Companies Law sets the current rules on shareholders, management, capital and publication.

The EUR 12,000 capital

The minimum share capital is EUR 12,000. It must be fully subscribed when the company is incorporated. The shareholders therefore commit to the whole amount in the deed.

The Law of 18 May 2026, in force since 2 June 2026, allows payment of the minimum cash capital to be deferred for up to 12 months after incorporation. The articles govern payment, and the articles or incorporation deed may require a shorter period.

This option applies only to the minimum capital subscribed in cash at incorporation. Contributions in kind are assets provided instead of cash. They must be contributed in full when the deed is signed. Share premium, the amount payable above the value of the shares recorded as capital, and capital above EUR 12,000 must also be paid in full at that time.

For example, a company with EUR 20,000 of cash capital must receive at least EUR 8,000 at incorporation. Payment of the remaining EUR 12,000 can be deferred. Shares issued after incorporation must be paid in full when issued.

Deferral does not remove the capital requirement. Each shareholder remains liable for the unpaid amount on that shareholder’s subscribed shares. After each balance sheet, the filing identifies shareholders who have not paid in full and the amount still outstanding.

Shareholders, shares and management

SARL shares are registered in the names of identified holders. For transfers made other than on death, known as inter vivos transfers, approval is required if the recipient is not already a shareholder. That approval must come from shareholders representing three quarters of the capital. The articles may reduce that threshold, but not below half of the capital.

This approval rule gives existing shareholders control over the arrival of a new investor. It differs from the more transferable shares of an SA.

One or more managers direct the company. A manager may be a shareholder or someone outside the company, and may be an individual or a legal entity. The articles and appointment decisions state who may sign for the company and when more than one signature is required.

The classic SARL and the SARL-S

The SARL-S, the simplified form of the SARL, serves a narrower purpose. It permits lower capital and may be formed by private deed, without a notary. In return, only individuals may be shareholders or managers, and the law restricts its activities.

Capital is not the only deciding factor. A subsidiary, a company owned by another company or a project expected to admit a legal-entity shareholder requires the classic SARL.

Incorporation and registrations

The founders first settle the points that shape the articles. These include the activity, registered office, capital, shareholders, management, signature powers and financial year.

A classic SARL is incorporated by notarial deed. The official guidance on incorporation documents explains the required content and publication process.

After signature, the deed is filed with the Trade and Companies Register (RCS) and published in the Electronic Compendium of Companies and Associations (RESA). Beneficial owners are declared to the Register of Beneficial Owners (RBE). The business permit, value added tax (VAT) identification, social-security registrations and bank account are added when the activity or the company’s situation requires them.

When cash payment is deferred, the notary still verifies that the capital is fully subscribed and records the amount paid at incorporation. Opening and operating the account remains a separate bank process.

Tax and accounting

An SARL falls within the ordinary tax regime for capital companies. Its profit may be subject to corporate income tax and municipal business tax. Its net assets may also enter the net wealth tax calculation.

The Luxembourg tax overview explains how the company’s income, location and operations affect its tax position.

An SARL used as a SOPARFI, a company holding financial participations, remains a fully taxable company. The participation exemption can exempt qualifying income and gains from those holdings when all conditions are met.

Accounting starts when the company is formed. It records subscribed capital, any unpaid portion, initial expenses, contracts and the first transactions.

The SARL bookkeeping process connects those entries to supporting records, reconciliations and the year-end close.

Annual obligations

Each financial year follows a recurring cycle. The accounts are closed, annual accounts are prepared and the shareholders approve them. The company then files them with the RCS.

The official annual-accounts procedure provides for approval within 6 months after the financial year end and filing within one month after approval. The annual accounts filing guide explains how this produces a seven-month outer limit for a legal entity.

The company also submits tax returns and, where relevant, VAT returns. An employer adds payroll and social-security declarations to this calendar.