Luxembourg is one of Europe’s most attractive business hubs, known for its favorable tax policies, strategic location, and strong financial sector. Entrepreneurs looking to establish a company in Luxembourg often opt for a Luxembourg private limited company, also known as SARL. This structure is preferred due to its limited liability protection and ease of incorporation. However, before setting up a SARL, it is essential to understand the Luxembourg private limited company requirements to ensure compliance with local regulations.

Minimum Capital Requirements

One of the key Luxembourg private limited company requirements is the minimum share capital. A SARL must have a minimum share capital of €12,000, which must be fully paid up at the time of incorporation. The capital is divided into shares, and shareholders are only liable for the amount they contribute.

Shareholders and Directors

A Luxembourg private limited company can be formed with at least one shareholder and up to 100 shareholders. These can be individuals or corporate entities, and they do not necessarily have to be Luxembourg residents. The company must also appoint at least one director, who can be of any nationality. However, having a local director may help with compliance and business operations.

Registered Office and Business Address

A SARL must have a registered office in Luxembourg, which serves as its official business address. This requirement ensures that the company has a legal presence in the country. The registered office can be located at a physical address or within a business center offering domiciliation services.

Articles of Association and Notarial Deed

To incorporate a Luxembourg private limited company, the founders must draft and sign the Articles of Association, outlining the company’s purpose, structure, and governance rules. This document must be notarized and submitted to the Luxembourg Trade and Companies Register (RCS).

Taxation and Financial Reporting

Luxembourg has a competitive tax regime, but companies must comply with local tax obligations. A SARL is subject to corporate income tax, municipal business tax, and net wealth tax. Additionally, the company must register for Value Added Tax (VAT) if its activities fall under taxable transactions. Financial statements must be prepared annually and submitted to the authorities.

Employment and Social Security Contributions

If the company hires employees, it must comply with Luxembourg’s labor laws and contribute to the social security system. Employers must register their employees with the Centre Commun de la Sécurité Sociale (CCSS) and withhold social security contributions from salaries.

Conclusion

Understanding the Luxembourg private limited company requirements is crucial for entrepreneurs planning to establish a SARL in the country. From minimum capital and shareholder regulations to taxation and reporting obligations, compliance with these requirements ensures smooth business operations. Consulting a local legal or financial expert can further help navigate the incorporation process efficiently.