Choosing Société à Responsabilité Limitée (SARL) in Luxembourg
A Luxembourg Société à Responsabilité Limitée (SARL or limited liability company), is a unique type of corporate structure that has become most prominent in Luxembourg.
A Luxembourg SARL combines the main features of a corporation and a private partnership. Its shareholders’ liability is limited to the amount of capital that they contribute. At the same time, SARLs have some of the main characteristics of a partnership such as non-transferability of shares, incredible simplicity, and increased flexibility.
A Luxembourg SARL usually has between 2 and 100 shareholders, but a single shareholder can incorporate and solely run a SARL.
The general functioning of a SARL is defined by the articles of association, and its minimum share capital must be €12,000.
The manager of a Luxembourg SARL can be a legal person and can be of foreign nationality. A SARL of over 60 partners is subject to the necessary control of an auditor. It is recommended to choose an independent director to facilitate bank account opening in Luxembourg. Your lawyer or your chartered accountant should not be your local director as new directive ATAD3 fights against shell companies.
The Simplified SARL (SARL-S) in Luxembourg
The Simplified SARL (SARL-S) is a simplified limited liability company that is registered under different rules and legislation correlated to a traditional SARL. A SARL-S is directed to specific investors and entrepreneurs, and the minimum share capital is set at EUR 1. Natural persons can easily establish a SARL-S in Luxembourg and can instantly start their business projects for which they do not need to invest a huge sum of money.
The advantages of a SARL in Luxembourg
A SARL in Luxemburg will have to following advantages:
- The owners’ liabilities are limited to the amount of capital that they have contributed to the company’s formation.
- The structure of a SARL has the same degree of simplicity as a private partnership, with few administrative requirements compared to a corporation.
- The formalities associated with the company formation are minimal.
- Although SARLs are subject to auditing and are expected to submit financial reports, there is still a good degree of privacy at the outset.
- Luxembourg has a territorial tax system whereby foreign-owned companies are only taxed on income that is sourced in Luxembourg.
Creating a SARL in Luxembourg
Before incorporating a SARL in Luxembourg the minimum share capital must be deposited in a corporate bank account in Luxembourg.
Next, the process of incorporating a SARL requires the “Articles of Association” to be prepared and filed with the Trade and Companies Register (registre de commerce et des sociétés), and must contain the following information:
- The name of the company.
- The local registered address of the company’s head office.
- The total issued share capital.
- The objective of the company and its expected lifetime.
- The identities and personal details of the company’s shareholders, as well as the number of shares they hold.
After this, all other required documents such as the incorporation deed, and memorandum of association would be filed with the Luxembourg Registrar of Companies (Registrar of Companies and Commerce). This has to take place within one month.
Details of the incorporation would then be published in the Official Gazette. This gazette is an electronic gazette which is known as the Recueil Electronique des Sociétés et Association (Electronic Collection of Companies and Associations). After this step, the company will officially exist.
Are you looking to set up your business or investment platforms in Luxembourg? Let’s go ahead and contact your Damalion experts now and let us help.