Forming a Société à responsabilité limitée (Sàrl) or limited liability company in Luxembourg offers international entrepreneurs and investors a direct, efficient, and legally solid path to operate across the European Union. Recognized for its business-friendly environment, Luxembourg provides a powerful platform for cross-border trade, investment structuring, and EU market access.
Why the Luxembourg Sàrl is a preferred vehicle
The Luxembourg Sàrl is governed by the Law of 10 August 1915 on Commercial Companies, as amended. It is by far the most common legal form for private companies in the country. According to the Luxembourg Business Register (LBR), over 90,000 active companies are currently incorporated in Luxembourg, and approximately 85% of them are Sàrls.
Key features include:
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Minimum share capital: €12,000, fully subscribed and paid-up at incorporation
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Number of shareholders: 1 to 100 (natural or legal persons)
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Limited liability: Shareholders’ liability is limited to their capital contributions
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Legal personality: The company is a separate legal entity under Luxembourg law
These characteristics make the Luxembourg Société à responsabilité limitée (Sàrl) or limited liability company particularly attractive for holding activities, commercial operations, service businesses, and family-owned enterprises looking to expand into Europe.
Strategic access to the European Union single market
A Luxembourg Sàrl benefits directly from Luxembourg’s full membership in the European Union, which ensures access to the EU’s internal market of over 450 million consumers.
The Sàrl can:
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Sell goods and services across EU borders without additional registration or incorporation
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Open subsidiaries, warehouses, or branches in other EU/EEA states
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Benefit from simplified VAT registration rules under Directive 2006/112/EC
From a legal standpoint, this access is backed by:
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Article 49 TFEU (freedom of establishment)
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Article 56 TFEU (freedom to provide services)
Luxembourg’s multilingual workforce and efficient infrastructure also support companies engaged in cross-border logistics, fintech, SaaS platforms, e-commerce, and consulting.
Tax efficiency and treaty network
Luxembourg offers an investor-friendly tax regime and an extensive network of over 85 double taxation treaties.
For commercial Sàrls:
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Corporate income tax: 16% (plus municipal business tax and solidarity surcharge, for a combined rate of approx. 23.87% in Luxembourg City)
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Dividends to EU parent companies: May benefit from exemption under the EU Parent-Subsidiary Directive (2011/96/EU)
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Capital gains: Generally taxed as ordinary income unless exempt under specific treaty provisions
Luxembourg’s substance rules are aligned with OECD standards, and Sàrls carrying out genuine economic activities with local directors, employees, and premises are respected internationally as compliant entities.
Fast and reliable incorporation process
Incorporating a Luxembourg Sàrl can be completed in 2 to 5 business days, provided all documentation and regulatory checks are in order. The process involves:
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Drafting and notarizing the Articles of Association
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Depositing capital with a Luxembourg bank
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Registering with the Registre de Commerce et des Sociétés (RCS)
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Obtaining a business license from the Ministry of the Economy if commercial activities are conducted
Luxembourg also allows for the creation of Sàrl-S (simplified Sàrl) with a minimum capital of just €1, aimed at startups and small entrepreneurs. However, foreign investors typically choose the standard Sàrl for broader credibility and operational flexibility.
Examples of use cases
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US software firms use Sàrls to invoice EU clients in EUR, register for VAT, and reduce FX exposure
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German exporters consolidate EU-wide logistics via a Luxembourg Sàrl and benefit from centralized administration
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Private equity sponsors set up Sàrls as holding companies for EU investments, relying on Luxembourg’s stable legal system and tax treaty access
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Family offices manage multi-jurisdictional real estate or asset portfolios through Luxembourg vehicles for better legal protection and estate planning
Damalion facilitates tailored Sàrl setups for international clients
At Damalion, we assist entrepreneurs, family offices, and institutional investors in structuring and registering Luxembourg Sàrls suited to their business goals. Our services delivered by accredited partners include:
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Company formation and full coordination with notaries and banks
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Bank account introductions with selected Luxembourg and Swiss banking partners
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Director and domiciliation services that meet substance requirements
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Ongoing compliance with accounting, VAT, and regulatory obligations
We understand that international investors need more than just a legal entity—they need a reliable structure aligned with tax, legal, and operational efficiency. That’s where our experience adds value.
The Luxembourg Sàrl remains one of the most robust and flexible entry points into the European market. Its strong legal foundations, access to EU freedoms, and supportive ecosystem make it the ideal choice for international expansion, holding structures, and regional headquarters.
With proper planning and professional guidance, a Luxembourg Sàrl can unlock efficient, scalable growth across Europe—while ensuring compliance with all legal and fiscal requirements.
To discuss your project or set up a Luxembourg Sàrl, contact your Damalion expert today for a confidential consultation.
