Open a Limited Liability Company in Luxembourg

Open a Limited Liability Company in Luxembourg - 2023 Updated Guide

Updated on Wednesday 15th March 2023

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Among all the types of companies available for registration in Luxembourg, the limited liability one is one of the most popular choice of foreign investors. Limited liability companies in Luxembourg can be divided into public and private, however the private limited liability company is the easiest to open. Statistics show that two thirds of all companies registered in Luxembourg are limited liability companies, which are shortly known as SARLs (société à responsabilité limitée). The SARL is regulated by the Commercial Law in Luxembourg.

Our law firm in Luxembourg can offer information on all types of companies which can be registered in the Grand Duchy.

Requirements to open a SARL in Luxembourg in 2023

Foreign investors are allowed to open limited liability companies in Luxembourg provided that they meet the requirements of the Commercial Code. A Luxembourg SARL must have at least two shareholders which will have limited responsibility related to the debts and obligations of the company, which is the greatest advantage of this type of company. The maximum number of shareholders admitted is 100. The minimum amount which must be fully deposited upon the registration of the SARL with the Luxembourg Trade Register is 12,000 euros. The minimum value of a share is approximately 25 euros. Also, the Luxembourg limited liability company is not allowed to trade its shares on the stock markets.

Steps to register a limited liability company in Luxembourg

The first step to open a SARL in Luxembourg is to open a bank account where the share capital will be deposited. The second step consists in choosing and reserving the company name, followed by preparation of the Articles of Association, which together with the shareholders and directors or managers’ details must be filed with the Companies Registrar. The incorporation documents must be prepared by lawyers in Luxembourg or a public notary.

The last steps of the company registration process consist in applying for the business license with the Ministry of Economy and registering with the tax authorities in Luxembourg.

Minimum company registration requirements for a Luxembourg LLC

One of the most important advantages of the Luxembourg limited liability company is related to incorporation requirements. These are:

it only needs two shareholders who can be local or foreign natural persons or companies;
the minimum share capital to be deposited upon registration is 12,500 euros;
it is also possible for a single shareholder to start a limited liability company in Luxembourg;
the management of the company can fall on one person who does not have to be a Luxembourg national.

It is also possible to set up a simplified limited liability company in Luxembourg, the SARL-S which need a minimum capital of 1 euro.

The limited liability of a Luxembourg SARL

As its name states, the SARL offers limited liability to its shareholders which means that all the duties and obligations of the company will be covered with the business’ assets and not with the personal goods of the owners. This is very useful in case of insolvency in Luxembourg.

The Luxembourg limited liability company can be used for various purposes

Among the uses of the limited liability company, our law firm in Luxembourg would like to mention the following:

it can be used as an investment vehicle by professional investors who set up investments funds in Luxembourg;
it can also be used for general activities, such as trading or commercial undertakings in various industries;
it is one of the best options for those seeking to create holding companies in Luxembourg;
it is a good option for those who want to start small and medium-sized businesses, but also for those who want to offer various services.

The corporate tax levied on LLCs in Luxembourg in 2023

The main tax imposed on Luxembourg limited liability companies is the corporate tax which is calculated on the net profits obtained by these companies at global level. Also, the corporate tax is made of several elements. The following tax rates apply on LLCs in Luxembourg:

a 15% rate applied to companies with net profits below 25,000 euros;
for incomes between 25,000 euros and 30,000 euros the tax levied is 3,750 euros+33% on the net income of the difference between the 25,000 euros and 30,000 euros;
a 18% rate is applied to LLC with net incomes above the threshold of 30,000 euros;
a solidarity surcharge of 7% which goes to the employment fund.

LLCs in Luxembourg are also subject to a municipal tax and a net wroth tax which is applied to the assets of the company. These rates are 6.75%, respectively 0.5%.

Our law firm in Luxembourg can assist foreign investors who want to register limited liability companies in the Grand Duchy in 2023.

Other taxes imposed on limited liability companies in Luxembourg

Other important taxes Luxembourg LLCs are subject to are:

the withholding taxes which are levied on interest and dividend payments;
the value added tax which is applies on the sale of goods and services.

The value added tax is levied at a standard rate of 17%, however three reduced rates of 3%, 8% and 14% apply on certain products and goods. LLCs with VAT numbers can also register for EORI in Luxembourg.

With respect to the withholding taxes, both dividend and interest payments are taxed at a rate of 15%. These can be reduced by LLCs thanks to Luxembourg’s double tax treaties.

Why open a Luxembourg limited liability company in 2023

Luxembourg is one of the most prolific economies in Europe and home of the European Union, and as such it attracts many foreing investors who can set up various types of entities, among which the private limited liability company one is very appealing in 2023.

It can also be used by European companies interested expanding their operations through Luxembourg subsidiaries in 2023, especially if they target the trading sector. The simplified company registration procedure is one of the main reasons to choose this business form.

Opening a private limited liability company in Luxembourg in 2023 implies a very simple procedure that can be completed with the help of our lawyers. Trading Economics projects Luxembourg's GDP will reach 86.54 USD billion by the end of 2023. However, various international bodies offer different takes on how much the country's economy is set to grow, values ranging from 0.5% to a little over 1% with more optimistic prospects from 2024 on. If you need more information on investing in Luxembourg in 2023, our lawyers will guide you in choosing a favorable investment sector.

If you want to open a limited liability company in the Grand Duchy and need assistance, do not hesitate to contact our attorneys in Luxembourg.