Business

LLCs, Ltds or their equivalents in Luxembourg

Let's understand what is meant by LLC and Ltd in Luxembourg.

Table of content

What is an equivalent for LLC

If we look at companies specifically, they are divided into structures:

with limited liability — SA, SARL, SE, SECA — public, e.g. SA, and private, SARL.
with unlimited liability — cooperative and civil societies, partnerships such as SENC and SECS.

The liability of the entrepreneur is determined on the basis of losses in case of payment of the company's debts:

Liability is limited if the founders suffer losses only to the extent of their contributions.
Liability is unlimited if the founders are liable for the company's debts with all their assets.

Thus, in Luxembourg, all companies, with the exception of cooperatives, partnerships and civil companies, are limited liability companies.

SARL

Société à responsabilité limitée — is an LLC of the private type. It is a company formed by one or more persons who pursue business purposes and bear losses to the extent of their contributions.

The SARL is the most common form of company registration in Luxembourg. Approximately two-thirds of the Grand Duchy's companies are SARLs, as they can be opened for any business purpose.

A SARL is allowed from 2 to 100 shareholders, but if there is only one founder, it is possible to open a simplified form of SARL-S, which is essentially closer to a sole proprietorship than an LLC. If the number of shareholders exceeds 100, the SARL has one year to change its legal form.

Features of the form

Founders: 2 partners are required unless it is a simplified form. They can be natural or legal persons.
The articles of association must be drawn up by a notary.
A registration fee of at least 12,000 euros is required to register this type of company. Contributions can be made in cash or in kind, but they must be valued and this valuation must be recorded in the articles of association.
Decisions are made in an organized manner: at a general meeting with the manager or the board of directors.
A legal audit of the annual accounts is obligatory for this form.
Annual accounts must be filed with the Register of Commerce (RCS) within 7 months of the end of the financial year.
Mandatory documents to be prepared are: balance sheet, income statement with its annexes, management report. All documents are approved by the general meeting of shareholders.
Business income is taxed directly at the corporate level. Partners are taxed only on the distribution of profits in the form of dividends. In addition, other taxes must be paid.

Typically, SARLs are registered by small and medium sized companies.

SA

Société Anonyme — analog of a corporation, a public company with limited liability. It is suitable for large projects. Together with the SARL, it is one of the most common types of company in Luxembourg.

Features of the form

Founders: it can be one or more natural or legal persons.
The articles of association must be drawn up by a notary.
Contribution to the authorized capital — at least 30,000 euros. Contributions can be made in cash or in kind.
Decisions are made by the general meeting together with management structures. These can be either the board of directors, which manages the company, or the management board, which manages the company, and the supervisory board, which supervises the management. In addition, a member of the board of directors may not be a member of the supervisory board.
The statutory audit of the annual accounts must be entrusted to one or more approved internal auditors (commissaires aux comptes) or external auditors (réviseur d'entreprises agréé).
The annual accounts must be filed with the Registry of Commerce (RCS) within 7 months of the end of the financial year.
Mandatory documents prepared by the SA: balance sheet, profit and loss statement, notes to the financial statements, and management report, which are approved by the general meeting of shareholders.
In addition to income tax, property tax, business tax, corporate tax, and others are paid.
Shares are issued with or without voting rights, with or without par value.