I. Legal structure of a Limited Liability Company (LLC., Ltd./SARL)

1. Concept

A Limited Liability Company (LLC., Ltd./Société à responsabilité limitée, SARL) in Luxembourg is a corporation whose assets are wholly liable for the company's liabilities. It may be formed for the carrying on of any type of commercial or non-commercial purposes. 

2. Formation

A Limited Liability Company (LLC., Ltd./SARL) in Luxembourg is formed through the recording of its articles of association by a notary. Its articles of association will subsequently be published in the Official Bulletin (Mémorial C) and lodged with Luxembourg's Trade and Companies Register. Moreover, the shareholders of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg must be registered in the Trade and Companies Register of which there must be at least two and no more than 40. The shareholders may be natural or legal persons. It is also possible to form a single-person Limited Liability Company in Luxembourg (LLC., Ltd./Société à Responsabilité limitée unipersonelle).

3.    Minimum capital

The minimum capital of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg is 12,500 EUR. This requires to be contributed in full in the form of a cash or non-cash contribution. The company's capital is divided into registered shares. Each share is of the same value and each share will have a minimum value of 25 EUR. 

4.    Share transfer

The shares of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg may be transferred to non-shareholders only with the consent of the general meeting at which at least 75% of the company's capital must be represented. The said transfer is required in notarised form.  Such consent is not required when the transfer is to a fellow shareholder.

5. Organisation

5.1.    General meeting

The general meeting is the supreme authority of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg. The general meeting consists of all shareholders of the company and must be convened if the number of shareholders exceeds 25.

5.2.    Managing director

A Limited Liability Company (LLC., Ltd./SARL) in Luxembourg has one or more Managing Directors who are not required to be company shareholders. Furthermore, the managing director(s) can be of any nationality and is not required to be resident in Luxembourg.

5.3. Supervision

A Limited Liability Company in Luxembourg (LLC., Ltd./SARL) is subject to auditing obligations if it has more than 25 shareholders. The supervision is carried out by one or more commissaire who may be shareholders or non-shareholders.  However, if a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg exceeds two of the following upper limits, an independent auditor must be appointed  to inspect the books: a balance sheet total of 6.25 million EUR, net turnover of 6.25 million EUR as well as having an average number of 50 full-time posts.

6.    Annual accounts

The annual accounts of a Limited Limited Company in Luxembourg (LLC., Ltd./SARL) consist of the balance sheet, the profit and loss account and the notes thereto. Following their approval, the annual accounts will be lodged with Luxembourg's Trade and Companies Register and published in the Official Bulletin (Mémorial C).

7.    Dissolution

A Limited Liability Company (LLC., Ltd./ SARL) in Luxembourg can be dissolved either through a decision of the general meeting at which 75% of the company capital must be represented or through a court order.

II. Tax structure of a Limited Liability Company (LLC., Ltd./SARL)

1. Corporate taxation

Since January 1st, 2013, all Limited Liability Companies (LLC., Ltd./SARL) in Luxembourg have been subject to corporate taxation at a rate of 29.22%. This said rate consists of the following components: corporate income tax at a rate of 21% on income exceeding 15,000 EUR (or a rate of 20% for income not exceeding 15,000 EUR), the solidarity surtax at a rate of 7% as well as the municipal business tax at a rate of 6.75%.

All Limited Liability Companies (LLC., Ltd./SARL) resident in Luxembourg which do not require a trade licence and whose assets, securities and bank balance together exceed 90% of its balance sheet total are required to pay only the minimum corporate taxation of 3,210 EUR (3,000 EUR plus the 7% solidarity surtax).

Furthermore, Limited Liability Companies (LLC., Ltd./SARL) in Luxembourg are subject to withholding tax at a rate of 15% on their dividend distributions. In contrast thereto, royalty and interest payments as well as proceeds from liquidation or partial liquidation are tax-free in Luxembourg.

2. Net wealth tax

Limited Liability Companies (LLC., Ltd./SA) in Luxembourg are further subject to a net wealth tax at a rate of 0.5%. Limited Liability Companies (LLC., Ltd./SARL) resident in Luxembourg are therefore subject to a net wealth tax on their total assets (assets in and outwith Luxembourg). However, Limited Liability Companies (LLC., Ltd./SARL) not resident in Luxembourg are subject to the said tax on their assets in Luxembourg only.

III. Advantages of forming a Limited Liability Company (LLC., Ltd./SARL)

In Luxembourg, the legal structure of the Limited Liability Company (LLC., Ltd./SARL) is predominantly suited to medium-sized companies due to its many advantages including, for example, it suiting all commercial purposes – from the trading of goods to asset management.

LEGAL and TAX ADVICE and SUPPORT

Our lawyers and tax experts stand ready to advise you personally and free of charge during the decision-making process and throughout the  formation/incorporation/setting up process of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg

Please contact us by telephone through the following telephone number

00352 250 345 27

(Monday - Friday between 9am and 4pm)

or by e-mail at the following e-mail address
info(at)startup-luxembourg.com

or simply use our online contact form.

TRADE LICENCE REQUIREMENT IN LUXEMBOURG

A company in Luxembourg must obtain written consent (a trade licence) from Luxembourg's Ministry of Small and Medium-sized Businesses prior to the carrying on of industrial, skilled trade or any other commercial activities. Moreover, it is required to register the business with Luxembourg's tax authority and to apply for a tax number.

Certain requirements must be fulfilled for the granting of a trade licence. The managing director or the manager must accordingly possess the corresponding qualifications and professional experience for the particular activity. Furthermore, the company must have a physical presence in Luxembourg (registered office or office).