Sàrl, Sàrl-S or SA: choosing a legal form in Luxembourg

Three forms cover almost every founder incorporating in Luxembourg: the Sàrl, the simplified Sàrl-S and the SA. Minimum share capital is €1 for a Sàrl-S, €12,000 for a Sàrl and €30,000 for an SA.

Since a 2026 amendment to the companies act, though, a Sàrl's cash capital no longer has to sit in the account on incorporation day — it can be paid up within 12 months, which changes the practical capital answer more than any headline figure. Tax is identical across all three. What differs is who may hold the shares, what the company may do, and whether a notary is in the room.

The three forms side by side

Capital, who may sit on the share register and the form of the founding deed are what actually separate the three; permits, accounting, VAT and deadlines are common ground, covered further down the page. The table's parameters come from each form's official guichet.lu page, linked in the header row, read in July and August 2026. Where a cell says None or No ceiling, the law sets no limit at all rather than a high one.

The last two rows carry most of the decision. A Sàrl-S register admits only natural persons — a company can never be a shareholder. It is incorporated by a private deed — a notarised document is not required. A Sàrl instead requires a notarial deed — the company must be formed in the presence of a notary.

What that notary appointment buys is scope. A Sàrl may pursue any corporate object, with one carve-out: insurance, savings and investment undertakings, which cannot be set up as a SARL. An SA is heaviest at the door, where the rule is capital fully subscribed and at least one quarter paid up at incorporation.

The capital figure moved in 2026

The €12,000 minimum is still the law, but it no longer describes what has to be in the account the day the deed is signed. The change comes from the Law of 18 May 2026 amending the amended Law of 10 August 1915 on commercial companies, which introduced deferred paying-up of the minimum share capital of limited liability companies.

Cash capital may be paid up within 12 months of incorporation, and the scope is wider again where the capital is smallest: for a SARL-S the deferred paying-up option covers the entire share capital subscribed at incorporation.

One limit is easy to miss while a deed is being drafted: shares issued on incorporation in consideration for contributions in kind must still be fully paid up at incorporation — only cash contributions can be deferred. A founder contributing equipment or code is in the old regime for that part of the capital.

Deferred is not discounted. Unpaid capital stays subscribed — an obligation of the shareholder towards the company — and a bank opening the account or a co-funder reads the paid-up figure. It is a cash-flow decision, not a saving.

Where the Sàrl-S actually bites

The Sàrl-S is not a cheaper Sàrl but a narrower one, and its limits are structural rather than administrative, which is why they surface months after incorporation rather than during it: nothing about the form is hard to set up, and everything about it is easy to outgrow. We cover the process in our Sàrl-S guide; these are the constraints that decide whether the form fits.

• Activity. The form is scoped by activity rather than by corporate object, and the scope reads: craftsmen, traders, manufacturers and certain liberal professions, activities covered by a business permit. A holding or passive investment vehicle sits outside it.
• Shareholders. Beyond the natural-persons rule in the table, a natural person may not be a shareholder in more than one SARL-S at the same time, with one exception: the one-SARL-S-per-person rule does not apply where the shares were transferred following the death of another shareholder.
• Reserve. 5% of profits are set aside each year until capital plus reserve reach €12,000, at which point the allocation stops. It is a temporary charge on profit, not a permanent one.
• Ceilings. Growth ends the form. Capital above €12,000 triggers a mandatory conversion. Separately, if the number of shareholders exceeds 100, the SARL-S has one year to change its legal form. Either way the decision falls to a meeting of shareholders.
• Naming. By law, the name must appear on all company documents followed by the mention SARL-S, so counterparties see the form before they ask.

The growth path is where this bites: an investor vehicle or a founder's own holding company cannot appear on a Sàrl-S register at any percentage, so the conversion has to be finished before money moves, not after a term sheet is signed. Nothing in the form flags that ordering — the block appears only when someone goes to sign the transfer.

Tax does not depend on the form

All three are capital companies taxed the same way, so the legal form is not a tax lever. On rates in force for tax year 2025 onwards, corporate income tax is 14% on taxable income up to €175,000 and 16% from €200,000, with a transition band in between computed as €24,500 + 30% of the income above €175,000.

Add the 7% employment-fund surcharge and municipal business tax, and a company seated in Luxembourg City reaches a combined 23.87% in the standard band.

VAT follows turnover rather than form too: the small-business franchise runs to €50,000 of annual turnover, with a tolerance to €55,000.

What every form owes anyway

The operating obligations are near-identical across the three, and they are where the first year actually goes. Choosing a form settles capital, who may hold the shares and whether a notary signs; it settles almost nothing about what the company then has to do.

The permit, the registered office, the RCS filings and the annual accounts arrive on the same terms whether the suffix reads Sàrl-S, Sàrl or SA — and each runs on its own clock, started by a different event.

• Business permit. Commercial, craft and industrial activity needs one before trading, and the chancellery fee is €50. A decision is due within 3 months, and that deadline is not merely indicative: the absence of a ministerial reply before the end of the 3-month period counts as a tacit authorisation. The sequence matters — the articles of association must be registered with the Trade and Companies Register before the permit is definitively granted.
• Who gets examined. Professional integrity must be proved by the manager of the business in whose name the permit will be issued; and, where the business is operated as a company, also the person holding the majority of the shares and anyone who can exert a significant influence on the management or administration of the business. That reach is wider than the manager alone, which makes the share split worth settling before the file goes in rather than after.
• Office and filing. A Luxembourg company needs its registered office at an address in Luxembourg, and the articles must reach the RCS within 1 month of signature.
• Accounts. Annual accounts are deposited with the RCS within 7 months of year-end whatever the form, and a statutory audit is triggered by company size rather than by the suffix.

If you convert later

Changing form is a corporate event rather than a restart — a change of legal form entails neither dissolution of the company nor the creation of a new legal personality — so contracts, the RCS number and the permit file survive it. The vote is a general-meeting decision, and the bar does not drop if the resolution has to go to a second meeting: at least two-thirds of the votes cast, at either of the two meetings.

The file includes a report by a réviseur d'entreprises on the financial statement summarising the company's assets and liabilities. And the transformation takes effect against third parties only after publication in the RESA — the date a counterparty checking you will see.

On the form of the instrument, the rule is conditional and the condition is the part to read twice: the absence of an authentic deed is a ground of nullity of the transformation wherever such a deed is required.

Whether a given transformation falls inside that requirement is what has to be settled first, and it is a question for the notary rather than something to infer from the rule that applied at incorporation. What rides on the answer is the validity of the transformation itself, not a line in the budget.

The two cost sides are easy to merge into one number, and they do not behave the same way. The register's side is a published tariff rather than a quote: the RCS tariffs set by grand-ducal regulation are stated exclusive of VAT and are subject to VAT at 17%.

Notarial cost, in the cases where a deed is required, is the side that varies with the instrument — which is why a conversion belongs in the plan as an incorporation-grade transaction rather than as a form update.

Common questions

Three questions tend to follow once the capital figures stop being abstract. They are what founders search for the moment a form looks affordable: whether the choice moves the tax bill, whether a company is needed at all rather than a sole proprietorship, and whether checking a name secures it. Each has a short, unhedged answer, and each is answered here rather than pointed at, because the hedged version is what sends a founder back to the search results.

Does the legal form change how much tax I pay?

No. All three are capital companies on identical rates: 14% up to €175,000, a transition band computed as €24,500 + 30% of the income above €175,000, then 16% from €200,000 — plus the 7% employment-fund surcharge and municipal business tax, which together give a combined 23.87% in the standard band for a company seated in Luxembourg City.

A Sàrl-S and an SA on the same profit in the same commune pay the same.

What about a sole proprietorship?

It is not a company: there is no share capital, and no separation between the business and the person, so liability is not ring-fenced.

Filing is lighter, though the exemption is narrower than the headline figure suggests: it is a commerçant personne physique, an individual trader, who has no RCS accounts-filing obligation until annual turnover excluding VAT exceeds €100,000. A liberal profession is a different case, and that figure does not govern it. The permit conditions are the same either way.

Does checking the company name protect it?

Only partly, and the distinction matters. The check is made by submitting an electronic request for a certificate of name availability to Luxembourg Business Registers before incorporating. The certificate that comes back is valid from the moment it is issued until the name is entered in the RCS — but it does not reserve the name: any available name may be taken by the first person who requests it when registering with the RCS.

What decides it in practice

The choice is usually settled by whichever constraint binds first. Does a company — an investor vehicle, a co-founder's holding — need to appear on the register? That rules out the Sàrl-S. Is the object a holding or investment activity? Also outside the Sàrl-S, and insurance, savings and investment undertakings are outside the Sàrl. Are freely transferable shares or several classes expected? That is SA territory, at €30,000.

What does not decide it is prestige. Counterparties check the permit, the RCS filings and the bank account, not the suffix after the name.