A simplified limited liability company, also known as an SARL-S or even “1 euro SARL,” is a variant of the “conventional” SARL and has been available in Luxembourg since January 2017. It is ideal for those getting into entrepreneurship for the first time, offering a reassuring legal framework and simplified formation costs. The SARL-S form is well suited to service and consulting-type business models, which tend to require little investment. The administrative steps involved are quick and specific.
Characteristics, advantages and limits of an SARL-S
The purpose of an SARL-S must fall within the scope of the amended act of September 2, 2011 governing access to occupations in craft trades, business and industry as well as certain liberal professions. If a business falls outside the scope of activities provided by the Ministry of the Economy, it cannot, in theory, use the SARL-S form (healthcare, purely financial or educational professions, etc.).
Formalities for setting up
An SARL-S can be formed by means of a private deed, meaning without having to go through a notary. This cuts costs and speeds up the formation process.
Registering with the Luxembourg Trade and Companies Register – RCS, however, is mandatory (via the Luxembourg Business Registers portal). If you do not use a notary for the formation of your SARL-S, you will have to handle registration formalities yourself, online.
Minimum share capital
The share capital must be between 1 and 11,999 euros. Hence the “1 euro company”!
This form is especially well-suited to entrepreneurs aiming to start or test a business activity that, by nature, does not require extensive start-up capital.
The SARL-S form is recommended for entrepreneurs looking at a simple business model. Someone starting a business alone, typically with activities in consulting or of predominantly intellectual nature, can also choose to start a “single member” SARL-S holding all shares.
By contrast, if you already know you will have high and recurring running costs (advance payments on rent, purchasing merchandise, specific material or equipment, etc.), like for a restaurant, for example, it would not be an appropriate form for your business.
The SARL-S form is intended exclusively for private persons, in such a way that an SARL-S cannot have a company as an associate. Furthermore, a private person can only be an associate of one SARL-S at a time (except when shares are transferred onto that person as the result of a death).
How much does it cost?
The administrative formation of a simplified SARL entails little cost: a 24 euro administrative tax for the business permit and 40 euros for electronic filing with the LBR.
Though incorporation is uncostly, accounting principles and obligations relating to the SARL-S form are identical to those for a “conventional” SARL. Look into costs relating to your accounting requirements to get a clear idea of what to expect in terms of annual fees. It is strongly recommended to use the services of an accountant due to the specificity of accounting standards for a capital company such as an SARL-S.
Annual expenses cannot be determined precisely and can greatly vary depending on your line of business, the size of the company, etc. Usually, the amount is several thousand. As an indicator, often between 2000 and 5000 euro. Among such expenses, keep in mind the annual fees for the relevant professional Chamber, wealth tax (minimum fee of €535 to be paid regardless of the company’s net earnings or loss), as well as accounting and banking fees.
Steps to launch: what you should know
There is a very specific chronological order to creating an SARL-S:
1) Draft and sign the articles of association by way of a private deed (or via a notary if you wish), after having downloaded the model of your choice from guichet.lu
2) Request a business permit from the Ministry of the Economy providing the name of the SARL-S on the 2nd page of the form whether you are sending a paper application or applying directly through the electronic procedure with the MyGuichet online assistant.
3) Receive a temporary permit with a reference number for registration with the RCS. This permit is usually issued within 2 or 3 weeks and is sent by email. At this point, you will receive a permit stating “Invalid” but with an official number allowing you to register your company via the online portal of the Luxembourg Business Registers.
4) Register your company, making sure to submit the sworn statement regarding proof of releasing cash and contributions in-kind (guichet.lu).
5) Provide the articles of association and proof of registration with the RCS to your bank to open a professional bank account.
6) Receive the final permit for the Ministry of the Economy (generally issued automatically within 1 to 3 days following approval from the RCS) and complete the usual administrative registrations (CCS, AED and others depending on the profession).
Key links and documents
- Models for the memorandum of association, free for download in Word format (EN/FR/DE) on guichet.lu. Do note that you can choose between a single-member or multiple partner SARL-S: https://guichet.public.lu/en/entreprises/creation-developpement/constitution/societe-luxembourgeoise/acte-constitutif-societe-commerciale.html
- A model for the declaration of honor (sworn statement) regarding contributions in capital in Word format on guichet.lu, not to confused with the declaration required when applying for a business permit: https://guichet.public.lu/en/entreprises/creation-developpement/forme-juridique/societe-capitaux/sarl-s.html
- FAQs about registering an SARL-S with the LBR-RCS (FR/EN) : https://www.lbr.lu/mjrcs/jsp/webapp/static/mjrcs/fr/mjrcs/pdf/Brochure_SARLS.pdf?time=1617289848495&pageTitle=Brochure%20relative%20%C3%A0%20la%20soci%C3%A9t%C3%A9%20%C3%A0%20responsabilit%C3%A9%20limit%C3%A9e%20simplifi%C3%A9e%20(SARL-S)%20(Brochure_SARLS.pdf
- Ordering a Luxtrust product (token or smartcard): luxtrust.lu/en
- Assistance for browsing the LBR portal via the dedicated helpdesk: (+352) 26 428-1 / email@example.com
Tips & tricks: filing formalities
- Download a recent version of Adobe Acrobat Reader before using the guichet.lu website or the lbr.lu portal.
- When applying for RCS registration of your SARL-S electronically, submit a version of the articles of association that is not hand signed as only the electronic Luxtrust signature is accepted.
- Do not change the original page layout of the articles of association (especially the header with specific margins) downloaded from guichet.lu, and convert the document into PDF/A format.
- Articles of association must be submitted to the LBR in their French or German version. Translations can be appended where necessary.
- When filling in the articles of association model on guichet.lu, fill only the fields between brackets and do not change any sentences if you are uncertain of their legal soundness.
Should you have any doubts, be sure to get in touch with the House of Entrepreneurship.
The Luxembourg Business Registers also offer (paying) assistance with filing, on appointment. The filing assistance office is open Monday through Friday by appointment only. You can book an appointment by contacting the helpdesk. And do make sure to load all the necessary documents onto a UBS stick before you make your way to 14 rue Erasme.
Happy launch to one and all!
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