Coming from outside of Luxembourg, it is important to know the business set up types before starting your own. There are a number of possibilities and you need to select one that will suit your company’s needs. You will also need to be aware of the different requirements. This article will guide you through the options, helping you become more prepared.
SARL in Luxembourg
One of the most popular business types in Luxembourg, a SARL (Luxembourg Societee a Responsabilite Limitee) is suitable for a company with less than 40 shareholders. There is a minimum share capital of 12,400€. Founders of the business are only liable for their contributions. A SARL can be registered as a natural person or legal entity with the following conditions:
- Minimum of 2 shareholders, maximum of 4
- A company director and business manager must be appointed
- The LLC needs to be registered with Luxembourg tax authorities
- It is registered with the Trade and Companies Register in Luxembourg when you Articles of Association are given
Joint Stock Company in Luxembourg
If the business is a considerable size, at least 2 people can create a Luxembourg Societe Anonyme (SA). The initial capital is set at a minimum of 31,000€, divided into shares. Shareholders do not have to be from Luxembourg. The liability is limited to the initial contribution. Everything from the structure, organisation, and decision making of a joint-stock company is regulated by the Company Law in Luxembourg.
General partnership in Luxembourg
General partnerships are usually set up by two people. There are two structures, depending on the size of the business, Societe Civil, or Nom Collectif. A Societe Civil is a professional partnership, whereas a Nom Collectif is suitable for small legal entities. Partners manage all aspects of their company and are fully liable for any obligations.
Similar to a general partnership, a limited partnership is created by two people, with the difference that one is fully liable for the company’s obligations and one must have limited liability (the initial contribution). More partners are also able to set up a limited company.
Investment companies in Luxembourg
A SICAF (Societe d’Investissement À Capital Fixe is ideal for those wishing to develop their portfolio. An example would be a closed investment scheme, established through a public or private limited company, with approvals issued by Luxembourg’s Financial Market Authority. A SICAF requires a minimum initial input of 300,000€
An alternative investment scheme is a SICAV (Societe d’Investissement À Capital Variable) It is an open-ended investment company, established when the Articles of Association are provided to both the financial and registering authorities in Luxembourg. The minimum share capital is also 300,000€. Both investment company options are subject to specific taxes.
Branch or Subsidiaries in Luxembourg
Both are available to foreigners looking to set up a business in Luxembourg.
- A subsidiary- an independent set-up coming from a parent company. It shares the same rules as a joint-stock company or a limited liability company. Necessary licenses must be applied for.
- A branch- requires less formalities than a subsidiary, however, it must respect the rules and regulations of a parent company. It can be run as a SARL or joint-stock company.
It is always worth seeking legal advice from qualified experts in Luxembourg before you set up your company. English is widely spoken so you shouldn’t have any issues finding an advisor who can explain the laws in Luxembourg.