Three structures, three philosophies: key characteristics
The SARL: the standard for Luxembourg SMEs
The Société à Responsabilité Limitée (private limited liability company) is the preferred legal form for around 70% of companies in Luxembourg. It requires a minimum share capital of EUR 12,000, fully paid up at incorporation. This amount, deposited into a blocked bank account prior to the notarised deed, demonstrates the seriousness of your project to business partners and banking institutions.
An SARL may have between 2 and 100 shareholders — natural or legal persons — or a single shareholder in the case of a single-member SARL. Its governance is based on one or more managing directors, who may or may not be shareholders, and who have broad powers to bind the company. Strategic decisions remain within the authority of the shareholders’ general meeting: amendments to the articles of association, capital increases, or changes of legal form. For companies with more than 60 shareholders, an annual general meeting becomes mandatory, as does the appointment of a statutory auditor.
The SA: the structure for international ambitions
The Société Anonyme (public limited company) is designed for projects requiring substantial financing capacity or institutional governance. Its minimum share capital is EUR 30,000, of which at least 25% (i.e. EUR 7,500) must be paid up at incorporation. This flexibility allows capital to be raised progressively while still displaying a strong financial base.
Unlike the SARL, the SA imposes no limit on the number of shareholders and allows free transferability of shares — a decisive advantage for attracting investors or preparing an initial public offering. Its governance may follow a one-tier model (board of directors with a minimum of three members) or a two-tier system combining a management board and a supervisory board. This structure is particularly well suited to holding companies, subsidiaries of international groups, and companies targeting capital markets.
The SARL-S: a springboard for first-time entrepreneurs
Introduced in January 2017, the Simplified Private Limited Liability Company (SARL-S) pursues a clear objective: making entrepreneurship more accessible. Its share capital may range from EUR 1 to EUR 11,999, removing the financial barrier to entry. Another major advantage is incorporation by private deed, which removes the mandatory involvement of a notary and reduces incorporation costs to around EUR 65 (business permit and publication with the RCS).
This accessibility, however, comes with significant restrictions. Only natural persons may hold shares, and each individual may be a shareholder in only one SARL-S at a time — failing which they become personally liable for the debts of the excess companies. In addition, 5% of annual net profits must be allocated to a special reserve until the combined amount of share capital and reserve reaches EUR 12,000. This requirement protects creditors in light of the low initial capital.
Which tax regime and accounting obligations?
All three corporate forms are subject to the same corporate tax regime. For the 2025 financial year, the overall effective tax rate amounts to 23.87% for a company established in Luxembourg City. This rate combines corporate income tax (14% to 16% depending on taxable income, increased by a 7% contribution to the employment fund) and municipal business tax (6.75% in Luxembourg City). Net wealth tax also applies, with a minimum ranging from EUR 535 to EUR 4,815 depending on the balance sheet total.
Accounting obligations are identical: preparation of a balance sheet, a profit and loss account with notes, and filing of annual accounts with the Trade and Companies Register within seven months following the end of the financial year. Companies exceeding two of the following three thresholds for two consecutive years — balance sheet total of EUR 4.4 million, net turnover of EUR 8.8 million, 50 employees — must appoint an approved statutory auditor to audit their accounts.
Choosing the right structure for your situation
You are launching a service activity with limited capital
The SARL-S is the logical choice for consultants, trainers, software developers or other intellectual professions starting out alone or with limited resources. It provides protection of personal assets without tying up EUR 12,000 in share capital. However, bear in mind that its perceived credibility remains lower than that of a standard SARL, particularly in the eyes of banks and large clients.
You are setting up an SME with moderate growth ambitions
The SARL is the standard choice for commercial, craft or service activities requiring a certain financial base. Its EUR 12,000 share capital inspires confidence, its governance remains simple, and the 100-shareholder limit suits the vast majority of projects. It can include both natural and legal persons as shareholders, facilitating structures involving holding companies or institutional partners.
You are targeting fundraising or an international dimension
The SA becomes essential when your project involves multiple investors, a potential stock market listing, or a holding structure. The free transferability of shares, absence of a shareholder cap, and institutional governance meet the expectations of investment funds and international partners. The participation exemption regime (dividends and capital gains) further enhances its attractiveness for holding structures.
| Criterion | SARL-S | SARL | SA |
|---|---|---|---|
| Minimum capital | EUR 1 | EUR 12,000 | EUR 30,000 |
| Shareholders | 1 to 100 (natural persons only) |
1 to 100 | 1 or more (unlimited) |
| Notarial deed | Not mandatory | Mandatory | Mandatory |
| Transferability of shares | Restricted | 75% approval required | Free |
| Typical profile | First-time entrepreneur, freelancer | SME, subsidiary | Holding company, fundraising |
Conclusion: a decision that deserves tailored support
Choosing between an SARL, SA or SARL-S goes far beyond the question of minimum share capital. It affects your company’s governance, its ability to welcome new partners, and the perception of your stakeholders — banks, clients and suppliers. An SARL-S can evolve into a standard SARL as reserves accumulate; an SARL can be converted into an SA to support rapid growth.
Each entrepreneurial situation has specific characteristics that require a personalised assessment. The PCG team supports you in this strategic reflection, from analysing your project to the effective incorporation of your company, including tax optimisation and the implementation of your accounting framework. Contact our experts to benefit from advice tailored to your objectives.
