SARL-S in Luxembourg: The Simplified SARL Explained

SARL-S (société à responsabilité limitée simplifiée) is Luxembourg’s cheapest way to get limited-liability protection. Launched in 2017, it lets you set up a company with as little as €1 of capital, no notary, and a turnaround of 1–2 weeks. The trade-off: it’s only for natural persons, you can be in only one SARL-S at a time, and your activity must require a business permit. This guide covers how it works, what to watch out for, and how it compares to a classic SARL.

The SARL-S was created by the law of 23 July 2016 (in force 16 January 2017).

What is a SARL-S?

A SARL-S is a simplified version of a classic SARL. Same legal personality, same limited-liability protection, same corporate tax treatment. The simplifications are:

• Capital can be anything from €1 to €12,000 — you pick
• No notary — you sign a private deed (acte sous seing privé)
• Faster, cheaper to set up

It was designed for first-time entrepreneurs, small business owners, craftsmen, and retailers who wanted a company form without the notary bill and the €12k capital of a classic SARL.

The other guides on choosing a legal form set the SARL-S beside the sole proprietorship and the classic SARL.

Key rules to know

1. Only natural persons, one per person

Only natural persons (individual humans) can be shareholders of a SARL-S. Other companies cannot be shareholders. And a single natural person cannot be a shareholder in more than one SARL-S at a time. If you already own a SARL-S, you cannot form or join another one.

(Exception: if you inherit SARL-S shares on the death of another shareholder, you can temporarily hold two.)

2. Only for activities covered by the establishment law

A SARL-S can only be formed for an activity that falls within the loi du 2 septembre 2011 on the right of establishment — the same law that governs business permits. That includes commerce, craft, HORECA, transport, and also many liberal professions that require a business permit (architect, expert-comptable, etc.).

What cannot use a SARL-S are professions regulated by their own Ordre outside the 2011 law: avocat (lawyer), notaire (notary), médecin (doctor), pharmacien (pharmacist), réviseur d’entreprises (auditor). These professions must use sole proprietorship or a classic SARL.

3. The 5% legal reserve rule

Each year, at least 5% of the net profits must be allocated to a legal reserve until capital + reserve reaches €12,000. After that, the obligation stops. There’s no time limit — it can take 5 years, 20 years, or never, depending on how profitable the business is.

The 5% reserve is mandatory. Even a profitable SARL-S cannot distribute all profits as dividends until capital + reserve reaches €12,000. Plan for it in your cash flow.

4. Converting to a classic SARL

Conversion is mandatory when your capital exceeds €12,000. The law of 10 August 1915 on commercial companies also limits a SARL-S to 100 shareholders and gives it a year to change its form once it passes that number, but a classic SARL has the same limit, so converting to one does not solve it.

Once capital + reserve reaches €12,000, you may keep running as a SARL-S — you’re not forced to convert at that moment. But many owners convert voluntarily so they can:

• Take on legal-person shareholders (holding companies, other firms)
• Run more than one company of the same kind

Conversion requires a notarial deed to amend the articles of association. It is not automatic.

5. Directors’ liability for public debts

Shareholders’ liability is limited to their contribution — that’s the whole point of a SARL-S. But gérants (managers) can be personally liable for public debts under two separate legal regimes:

• Tax and VAT — when the gérant’s fault in carrying out the company’s tax duties leaves tax unpaid: § 109 of the Abgabenordnung (Loi générale des impôts) for direct taxes, articles 67-1 to 67-3 of the VAT law for VAT.

This is the same as for a classic SARL. The liability shield does not extend to these debts.

Founders are also jointly liable to third parties for unpaid capital subscriptions and for any gap in the founding documents. Make sure your articles of association are clean and your capital is paid up in time: since 2 June 2026, cash contributions to a SARL-S may be paid up within 12 months of formation (article 720-4 of the 1915 law), like a classic SARL’s capital (article 710-6).

Tax treatment

A SARL-S is taxed like any other company:

• Corporate income tax (IRC): 14% up to €175,000 taxable profit; 16% above €200,000 (2026 rates). Plus 7% solidarity surtax.
• Municipal business tax (ICC): rate varies by commune (~6.75% in Luxembourg City).
• Net wealth tax (IF): 0.5% up to €500m net assets. Since the 1 January 2025 reform (Loi du 20 décembre 2024), the minimum IF depends only on the total balance sheet, according to the ACD’s net wealth tax scale for companies: €535 up to €350,000, €1,605 up to €2 million and €4,815 above. For most SARL-S companies, the minimum IF is €535 per year.

Combined effective rate in Luxembourg City: ~24% for profits above €200k. Below €175k, lower.

Setup cost and timeline

Typical total cost: about €97–€297, including:

• Business permit application: ~€50
• RCS filing fee: €14.61 excl. VAT, according to the LBR’s fee schedule, plus a €12 registration duty on each document filed
• RBE filing (beneficial owners register): €15 excl. VAT, according to the LBR’s RBE tariffs
• RESA publication of articles: free, according to Guichet.lu
• Optional legal/admin support: €0–€200

Timeline: 1–2 weeks once you have the business permit. If you’re also applying for the permit, add its processing time: 6.62 days on average in 2025, according to the Ministry of the Economy’s review of 2025.

What you need to set up a SARL-S

1. A business permit for the company — you apply before forming it and include the application in the RCS filing, as Guichet.lu’s page on the SARL-S explains; the final permit follows once the articles are registered with the RCS, according to its page on the business permit
2. Articles of association (statuts) — private deed, no notary
3. A registered address in Luxembourg (non-residential for most activities)
4. Capital of €1 to €12,000 and a declaration of honour on the contributions (a form on Guichet.lu’s SARL-S page); cash contributions may be paid up within 12 months of formation (art. 720-4)
5. Identification of shareholders and gérants (passport, proof of address, criminal record extract)
6. RCS filing (via lbr.lu)
7. RBE filing (beneficial owners register)

Typical order: name check with the RCS → business permit application → articles of association → RCS filing → final business permit and RBE filing → bank account → VAT registration and CCSS affiliation.

Who is it for?

SARL-S fits well if you are:

• A first-time entrepreneur starting a commercial or craft activity
• A craftsman, retailer, or service provider wanting liability protection without the notary bill
• Not planning to bring in a corporate investor (only natural persons can be shareholders)
• Confident your activity requires a business permit

SARL-S doesn’t fit if:

• You’re a liberal profession (lawyer, doctor, consultant without a commercial permit) — you cannot use SARL-S
• You want a holding company or corporate shareholders — use a classic SARL
• You already own another SARL-S — you cannot form a second

Practical tip: Many SARL-S owners keep the company as SARL-S indefinitely, even once they could convert. The SARL-S form is just as solid legally, and converting adds a notarial cost for no strong benefit unless you specifically need corporate shareholders.

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