How to Start a Business in Luxembourg: Sole Trader, SARL-S or SARL

Starting a business in Luxembourg is not a single company-registration form. The founder first defines the activity and chooses a legal form, then deals with any business permit, incorporation, the Trade and Companies Register, tax, VAT and social security. Some steps overlap, but doing them in the wrong order can delay an opening.

The three forms most often considered by a small founder are the sole proprietorship, the simplified private limited company known as SARL-S and the conventional SARL. The cheapest-looking option is not automatically the right one: liability, shareholders, financing, governance and professional rules matter more than the headline capital figure.

Choose the legal form before filing

A sole trader operates in their own name. There is no statutory minimum capital and decisions remain simple, but the business is not a separate legal person. The operator has unlimited liability on personal assets for business debts. This can suit a small independent activity where the founder accepts that exposure and does not need shareholders.

An SARL-S creates limited liability and can have one to 100 shareholders, but all shareholders must be natural persons. Its capital must be between EUR 1 and EUR 12,000, fully subscribed and paid at formation. A private deed is sufficient, so a notary is not compulsory. The form is limited to traders, craftspeople, manufacturers and certain liberal professions, and the business permit is needed for RCS registration.

A conventional SARL can also start with one shareholder and can include legal-person shareholders. It requires at least EUR 12,000 of fully subscribed and paid capital and must be incorporated before a notary. The capital remains company property after formation; it is not a fee paid to the state, although directors must use it in the company's interest and respect creditor-protection rules.

The official sole-trader guide, SARL-S guide and SARL guide describe more detailed governance and accounting obligations. A founder expecting outside investors, regulated work or substantial contractual risk should obtain tailored legal and accounting advice before selecting a form.

Business permit and genuine establishment

Commercial, craft, industrial and specified liberal activities generally require an authorisation d'établissement from the Ministry of the Economy. The permit is issued to the business when the manager satisfies professional-integrity requirements and any required qualification or experience. Regulated professions can need another approval in addition to the general permit.

“The company or sole proprietorship must have a fixed place of business in Luxembourg.” — Guichet.lu

A mailbox alone is not a qualifying establishment. The business needs premises in Luxembourg that fit the nature and scale of its activity, with effective and permanent management there. Home-based work may be possible in suitable circumstances, but the lease, planning rules, co-ownership terms and commune requirements should be checked rather than assumed.

The business-permit application can be filed through MyGuichet.lu or by post. Current stamp duty is EUR 50. The file varies by activity and manager, commonly covering identity, criminal history or declarations of honour, qualifications and the operating address. For a company, final issue also depends on filing its constitutional documents with the RCS.

Incorporation, RCS and registrations

For an SARL, the founder opens the capital account, prepares articles and completes the notarial deed. An SARL-S uses a private deed but still needs compliant articles and its permit for registration. A commercial sole trader also registers where required. RCS filing creates the public register record, and company documents are published through the electronic RESA. Check the proposed name before signing documents.

Registration does not finish the launch. The operator must handle the relevant income-tax or corporate-tax registration and social-security status. A sole trader normally affiliates with the CCSS as self-employed. A company files the necessary operating and manager declarations, and must register employees before work begins.

A taxable activity also requires an initial declaration to the VAT authority. Luxembourg's domestic small-business exemption currently applies where annual turnover excluding tax does not exceed EUR 50,000, but exemption does not erase every VAT obligation. Purchases from abroad, intra-EU services or sales, and activities outside Luxembourg can trigger registrations or returns. The official VAT procedure states a normal 15-day deadline from the start of activity for non-exempt taxable persons.

What the launch really costs

There is no honest universal total. Share capital, EUR 50 permit duty, RCS filing, notarial work for an SARL, professional advice, premises, insurance, banking and sector licences are different items. Capital is financing, not the same as an expense. VAT and income-tax registrations themselves are free, while adviser and compliance costs depend on the file.

A non-EU founder must also separate company law from immigration law. Owning or forming a Luxembourg company does not itself grant a right to live or work in the country. Where self-employment authorisation is required, that route should be planned alongside the business file before commitments are made.

• Define the exact activity and regulated-profession requirements.
• Choose the form by liability and governance, not capital alone.
• Secure a genuine Luxembourg establishment and business permit.
• Complete incorporation, RCS/RESA and beneficial-owner filings.
• Finish tax, VAT and social-security registrations before trading.