Articles on: Becoming Self-Employed

Which Legal Form for Your Business in Luxembourg?

If you're starting a business in Luxembourg, you need to pick a legal form. The four most common are sole proprietorship (entreprise individuelle), SARL (société à responsabilité limitée), SARL-S (simplified SARL), and SA (société anonyme). Your choice affects setup cost, tax treatment, personal liability, and paperwork. Most solo self-employed people start as a sole proprietorship or SARL-S.


Whichever form you pick, you still need a business permit (autorisation d'établissement / Niederlassungsgenehmigung) if your activity requires one.


Form

Min. capital

Notary?

Liability

Best for

Sole proprietorship

None

No

Personal, unlimited

Solo freelancers, small traders

SARL-S (simplified)

€1–12,000

No

Limited

Small businesses starting lean

SARL

€12,000

Yes

Limited

Established businesses, multiple partners

SA

€30,000

Yes

Limited

Larger businesses, raising capital


Sole proprietorship


You are the business. No separate legal entity.


  • Capital: none required
  • Liability: unlimited — your personal assets are on the line for business debts
  • Tax: profits taxed under personal income tax (IRPP). No corporate tax, no net wealth tax
  • Registration: RCS only if your activity is commercial (not for liberal professions). RBE not required
  • Accounting: simple cash-basis ledger allowed up to €100,000 turnover. Above that, double-entry bookkeeping
  • Setup: cheapest and fastest — business permit + CCSS + AED registration


Good for: freelancers, consultants, small traders, anyone starting solo and testing their market.


Bad for: activities with significant financial risk (damage to clients, large inventories, public works). Personal liability means one bad year can cost you your home.


See our deeper guide on sole proprietorship in Luxembourg.


SARL (société à responsabilité limitée)


The classic limited liability company. A separate legal entity.


  • Capital: €12,000 minimum, fully paid up at incorporation (cash or in-kind)
  • Liability: limited to your capital contribution as a shareholder. But gérants (managers) can be personally liable for unpaid tax/VAT (under § 103 of the Abgabenordnung, if they fail to ensure the company meets its tax obligations) and for unpaid CCSS contributions (under the Code de la Sécurité Sociale) — two separate legal regimes
  • Tax: corporate income tax (IRC) + municipal business tax (ICC) + net wealth tax (IF). Combined effective rate in Luxembourg City ~24% for profits above €200,000 (2026 rates)
  • Shareholders: 1 (SARL unipersonnelle) to 100. Natural or legal persons
  • Setup: notary required. Typical total cost €1,500–€3,000 (notary + RCS/Memorial publication). Timeline 1–3 weeks
  • RCS + RBE registrations mandatory. Annual accounts filed within 7 months of year-end


Good for: established businesses, multiple partners, activities where credibility with clients and banks matters.


SARL-S (simplified SARL)


Launched in 2017 to make company creation cheaper and faster for small businesses.


  • Capital: €1 to €12,000, fully paid up at formation
  • Notary: not required — private deed (acte sous seing privé) is enough
  • Shareholders: only natural persons. Maximum 100, minimum 1. You can only be a shareholder in ONE SARL-S at a time
  • Activity: must require a business permit (commerce, craft, HORECA, transport, etc.). Pure liberal professions (lawyer, doctor, architect) cannot use SARL-S
  • 5% reserve rule: each year, 5% of net profits go to a legal reserve until capital + reserve reaches €12,000. No time limit
  • Tax: same as classic SARL (IRC + ICC + IF)
  • Liability: same as SARL — limited for shareholders, personal for gérants on tax and CCSS debts
  • Setup: ~€200–€500. Timeline 1–2 weeks


Good for: first-time entrepreneurs, small businesses, craftsmen, retailers. A lean way to get limited-liability protection without a notary bill.


See our deeper guide on SARL-S in Luxembourg.


SA (société anonyme)


The "big company" legal form. Rarely used by solo self-employed people.


  • Capital: €30,000 minimum, of which 25% paid up at incorporation
  • Notary: required
  • Shareholders: 1+ (natural or legal)
  • Board: one-tier (≥3 directors, or 1 if sole shareholder) or two-tier (management + supervisory board)
  • Tax: same as SARL


Good for: larger businesses, businesses raising equity, holding structures.


Which one to choose?


Three questions to ask yourself:


1. What's my financial risk?

Solo consultant with low risk → sole proprietorship works. Building something with inventory, staff, or significant client exposure → SARL-S or SARL for the liability shield.


2. How much can I invest in setup?

SARL-S is the cheapest company form (~€200–€500). Classic SARL needs a notary and €12k paid-up capital. Sole proprietorship is almost free.


3. What's my activity?

Liberal professions (lawyer, doctor, architect, IT consultant without a commercial permit) cannot use SARL-S. They're left with sole proprietorship or classic SARL.


Practical tip: Many solo freelancers start as a sole proprietorship, then switch to a SARL-S or SARL once revenues stabilise and they want to protect personal assets. You can change form later — it's not a one-way door.


The business permit is separate from the legal form. Sole proprietorship, SARL, SARL-S, or SA — if your activity needs a permit (commerce, craft, HORECA, etc.), you still need one. The legal form does not replace the permit. See our article on the 4 criteria for a business permit.


Quick reference


Question

Answer

Cheapest form to set up?

Sole proprietorship (almost free) — or SARL-S (~€200–€500) if you need limited liability

Form with limited liability?

SARL-S, SARL, SA

Form without a notary?

Sole proprietorship, SARL-S

Can liberal professions use SARL-S?

No — only business-permit activities

Can I be in multiple SARL-S companies?

No — one per person

Do I pay corporate tax as a sole proprietor?

No — only personal income tax

Do I need a business permit regardless of form?

Yes, if your activity requires one




No boss, no hierarchy, no ceiling on what you can build. Bravo for choosing your own path.
🙌💜 Your BravoLisa Team


This article is for general information purposes only and does not constitute professional tax, legal, or accounting advice. Every situation is different — consult a qualified professional (tax adviser, accountant, or lawyer) for advice specific to your circumstances. BravoLisa does not accept liability for decisions made based on this information.


Last updated: April 2026. Rates and thresholds may change — always verify with the relevant authorities for the most current figures.

Updated on: 17/04/2026

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