SARL vs SARL-S: 4 differences to choose the right Luxembourg company

Two almost identical names, one family

The SARL-S is not a separate species: it is a “simplified” private limited liability company that departs from some rules of the classic SARL.

The two forms share the essentials. Partners are liable only up to their share of the capital, shares are not freely transferable, the company is run by one or more managers, who may or may not be partners, and it can have up to 100 partners. According to Guichet.lu, the SARL is the most common company form in Luxembourg: around two thirds of existing companies.

The SARL-S was designed as an instant gateway to economic activity for new entrepreneurs. If you first want to understand how it works in detail, read our guide What is a SARL-S?. Here, we compare both forms point by point to help you choose.

Difference no. 1: the capital

This is the most visible difference. Forming a SARL requires minimum capital of €12,000. The capital of a SARL-S must be between €1 and €12,000.

• In both cases, the capital must be fully subscribed and fully paid up at incorporation: “€1 minimum” does not mean “pay later”.
• Contributions can be made in cash or in kind, in either form.
• The €12,000 ceiling is a real ceiling: if the capital of a SARL-S exceeds it, the company must change its legal form, as decided by the partners’ meeting.

Difference no. 2: formation, notary or private deed

A SARL must be formed before a notary. A SARL-S can be set up by private deed: using a notary is not mandatory.

This shows in the costs listed by Guichet.lu: a SARL adds notary fees and, if one is required, a statutory auditor; both forms pay publication fees at the Trade and Companies Register (RCS) and any administrative authorisation costs. The full path for a SARL, from the blocked account to the RCS, is set out in Starting a business in Luxembourg: the 5 steps.

Difference no. 3: who can be a partner

• SARL: partners can be natural persons or legal persons, i.e. other companies. It normally has 2 to 100 partners, but the single-member form lets one person set it up alone.
• SARL-S: partners must be natural persons; a company can never be a partner. It has 1 to 100 partners.
• A natural person can be a partner in only one SARL-S at a time, unless the shares were inherited. They can, however, be a partner in a SARL-S and, at the same time, in a classic SARL or an SA.

Management follows the same logic: a legal person may manage a SARL, whereas a SARL-S is managed by one or more natural persons, partners or not.

Difference no. 4: the permitted activity

A SARL can be formed for any corporate purpose. Only insurance, savings and investment companies cannot take this form.

The corporate purpose of a SARL-S is limited to craftspeople, traders, manufacturers and certain liberal professions. Its founder must first apply for a business permit from the Ministry of the Economy, to be included in the RCS registration file; the permit number is part of the information to declare.

Side-by-side comparison

How to choose: a four-question checklist

1. 1
   Will a company hold shares, now or later? If so, you need a SARL: a SARL-S only accepts natural persons.
2. 2
   Are you already a partner in a SARL-S? If so, you cannot set up a second one; a SARL remains possible.
3. 3
   Is your activity a craft, trade, industrial activity or an eligible liberal profession? If not, the SARL-S is not available.
4. 4
   How much capital do you need, and for how long? Above €12,000, it is a SARL; below that, a SARL-S lets you start small, without a notary.

After formation: the same accounting obligations

Whichever form you choose, the company prepares a balance sheet, a profit and loss account and notes, in principle a management report, and files its annual accounts with the RCS within 7 months of the financial year-end. For VAT, Guichet.lu gives the same filing frequency for both: an annual return below €112,000 of annual turnover excluding VAT, quarterly between €112,000 and €620,000, monthly above that.

SARL or SARL-S, Zuelen brings together for companies your bank, invoices, VAT and the PCN chart of accounts in one workspace, with a profit and loss account and balance sheet that are always up to date.

This article is general information and does not constitute legal advice. For your situation, check the official sources or consult a professional.