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What are the types of business entities in Luxembourg?

business entities in Luxembourg

Luxembourg is a small country in the heart of Europe with an unusually high per capita income. Luxembourg is home to over 155 international banks with burgeoning financial services and banking sectors. It is also a major e-commerce hub in Europe, coupled with low corporate taxes, a business-friendly environment and respect for investment, making it an ideal place to do business. This article lists the different types of business entities that can be opened in Luxembourg.

What are the types of business entities in Luxembourg?   

Irrespective of the size and nature of your business, it is important for you as an entrepreneur to select a legal structure suitable to your activities and business operations. The major types of business entities in Luxembourg are as follows:


  1. Public Liability Company (Societe Anonyme or SA.)
  2. Private Limited Liability Company (Société à Responsabilité Limitée or S.A.R.L.)
  3. European Companies (sociétés européennes or S.E.)
  4. Cooperative Companies (sociétés cooperatives or SCOP)
  5. Civil Companies (sociétés civiles)


  1. Partnerships (sociétés en nom collectif)
  2. Partnerships limited by shares (sociétés en commandite par actions)
  3. Limited Partnerships (sociétés en commandite simple)

Procedure to set-up a company in Luxembourg

The following procedure must be followed to set-up a company in Luxembourg:

1. Public Liability Company (Societe Anonyme or SA.)

Public Liability Companies are one of the most common types of business entities in Luxembourg. These entities are usually opened by large businesses but are also accessible to SMEs since this setup deals in bearer shares that are easily transferable. A public limited company can be opened by one or more natural or legal persons. The liability of the shareholders is limited to the level of their contribution to the capital in the company. It can access financial markets too. The share capital required to set-up a Public Limited Company in Luxembourg is EUR 30,000. The capital must be fully subscribed, and a minimum of 25% should be paid up.

2. Private Limited Liability Company (Société à Responsabilité Limitée or S.A.R.L.)

The maximum number of companies incorporated in Luxembourg are incorporated in the form of private limited liability companies. They have combined features of both capital companies and partnerships. A private limited company in Luxembourg must have 2-100 shareholders. If the shareholders exceed the number of 100, then the company needs to change its legal form.

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At the time of incorporation, there can be one shareholder since the law allows one shareholder to own all the shares. These companies can be set up for any kind of business except for insurance business, savings, and investment businesses. The minimum amount of share capital required to set-up a SARL[1] in Luxembourg is EUR 12,000. The company’s share capital must be fully subscribed and paid up at the time of incorporation.

Where the number of shareholders exceeds 60, such SARL must hold a general meeting of the shareholders at least once a year.

There is an exception to SARL called a single member SARL where a private limited company can be set-up by a single shareholder.

3. European Companies (sociétés européennes or S.E.)

The laws of the European Union govern European Companies. It has a separate legal framework and works as a single economic operator throughout the EU. This allows flexibility and avoids the complications of setting up different entities according to specific national legislations of different EU member states.

A European Company must have at least two structures in at least two different EU countries. Any SE having its registered office in Luxembourg will be governed by the Luxembourg law applicable to public companies in all such provisions where EU standards do not apply. An SE incorporated in Luxembourg shall be incorporated according to the same conditions as public limited companies.

The minimum capital required for an SE is EUR 120,000. The registered office of an SE shall be its place of central administration, i.e. its headquarters. Every S.E. in Luxembourg is required to include the letters ‘ SE’ at the end of its company name. For taxation purposes, an SE is treated in the same way as a Luxembourg SA.

4. Cooperative Companies (sociétés cooperatives or SCOP)

A Cooperative Company in Luxembourg is a commercial company. It has a variable capital structure and a variable number of partners.This means that the company’s capital and the number of partners keep on changing and are not fixed. Moreover, there is absolutely non-transferability of shares to third parties.

In order to form a Cooperative Company, a minimum of 2 persons is required, and there is no limit on the maximum number of persons. The partners can be both natural and legal persons. However, the partners must have the legal capacity to enter into contracts.

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There is no mandate for a minimum or maximum amount of share capital. The deed of incorporation should spell out how the share capital is formed and the minimum amount of share capital required for subscription. The share capital increases and decreases with partners’ admission and withdrawal from the company.

5. Civil Companies (sociétés civiles or S.E.)

Civil companies in Luxembourg are involved in the realm of civil, freelance, agricultural and intellectual professions. Generally, these companies are involved in the management of immovable assets in the form of real estate companies that are constituted under Civil law. If these civil companies engage in commercial activities, their tax situation and related aspects may undergo change.

These companies are meant for all natural and legal persons engaged in non-commercial activities such as holding and managing assets. Such companies must have at least 2 partners and they have civil capacity. The purpose must be civil, i.e. it should not be commercial.

A Civil Company’s duration is limited to its partners’ lifetime. Here, the capital is made up of ownership shares, and no minimum capital is required to set up such a company.

6. Partnerships (sociétés en nom collectif or S.E.N.C.)

Partnerships in Luxembourg are commercial companies where the partners are jointly and severally liable to an unlimited extent against all the commitments of the partnership. Here, the partners are free to do business as traders in their own name. These partnerships are usually opened for small and medium size family-run businesses that want the rules of implementation to be simple and inexpensive, where no rules of minimum capital requirements exist and where there is flexibility in drafting articles of association of the partnership.

For a SENC to be registered, minimum 2 partners are required where legal persons can also become partners. A partnership is established through a private deed and then it dissolves at the end of the duration specified in the such deed.

7. Partnerships limited by shares (sociétés en commandite par actions S.C.A)

A partnership limited by shares is, again, a commercial company having the characteristics of a limited partnership and a public limited company. Unlike a limited partnership, the ownership shares are freely transferable in a partnership limited by shares. The benefit of SCA can be used in all types of businesses because it provides stable management.

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In the partnerships limited by shares, minimum 2 partners are required where at least one partner is a general partner and at least one is a limited partner and the difference between them lies in respect of their liabilities.

For setting up an SCA, a minimum share capital contribution of EUR 30,000 is required, which must be fully subscribed and paid up to at least 25%. A notary draws its deed of incorporation. The duration of an SCA is defined in its articles of association.

8. Limited Partnerships (sociétés en commandite simple or S.C.S.)

A limited partnership is also a commercial company where there are at least 2 partners. At least one partner is a general partner and at least one is a limited partner. These partners are different in terms of their extent of liability against the liabilities of the partnership. The general partner is jointly and severally liable for the company’s obligations whereas the extent of liability of a limited partner is limited to the extent of the contribution made by a such partner in the partnership. 

Both legal and natural persons can become partners of in a limited partnership. An SCS is established via a private deed called the partnership agreement. The duration of the limited partnership ends on the expiry of the duration mentioned in the partnership agreement. There is no minimum capital requirement to set up a limited partnership in Luxembourg.


The economy of Luxembourg is dependent on its financial and banking services, which specialise in the administration of international investments, management of mutual funds, pension funds, hedge funds etc. It is also a tech-driven economy with significant support from the government for business-friendly policies. This makes it ideal to set up a business entities in Luxembourg. To know which type of business entity would be most suitable according to the needs of your business, get the consultation offered by global incorporation experts at Enterslice.

Read our Article: Company Incorporation in Luxembourg

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