Legal Framework

The forms of companies

Private limited liability company (Société à responsabilité limitée  – « S.à r.l. »)

The minimum share capital amounts to (ie, at least €12,000) and will have to be deposited on the bank account of the company prior to its incorporation. The bank will then block that amount and issue a certificate to the attention of the notary to confirm the latter that capital payment was duly made. The incorporation deed will have to be passed by Luxembourg notary public (associates may be either present in person or represented for that meeting). The money paid for the subscription to the share capital and blocked by the bank will be released after incorporation of the company. The incorporation deed including the articles of association will have to be filed with the Corporate and Trade Registry in Luxembourg and then published Luxembourg electronic gazette (« RESA »).

The capital of the S.à r.l. may also be paid in by way of a contribution in kind. In such case, the valuation will have to be confirmed to the notary by the contributing associate. As opposed to a Société Anonyme (se below), no valuation of the contributed asset by an independent registered auditor will be required.

The S.à r.l. exists as from the date of signature of the incorporation deed by the notary.

Public limited liability company (Société anonyme  –  » S.A. »)

The minimum share capital amounts to (ie, at least €30,000) which will have to be deposited on the bank account of the company. The bank will then issue a certificate to the notary confirming that funds for the payment of the share capital were received by the company to be incorporated. As for the S.à R.L., the incorporation deed will have to be passed by a Luxembourg notary public (shareholders may be either present in person or represented for that meeting). The money paid for the subscription to the share capital and blocked by the bank will be released after incorporation of the company. The incorporation deed including the articles of association will have to be filed with the Corporate and Trade Registry in Luxembourg and then published Luxembourg electronic gazette (« RESA »).

Contribution in kind may also be made to pay in the share capital of a Société Anonyme; in such case, a valuation report issued by a independent registered auditor (Réviseur d’Entreprise) will have to be provided to the notary.

The S.A. will exist as from the signature of its incorporation deed by the notary.

Special limited partnership (Société en Commandite Spéciale – « SCSp »)

The SCSp may be formed before a Luxembourg notary or under private seal,tHe latter option being the most usual. Contractual freedom rules the language of the articles of association of the SCSp. The SCSp requires a minimum of two associates, i.e. at least one General Partner and one Limited Partner.

The capital contributions to the SCSP can be made of cash, contribution in kind or of industry. There is no need of a valuation for such purpose.

The SCSp will validly exist as from the date of execution of its articles of association. Only an excerpt of the articles of association will have to be filed with the Corporate and Trade Registry in Luxembourg and then published Luxembourg electronic gazette (« RESA »).

Partnership limited by shares (Société en Commandite par Actions – « SCA »)

A partnership limited by shares is a form of corporation that combines the characteristics of a classic Limited partnership (Société en Commandite Simple) with those of a Private Limited Corporation (Société Anonyme).

The minimum share capital amounts to (ie, at least €30,000) which will have to be deposited on the bank account of the company. The bank will then issue a certificate to the notary confirming that funds for the payment of the share capital were received by the company to be incorporated. The bank will then block that amount and issue a certificate to the attention of the notary to confirm the latter that capital payment was duly made. The incorporation deed will have to be passed by Luxembourg notary public (associates may be either present in person or represented for that meeting). The money paid for the subscription to the share capital and blocked by the bank will be released after incorporation of the company. The incorporation deed including the articles of association will have to be filed with the Corporate and Trade Registry in Luxembourg and then published Luxembourg electronic gazette (« RESA »).

The SCA is incorporated by minimum 2 partners, i.e. at least one General Partner and one Limited Partner. The main difference between the partners lies in their liabilities (and the related power they have): general partners have full power to manage the company activities and support a joint and several liability for the commitments of the said company, whereas the limited partners are only investors and as such are liable up to the level of their contributions.

Contributions to the capital may be in cash or in kind. Contributions other than in cash must be valued by an independent registered auditor (réviseur d’entreprises). Contributions in services do not form part of the share capital, but may be included in the articles of association and remunerated.

The SCA will exist as from the signature of its incorporation deed by the notary.

The Luxembourg social security system

….. and what makes Luxembourg different from many other countries in the World is its social security system, which is one of the most advantageous and most complete system in Europe and in the World.

The protections that are provided by the Luxembourg social security system are the followings:

  • Sickness
  • Maternity
  • Accidents at work
  • Old age
  • Invalidity
  • Unemployment
  • Family benefits

In order to get protected by this system, some conditions must be fulfilled.

Who is concerned?
In Luxembourg every employer and employee are obliged to pay the contributions to the Social Security.
The percentage of the contributions that everybody pays depends as well on the status that every employee has in Luxembourg.
The rates of social contributions

source: ABBL

Regarding the Self-employed workers the amount of the contributions that need to be paid is decided by the “Centre Commun de la Sécurité Social”. These contributions are not deducted form their salary automatically.