Luxembourg’s law of July 23, 2016, which came into force on January 16, 2017, creates an incentive for entrepreneurs to establish a business in the grand duchy by introducing the simplified private limited liability company (société à responsabilité limitée simplifiée or Sàrl-S) – also known as the one-euro company.

The main legal features of the new company type are:

 Minimum capital requirement of €1

By contrast with the private limited liability company (Sàrl), which must have capital of at least €12,000, the simplified private limited liability company may be incorporated with a minimum share capital of €1, which must be fully subscribed and paid-up.
The minimal capital requirement is counterbalanced by an obligation to create legal reserves to which it must allocate at least one-twentieth of the company’s net profit annually. The obligation to create legal reserves ceases once the share capital threshold of €12,000 is reached.
When the share capital reaches €12,000, either by incorporation of legal reserves or by a share capital increase, the Sàrl-S must be transformed into another eligible legal form, such as an Sàrl, S.A. or S.C.A., subject to any applicable capital requirements they may entail.

• Shareholders must be individuals

The simplified private limited liability company is restricted to shareholders that are individuals, otherwise they will have no legal validity. Similarly, the governance of an Sàrl-S must be conducted solely by individuals.
In addition, an individual may hold shares in only one simplified private limited liability company, except in cases where the person has become a shareholder in another Sàrl-S as a result of the death of one of its shareholders.
A shareholder that owns shares in more than one Sàrl-S, apart from in these exceptional circumstances, will become jointly liable for the obligations of all other Sàrl-S in which they are a shareholder.

• Business licence required

The corporate purpose of the Sàrl-S is restricted to activities that require a business licence, such as commercial, skilled trades and industrial activities, as well as certain liberal professions.

• Simplified incorporation
The one-euro company may be incorporated by private deed or by a notary.