Luxembourg built a simplified company form specifically for solo founders and small businesses, the SARL-S, which needs just €1 in capital. A 2026 reform also loosened the rules for the standard SARL, letting you defer part of its larger capital requirement. Here's what it takes to start a business in Luxembourg in 2026.
1. Which business structure fits you?
Before you register anything, it helps to know what you're actually choosing between.
- SARL-S (simplified SARL). Designed for individual entrepreneurs and small businesses, with a minimum capital of just €1. Fast and economical to set up.
- SARL. Luxembourg's standard private limited liability company and the most common form overall. Minimum capital is €12,000, fully subscribed at formation. Under a reform effective June 2, 2026, founders can now defer payment of qualifying cash contributions for up to 12 months after incorporation, though the capital still has to be fully subscribed on day one, just not fully paid immediately.
- SA. A public limited company, minimum capital €30,000, generally used by larger groups.
2. Register your business
Most commercial and craft activities, and certain liberal professions, need a business permit (autorisation d'établissement) from the Ministry of Economy, which requires proof of professional qualifications. For a SARL or SA, a notary drafts and certifies your articles of association, a mandatory step; the SARL-S skips this requirement, which is part of why it can be formed in around 5 days. After notarization, the company registers with the Registre de Commerce et des Sociétés (RCS) and is published in the RESA (the electronic company gazette). Total setup cost for a SARL-S runs around €430; a full SARL typically costs €3,000 to €8,000 once notary fees (around €1,500), RCS registration (around €200), and legal fees are added up.
3. Register for tax and VAT
You register with the Administration des Contributions Directes (ACD) for corporate income tax, and separately with the Administration de l'Enregistrement et des Domaines (AED) for a VAT number if your projected turnover exceeds €35,000. If you'll hire staff or operate as self-employed, you also register with the Centre Commun de la Sécurité Sociale (CCSS).
4. Check licenses and permits
Beyond the business permit described above, Luxembourg doesn't issue a single general business license. What else you need depends on your specific activity and sector.
5. Understand Luxembourg taxes
Corporate income tax (IRC) is 17%, plus a 1.19% employment fund surcharge, for an effective rate of about 18.19%. On top of that, every municipality levies its own municipal business tax (ICC), around 6.75% in Luxembourg City. Combined, the effective corporate tax burden in Luxembourg City lands around 24% to 25%. Small companies with taxable income under €175,000 benefit from a reduced CIT rate of 15% before the municipal surcharge is added.
VAT is 17% standard, the lowest rate in the EU, with reduced rates for specific categories. Filing frequency depends on turnover: annual below €112,000, quarterly between €112,000 and €620,000, and monthly above that.
6. Stay compliant
Every company files an annual corporate tax return (Form 500), a VAT return under the applicable regime, and an ICC declaration for the municipal tax. Holding and financial companies may also owe a separate net wealth tax on their assets.
Luxembourg business costs at a glance
| Item | Cost |
|---|---|
| SARL-S formation | ~€430 |
| SARL formation (notary + registry + legal) | ~€3,000 to €8,000 |
| SARL minimum capital | €12,000 (deferrable up to 12 months) |
| SARL-S minimum capital | €1 |
| Corporate tax + employment fund surcharge | ~18.19% |
| Municipal business tax (Luxembourg City) | ~6.75% |
| Reduced CIT rate (income under €175,000) | 15% |
| VAT, standard rate | 17% |
| VAT registration threshold | €35,000 turnover |
Frequently asked questions
How much capital do I need to start a SARL-S in Luxembourg?
Just €1, designed specifically for individual entrepreneurs and small businesses.
How much capital do I need to start a standard SARL in Luxembourg?
€12,000, fully subscribed at formation, though a 2026 reform lets founders defer payment of qualifying cash contributions for up to 12 months.
What's the corporate tax rate in Luxembourg?
17% plus a 1.19% employment fund surcharge, about 18.19% combined, plus a municipal business tax around 6.75% in Luxembourg City, for an effective combined rate of roughly 24% to 25%.
How much does it cost to register a SARL-S in Luxembourg?
Around €430 total, since it skips the notarization step required for a standard SARL.
When do I need to register for VAT in Luxembourg?
Once projected turnover exceeds €35,000. The standard VAT rate is 17%, the lowest in the EU.
Fees and rates above come from the Registre de Commerce et des Sociétés and the Administration des Contributions Directes as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Luxembourg-qualified accountant or lawyer about your specific situation.