Simplified LLC
The project for the creation of a Simplified Limited Liability Company (Simplified LLC) in Luxembourg, also commonly called “1€ LLC” has matured for many years before coming into effect. But it has been implemented: since 16th January 2017 it is possible to form a simplified LLC.
Like its Belgian and French neighbors, Great Duchy of Luxembourg had to offer the possibility for would-be entrepreneurs to build their business without the burden of sometimes overbearing regulations (the involvement of a notary) and the gathering of too big a treasury (12,000€ at minimum for the formation of a LLC) for the project.
1€ LLCs can be formed by a private deed followed by its publication to the Trade Register. Even though a notarial deed is still possible, in practice the private deed is preferred.
No longer is it required to bring 12,000€ in capital: a company can be formed with a single euro. However an unavailable reserve of 5% of net profits per year must be created until the capital of the company reaches the minimum capital for a LLC (12,000€)
Once formed the company must either move towards the LLC status or towards liquidation but the law does not impose a time limit to reach 12,000€ in capital.
No shareholder from the company can be a legal person. Consequently, only private individuals, whether they live in Luxembourg or not, can become shareholders. Such private individuals cannot become shareholders in several simplified LLCs but the law does not forbid a simplified LLC to have several shareholders.
Unlike a regular LLC, simplified LLCs must choose a strict corporate goal that must be covered by the business license granted by the administration. The adequate equipment requirement is still relevant for simplified LLCs.
The 1€ LLC is adapted for would-be self-employed workers. Those are mainly consultants and those intellectual professions that require little up-front investments.
The risk with the ease of capital requirements is the large amount of potential bankruptcies of simplified LLCs that have been quickly built, without a solid business plan and with the illusion that a company requires no capital.
The enactment of this new kind of company is a step forward for Luxembourg towards better competitiveness. This kind of company is dedicated to a particular kind of entrepreneurs who will need to rely on tax and accounting advice.
| Simplified LLC | LLC | |
| Social Capital | Between 1 euro and 12,000 euros | 12,000 euros and more |
| Status | Private deed | Notary act |
| Nature of shareholders | Private individuals | Private individuals or legal entity |
| Activity | Commercial, industrial, artisanal, intellectual | Commercial, industrial, artisanal, intellectual or financial |
(1) Law of July 23, 2016 modifying, for the purpose of creating simplified limited liability companies, the law of August 10, 1915 on commercial companies.
(2) 1st article of the Law of September 2, 2011 regulating the access to artisanal, commercial industrial and some intellectual professions.
