BLB InLaw Blog

Reforming the Luxembourg Stock Options Regime: Draft Law No. 8782 and the New Framework for 2027

Wed, 21 Oct 2026 11:19:30 GMT

Introduction Attracting and retaining international executive talent has long been a strategic priority for Luxembourg’s financial and corporate sectors. As part of the upcoming 2027 budgetary measures, the Luxembourg government has submitted Draft Law No. 8782 to Parliament, introducing a comprehensive overhaul of the tax framework governing stock options. Set to apply to options granted starting from tax year 2027, the legislative proposal replaces legacy administrative practices with a codified statutory structure, while introducing an exceptionally advantageous tax track for innovative start-ups.

Pillar 1: The Favorable Regime for Innovative Young Enterprises (JEI) To reinforce Luxembourg's position as a dynamic hub for European venture capital and technology ventures, the bill introduces a specialized tax status under Articles 100bis and 104ter of the Luxembourg Income Tax Law (L.I.R.).

For eligible Innovative Young Enterprises (Jeunes Entreprises Innovantes - JEI), the framework radically shifts the standard taxation timeline:

Zero upfront taxation: The benefit-in-kind is valued at zero euros upon both grant and exercise.
Deferred realization: Taxation applies solely at the disposal of the acquired equity.
Favorable rate: Capital gains realized upon disposal are taxed as extraordinary income pursuant to Article 132 L.I.R., applying a reduced rate equal to one-quarter of the taxpayer's global tax bracket.

Company Qualification Criteria To qualify under the JEI mechanism, an entity must satisfy cumulative statutory requirements:

Incorporated for less than 10 years and registered with the Trade and Companies Register (RCS);
Headcount under 150 full-time equivalent (FTE) employees, with a minimum operational staff of 2 FTEs;
Annual net turnover or balance sheet total not exceeding 30 million euros;
Demonstrated research and development commitment, representing at least 15 percent of total operating expenditure in at least one of the three preceding financial years, duly certified by an independent auditor or chartered accountant.

Pillar 2: Codification of the General Regime (Article 104bis L.I.R.) For commercial enterprises that do not meet the JEI benchmarks, or where employers elect not to apply the start-up framework, the reform formalizes statutory rules under Article 104bis L.I.R., moving away from historical reliance on administrative circulars and creating absolute legal certainty.

The codified general framework establishes two explicit operational tracks:

Freely transferable options: Subject to taxation at the date of grant, evaluated on fair market value less any consideration paid by the employee.
Non-transferable options: Taxed at the moment of exercise based on recognized financial methodologies, such as Black-Scholes valuation models.
Mandatory holding relief: Where underlying shares are subject to contractually binding lock-up periods, employees benefit from a flat statutory discount of 5 percent per restricted year, capped at a maximum deduction of 20 percent, subject to statutory employer reporting.

Transitional Rules: Impact on Existing Corporate Plans Draft Law No. 8782 establishes a clear cut-off criterion based strictly on the grant date:

Legacy grants: All stock options granted prior to tax year 2027 remain governed by the legal and tax principles in force at the time of allocation.
Future allocations: Any options granted from 2027 onwards will automatically fall under the amended statutory regime. This statutory rule applies irrespective of whether options are awarded under an existing corporate equity incentive plan or a newly drafted framework. Companies are not required to redraft existing overarching plan documentation, but subsequent allocations must be structured around the reformed statutory thresholds.

Strategic Takeaways With parliamentary review currently underway, corporate employers, start-ups, and private equity-backed groups should conduct an early audit of their remuneration architecture. Reviewing plan terms and R&D expenditure metrics today will allow businesses to optimize incentive packaging ahead of the 2027 implementation date.

BLB in Law can assist corporate groups, start-ups and VCs in designing compliant incentive structures. For strategic legal guidance, contact our team.

Luxembourg as a Magnet for Global Talent: Beyond the New Tax Regime

Fri, 24 Apr 2026 17:46:28 GMT

As from 2025, Luxembourg offers a 50% tax exemption on salaries up to €400,000 for highly qualified professionals.

With this regime and the EU Blue Card, the country is set to become a true magnet for global talent.

Refer to Page 8 to read more in our article written for Antea’s August international business issue : https://antea-int.com/wp-content/uploads/2025/08/Antea-International-Business-August-2025.pdf

#blbinlaw #Luxembourg #Globaltalents

Social Impact Companies in Luxembourg: serving sustainability with business

Tue, 03 Feb 2026 17:48:46 GMT

The law creating Social impact companies (SIS) was adopted in December 2016, after ongoing debates and discussions on the establishment of a specific legal status for businesses in the social and solidarity economy.

The SIS law was then reformed in 2021 in order to address some practical issues and simplify the process, but the spirit remains the same: a SIS is aimed at any individual or legal entity, whether acting alone or in partnership, that seeks to establish a business committed to activities grounded in the principles of the social and solidarity economy.

The SIS status is reserved to commercial companies (e.g. S.A, S.à.r.ls, Cooperatives) provided they comply with the principles of the social and solidarity economy .

The SIS is meant for both existing enterprises or organisations and project sponsors who wish to engage in an economic activity with a social or societal purpose.

The Ministry of Labour is in charge for accreditation as societal impact companies and has implemented an incubator that offers tailor-made support to carry out the procedures for setting up an SIS .

The SIS offers a number of benefits for the entity concerned, including a clearly defined legal framework , an appropriate tax regime, and access to national and European public procurement contracts.

Through the SIS approval, values such as solidarity, altruism, and non-profit orientation are supported, encouraged, and highlighted—not only as additional characteristics but as fundamental elements at the core of socially engaged companies.

This is why SISs are subject to strict obligations in terms of transparency and governance .

When drafting the articles of association for a SIS, it is essential to consider the following:

A precise definition of the pursued social objective (e.g. providing support to people in vulnerable situations, contributing to the preservation and development of social ties, the fight against exclusion and inequalities, the maintenance and strengthening of territorial cohesion, environmental protection, the development of cultural or creative activities, or the development of initial or continuing training activities).
A list of performance indicators that will enable the effective and reliable verification of the social objective’s achievement.
The necessity to respect the principle of limited profitability (The share capital must consist of at least 50% impact shares at all times.).
The requirement for autonomous management.

Holders of Impact shares cannot have the profit related thereto distributed to them, such profit being compulsorily reinvested in the realization of the corporate object of the SIS.

Investors seeking for return on investment may however find an interest in investing in profit shares (whether voting or not), representing not more than 50% of the share capital. The SIS law does not prevent either the issue of profit shares outside of the share capital (parts bénéficiaires), which renders the investment structure flexible.

Depending on the amount of profit generated by the SIS, a statutory auditor or a supervisory auditor must be appointed in order among others to certify that the SIS law requirements are fulfilled.

In conclusion, Social Impact Companies are far from being philanthropic associations. They are real business oriented commercial companies, but with a social and sustainable object, designed to serve the solidarity economy. Cooperatives are a particularly adapted vehicle for achieving this goal.

Investment structuring with Luxembourg and Mauritius SPVs: an ideal route for European investments towards Africa and Asia

Wed, 17 Dec 2025 17:47:39 GMT

Investment structuring with Luxembourg and Mauritius SPVs: an ideal route for European investments towards Africa and Asia

As European investors increasingly seek exposure to growth opportunities across Africa and Asia, structuring considerations have become central to the success of cross-border investments. Selecting jurisdictions that combine tax efficiency, legal reliability, and practical operability is essential. In this context, the use of Luxembourg and Mauritius as part of a coordinated special purpose vehicle (SPV) structure has proven to be a highly effective and widely adopted approach. By combining the strengths of these two jurisdictions, investors can benefit from strong treaty access, optimized tax outcomes, regulatory certainty, and flexible investment platforms tailored to international capital flows.

From a treaty perspective, Luxembourg and Mauritius each maintain extensive double taxation agreement (DTA) networks that significantly reduce fiscal barriers to international investment. Luxembourg’s treaty network is among the most developed globally, encompassing the majority of European Union member states as well as numerous key international markets. These agreements typically allow for reduced withholding taxes on cross-border payments such as dividends, interest, and royalties, while ensuring clarity on the allocation of taxing rights. By contrast, Mauritius has developed its treaty network with a particular focus on Africa and Asia. This strategic orientation has positioned the country as a preferred intermediary jurisdiction for investments into emerging markets across these regions. When structured together, Luxembourg and Mauritius SPVs enable investors to access treaty benefits at multiple levels of the investment structure, enhancing overall efficiency.

Similarly, Mauritius’ DTAs with African and Asian countries are widely recognized for their favourable treatment of foreign investors. Common advantages include lower or zero withholding tax rates on income streams, capital gains provisions that often favour taxation in the investor’s jurisdiction of residence, and protections against double taxation and adverse fiscal treatment. As a result, these treaty features have made Mauritius a well-established gateway for private equity, infrastructure, and long-term investments across Africa, as well as for selected Asian markets, subject to evolving international tax standards.

In fact, a key benefit of the Luxembourg–Mauritius investment route lies in the interaction between the Luxembourg–Mauritius DTA and Luxembourg’s participation exemption regime. Under this arrangement, dividend and capital gain flows between Luxembourg and Mauritius can generally be achieved without significant tax leakage. Qualifying shareholdings benefit from exemption at the Luxembourg holding level, while withholding tax exposure within the structure is largely mitigated. Consequently, investors can preserve value throughout the investment lifecycle, including at exit, provided that substance and compliance requirements are properly met.

Beyond tax considerations, both Luxembourg and Mauritius are internationally recognized financial hubs serving their respective regions. Luxembourg is a leading European centre for investment funds and holding structures, offering deep expertise in alternative assets, private equity, real estate, debt, and capital markets transactions. Mauritius performs a similar role for Africa and parts of Asia, supported by a stable legal system, internationally aligned regulation, and a well-developed network of financial institutions and professional service providers. Importantly, cross-border financial activity between Luxembourg and Mauritius is well established, allowing for efficient capital movement and administrative coordination.

From a structuring standpoint, both jurisdictions are known for their investor-oriented frameworks and wide range of structuring vehicles. Luxembourg offers holding companies, regulated and unregulated fund structures, and flexible financing instruments suitable for institutional and private investors. Mauritius provides a variety of corporate and partnership vehicles, including global business companies and investment funds designed to accommodate private equity and alternative investment strategies. In both cases, entry and exit mechanisms are efficient, enabling investors to dispose of their interests through share transfers, asset sales, or fund exits with limited tax impact when appropriately structured.

In conclusion, the Luxembourg–Mauritius SPV structure continues to represent a compelling solution for European investors seeking exposure to Africa and Asia. By combining expansive treaty networks, favourable DTA provisions, tax neutrality through participation exemption alignment, and the advantages of two established financial centres, this approach delivers a balanced and resilient investment framework.

Financial Holding Structures in Luxembourg: Key Benefits

Mon, 28 Jul 2025 17:45:17 GMT

Thinking about the right jurisdiction for your holding structure?

Our latest Antea International Comparison – July 2025 is out now, offering a clear, side-by-side view of holding structures across multiple countries.

Curious about Luxembourg?

Check out pages 12 to 15 for a concise overview of why Luxembourg continues to be a key player in international structuring.

View the full report here:

https://antea-int.com/wp-content/uploads/2025/07/Antea-Int.Comparison-July-2025.pdf

Reserved Alternative Investment Funds (RAIFS) in Luxembourg

Sat, 31 May 2025 17:44:04 GMT

The Reserved Alternative Investment Fund (RAIF) has become an extremely popular investment structure since its introduction in Luxembourg in 2016.

Highly appreciated for its flexibility and competitive costs, it is designed to meet the needs of fund managers and professional investors seeking a streamlined setup process and broad investment opportunities, while benefiting from a certain level of regulation and protection.

Unlike other regulated funds in Luxembourg, RAIFs are not directly overseen by the Luxembourg financial regulator (CSSF) as they are not internally managed. Instead, they must be managed by an authorized Alternative Investment Fund Manager (AIFM) , who ensures the fund complies with the requirements of the EU’s Alternative Investment Fund Managers Directive (AIFMD) . The success of the RAIF certainly comes from this “compliance guarantee” given by the external AIFM, without having to go through a rigorous and expensive licensing process with the CSSF.

Main Characteristics:

Target Investors :
RAIFs are limited to well-informed investors . This includes institutional or professional investors, or individuals who either:
Confirm in writing that they qualify as well-informed;
Invest a minimum of EUR 100,000; or
Receive certification from a bank, investment firm, or management company confirming their expertise.
Legal Structures :
RAIFs can be formed either as:
Common funds (FCP) or
Investment companies with variable (SICAV) or fixed capital (SICAF),

Limited partnerships like SCS or SCSp are the most common legal forms as they favour contractual freedom and give a predominant role to the General Partner, but the usual forms of companies limited by shares are also possible, such as the S.A, the Sarl or the SCA, the latter being a kind of partnership limited by shares..

Broad Investment Scope :
RAIFs are permitted to invest in virtually any type of asset, such as:
Private equity,
Real estate,
Hedge funds,
Infrastructure, and more.
Capital Requirements :
Each RAIF must reach at least EUR 1.25 million in assets within 24 months from launch, with 5% minimum capital subscribed at inception .
Favorable Tax Treatment :
RAIFs can adopt:
The SIF regime , which involves a low annual subscription tax (0.01% of net assets) and exemption from corporate income and wealth taxes; or
The SICAR regime , for funds focused solely on risk capital, offering full tax exemptions on income and gains from qualifying investments.
Service Provider requirements :
In addition to the AIFM, RAIFs must appoint:
A Luxembourg-based depositary for safekeeping assets,
An independent chartered auditor ( réviseur d’entreprises agréé ) , and
A central administrator , also based in Luxembourg.

Other key service providers like legal advisors or distributors may also be required, depending on the fund's operations.

Securitization Vehicles in Luxembourg

Mon, 05 May 2025 12:21:34 GMT

Luxembourg, together with Ireland, remains the location of choice for securitisation activities.

Luxembourg offers indeed an attractive environment for setting up securitization vehicles (SVs) , thanks to a strong and flexible legal system and a favourable tax regime. These vehicles are used to manage and transfer various types of financial risks by issuing securities to investors.

Legal Basis

Securitization in Luxembourg is governed by the Law of 22 March 2004 as amended, which allows a securitization vehicle to take on risks linked to loans, assets, or liabilities from other parties, and then issue financial instruments based on those risks.

Structure Options

SVs can be formed either as:

Companies , such as public limited companies (S.A.), private limited liability companies (S.à r.l.), or partnerships (SCA), or
Funds , which have no legal personality and must be managed by a Luxembourg-based management company .

Compartment Model

SVs can be organized into multiple compartments , with each one legally and financially separate from the others. This “ring-fencing” setup ensures that liabilities or performance issues in one compartment do not affect the other compartments of the SV.

Regulatory Supervision

If an SV issues securities to the public on a continuous basis , it must be approved and monitored by the CSSF (Luxembourg’s financial regulator). Private placements by so called “well informed investors” or one-time issuances are typically not subject to this supervision, which makes that most of SVs in Luxembourg are unregulated.

Tax Advantages

Luxembourg SVs benefit from tax neutrality :

Although subject to corporate income tax (CIT) and municipal business tax (MBT) , most of their income is offset by deductible payments made to investors or creditors.
As a result, the taxable profit is usually close to zero .
There is no withholding tax on distributions to investors, and some management fees may be exempt from VAT.

Expanded Possibilities Since 2022

An important legal update in 2002 allows SVs to raise funds not only through traditional securities but also via instruments like loans and promissory notes . In addition, while one of the main criteria for qualifying as a SV is risk assumption by third parties and not by the SVs themselves, the latter may now also actively manage debt portfolios , enabling higher returns in complex structures like collateralized loan obligations (CLOs) and collateralized debt obligations (CDOs) .

We at BLBInLaw assist our clients in setting up their SVs and ensuring that the related documentation is compliant with Luxembourg law and regulations.

New rules in Luxembourg for Cross-Border Mergers, Demergers & Transformations in the EU: What Luxembourg Companies Need to Know as from April 1st, 2025

Mon, 07 Apr 2025 17:40:56 GMT

On 17 February 2025, Luxembourg took a significant step in aligning with EU company law by transposing the Mobility Directive (Directive (EU) 2019/2121) into national legislation.

The new law, which came into force on 2 March 2025 , introduces a harmonised EU framework for cross-border mergers, divisions (demergers), and conversions (transformations) involving Luxembourg-based companies.

Here are five key things to know:

Applies Only to Certain EU Cross-Border Operations

The new law only applies to cross-border operations within the EU and is restricted to Luxembourg companies such as S.A. (société anonyme), S.à r.l. (société à responsabilité limitée), and S.C.A. (société en commandite par actions) . Transactions involving non-EU countries or purely domestic restructurings remain governed by existing national laws.

2. Mandatory Scrutiny for Abuse by Notaries

To prevent misuse of cross-border reorganisations, Luxembourg notaries now play a key role in assessing whether a transaction may be pursued for abusive, fraudulent, or criminal purposes . If there are serious doubts, the notary can refuse to issue the pre-operation certificate , effectively halting the process.

3. Protections for Minority Shareholders

Dissenting shareholders are granted an exit right —they can request a cash payment for their shares . Additionally, they may challenge the share exchange ratio in court within one month of the general meeting. However, such challenges won’t delay the transaction from proceeding.

4. Creditor Safeguards

Creditors with claims that predate the publication of the restructuration plan can seek protection if the transaction puts their claims at risk and no adequate guarantees are offered. They have three months to notify the company and apply to the court for safeguards.

5. Effective Date of Provisions

The new rules will apply only to transactions whose draft terms are published on or after 1 April 2025 . Deals with draft terms published before that date will follow the previous legal framework.

Final Thoughts

This reform strengthens legal certainty, promotes fair treatment of stakeholders, and aligns Luxembourg law with modern EU standards. Businesses considering a cross-border restructure should plan ahead and seek legal advice to ensure compliance with these new rules.

If you’d like tailored support on cross-border operations or corporate reorganisations, our team at BLBinLaw Luxembourg is here to help.

Corporate series- Chronicle #4 Directors’ duties and Legal Liabilities in Luxembourg

Fri, 14 Mar 2025 17:39:40 GMT

Though directors of Luxembourg-based corporations are protected by the so called “corporate shield”

meaning that they cannot be personally liable when acting for the company, they may nevertheless and under certain conditions, be held liable under civil, criminal, and bankruptcy law. Their primary liability is controlled by the Companies Act, the Civil Code, and the Commercial Code.

1. Civil Liability

Directors may be subject to civil liability under three main circumstances:

- Internal liability to the company – directors must always act in the best interest of the company and can therefore be sued for negligence in the performance of their duties. This requires proof of fault, damage to the company, and causation.

- Liability to third parties and the company - directors are also jointly and severally liable for violations of the Companies Act or the company's articles of association. This applies to acts such as failure to convene meetings or to timely publish financial statements.

- General Civil Liability - Based on general tort law governed by the he Civil Code, directors may be held liable for damages caused by their fault, even if they do not fall under the Companies Act.

A director's resignation does not relieve the latter of liability. Moreover, the Companies Act establishes a joint and several liability assumption, meaning that all board members will be deemed collectively liable, unless and until evidence to the contrary.

2. Criminal Liability

Certain violations by directors may result in criminal charges under the Criminal Code and the Companies Act, including

- Falsification of corporate documents

- Misappropriation of funds

- Distribution of fictitious dividends

- Fraudulent alteration of financial statements

Penalties range from fines of up to EUR 250,000 to imprisonment for up to ten years.

3. Liability in Bankruptcy Cases

When a company goes bankrupt, directors may face

- Civil liability for mismanagement leading to insolvency: this can also apply when the directors don’t file for bankruptcy in a timely manner. In this case they may be held liable for the portion of the liabilities’ increase

- Liability under the Commercial Code, where they may be held personally liable for outstanding debts if serious mistakes contributed to the bankruptcy.

- Criminal penalties, including imprisonment and disqualification from managing companies, particularly in cases of fraudulent bankruptcy.

In serious cases, directors may be banned from conducting business for up to 20 years.

Conclusion

Luxembourg law protects directors when acting within their function. However, it also imposes strict liability rules on them to ensure accountability. Directors must be diligent and must not act ultra vires , as violations can result in civil claims, criminal prosecution and severe penalties in bankruptcy situations.

The Role of Shareholders' Agreements in Luxembourg: Why Are They Important?

Fri, 21 Feb 2025 17:38:04 GMT

Shareholders’ agreements (commonly abbreviated as SHA) are widely used in corporate structures.

Their coexistence with the articles of association (commonly abbreviated as AoA) has become standard practice for corporate structuring. But what exactly is an SHA, and why have one in addition to the AoA?

Purposes of a Shareholders' Agreement

Confidentiality and Enhanced Governance: A SHA complements the AoA by covering certain aspects that shareholders may not wish to make public. These include corporate governance rules (particularly where different categories of shareholders exist), share transfer restrictions (such as rights of first refusal, tag-along, and drag-along rights), pricing mechanisms, preferential rights in distributions and liquidation, and exit strategies.
Specific Arrangements Between Shareholders: Some shareholders may prefer to regulate their relationship through a separate contract, outlining agreements on voting rights (voting agreements), financing obligations, or any other bespoke arrangements they deem necessary.

General Use of an SHA

A SHA is particularly beneficial in situations where:

Different categories of shareholders exist, such as in a financing round, where founders and investors must strike a balance between their respective interests.
The governance framework is too complex to be fully incorporated into the AoA.
A tailor-made approach is needed to complement the general structure provided by the AoA.

Differences Between AoA and SHA

Binding Effect: The AoA bind all shareholders and the company, whereas a SHA applies only to the parties who have signed it.
Amendments: The AoA can be amended by the majority stipulated therein, while any change to a SHA would require unanimous consent among its parties.
Company’s Involvement: The company itself is not necessarily a party to the SHA, whereas it is always bound by the AoA.

Interaction Between AoA and SHA

The SHA must not contradict the AoA or applicable laws; otherwise, its provisions would be considered invalid.

A shareholders’ agreement is a powerful tool for structuring corporate matters and ensuring alignment between shareholders. While the articles of association set the general legal framework, a SHA allows for greater flexibility, confidentiality, and customization of rights and obligations. By carefully drafting both instruments, shareholders can ensure a robust and efficient corporate structure tailored to their specific needs.

One Euro Companies in Luxembourg: A Smart Start for Entrepreneurs? Pros and cons of the Société à Responsabilité Limitée Simplifiée (SARL-S)

Mon, 10 Feb 2025 17:36:41 GMT

The Simplified Limited Liability Company (SARL-S) was introduced in Luxembourg in 2016 to encourage entrepreneurship by making business formation easier and more affordable.

This legal structure allows individuals to launch a company with minimal capital requirements and fewer administrative hurdles. However, this attractive option for new business owners also comes with certain constraints that may impact long-term growth and investment opportunities. Understanding both the benefits and limitations of a SARL-S is crucial before making a decision.

Key Advantages of a SARL-S

One of the most compelling reasons to choose a SARL-S is the low minimum capital requirement. Unlike a traditional Limited Liability Company (SARL), which requires at least €12,000, or a public limited company (SA) with a €30,000 minimum share capital, a SARL-S can be established with as little as €1. This makes it an accessible option for entrepreneurs who may not have significant financial resources upfront. Small-scale businesses such as digital services, consulting, and handmade goods production can particularly benefit from this cost-effective structure.

Another major advantage is the simplified incorporation process. Unlike most of the commonly used legal entities (SARL or S.A) that require a notarial deed, a SARL-S can be formed through a private agreement, eliminating notary fees and reducing legal costs.

These benefits come together with the same limited liability protections as a standard SARL: shareholders are only responsible for the company’s debts up to the amount of their capital contribution, safeguarding their personal assets.

Potential Drawbacks to Consider

Despite its advantages, the SARL-S comes with financial and operational constraints that entrepreneurs should be aware of. One notable limitation is the maximum share capital of €11,999, which can make the business appear less financially stable to banks, suppliers, and potential partners. Securing loans or high-value contracts can therefore be more challenging for SARL-S compared to those with larger capital reserves.

The ownership structure constitutes another significant limitation. Only individuals can be shareholders or managers of a SARL-S, meaning that companies or corporate investors cannot hold shares in the business. This restriction makes it difficult to integrate a SARL-S into a larger corporate structure or attract venture capital funding. Moreover, individuals are not allowed to be shareholders in more than one SARL-S simultaneously, unless they inherit shares. Intentionally doing so exposes these shareholders to unlimited and joint liability for the debts of all the SARL-S they would hold.

The SARL-S must in addition be managed by a daily manager who holds a business permit within the meaning of the law on establishment: this renders the incorporation process less efficient, as this parallel procedure must be made with the ministry of economy.

Business activity restrictions also apply to SARL-S entities. While they can operate in commercial, industrial, craft, and certain liberal professions, they are prohibited from engaging in financial services (e.g. holding activities), real estate investments, or healthcare-related businesses.

Is a SARL-S the Right Choice for You?

The SARL-S presents a great opportunity for first-time entrepreneurs to establish a business in Luxembourg with minimal investment. However, the limitations in capital structure, ownership, and permissible business activities may pose challenges for those with long-term growth ambitions. Before choosing this structure, entrepreneurs should assess their business goals and determine whether the SARL-S aligns with their vision.

For those looking to start small and gradually expand, the SARL-S offers a practical stepping stone into the business world. However, for companies with plans to scale quickly or attract external investment, a different legal structure may be a better fit. Some entrepreneurs may also consider starting with a SARL-S, and then converting into another form, which is allowed by the law. By carefully considering these factors, aspiring business owners can make an informed decision and lay the groundwork for a successful venture in Luxembourg.

Real domicile vs Domicile of convenience: an application in Luxembourg case law in service of process within the EU

Fri, 24 Jan 2025 17:35:26 GMT

On October 18, 2024, a Luxembourg court issued a decision [1] emphasizing the gap between actual and fiscal or administrative domicile, especially in cross-border legal enforcement.

The issue originated from the necessity to authenticate the delivery of a Luxembourg exequatur order in France, which upheld a 2017 French court decision. This verdict ordered the defendant to pay specific amounts, resulting in asset seizures in Luxembourg. The defendant claimed residency in Russia, complicating the enforcement process.

In the absence of the defendant when service was made (“signification à personne”), the court used the "faisceau d'indices" methodology to ascertain the defendant's true residence, which is a thorough examination of evidence to establish factual reality, and therefore the validity of the delivery to his residence (“signification à domicile”).

· The defendant's true habitation was a château in France, as evidenced by his name on the château's mailbox and testimony from neighbours and château staff.

· The defendant was listed as the château's contact person on a business website.

· Additional verifications and inspections made on the spot by French bailiff who could therefore validly serve the decision according to French Laws.

In defense, the defendant contended for fiscal presence in Russia, showing papers including French tax records showing a Russian address, a resident permit issued in Russia, passport mentions, consular certifications, and a "certificate of life" from the French consulate in Moscow. The defendant further stated that the château was owned by a firm and rented out to third parties. Despite these assertions, the court determined that fiscal or administrative paperwork did not overcome the substantial presumption of true domicile based on factual evidence,.

The judgment confirmed that the exequatur order was validly served, hence confirming the asset seizure. Though the verdict is now being appealed and lacks res judicata authority, this conclusion is consistent with Luxembourg case law, which favors factual proof of residence above administrative or fiscal appearances. The case emphasizes the significance of extensive factual investigations in legal situations involving domicile and cross-border execution of decisions, particularly for matters introduced before 10/01/2015 under EU legislation governing civil and commercial judgments (Brussels I). Indeed, since that date, national decisions rendered in the EU do not need to go through the exequatur procedure anymore in order to be enforced in another EU Member State (Brussels 1 bis regime).

[1] Civil Judgement 2024TALCH10/0013, n° TAL-2018-00560

Starting Your Business in Luxembourg: Essential Steps to Success

Thu, 23 Jan 2025 17:34:03 GMT

Luxembourg, with its robust economy, strategic location, and business-friendly legislation, is an excellent destination to start a firm. To ensure a smooth start, follow these crucial steps:

1. Determine whether your activity requires a business permit.
Certain activities in Luxembourg demand a business authorization, such as crafts, trade, industrial operations, and certain liberal professions. This is covered by Luxembourg's establishment legislation. Before proceeding, check with the Ministry of Economy or House of entrepreneurship to see if your specific activity requires a permit. Operating without the proper permits might result in penalties or business closure.

2. Determine your eligibility for a business permit.
If your activity needs a business permit, the procedure differs according to your status:
• EU/EEA nationals: Typically, you must offer confirmation of financial probity and a clear criminal background. Professional qualifications and suitable work experience, longtime required, is not anymore a requirement, except for certain activities.
• Non-EU nationals: The process is more difficult and may include additional approvals, including residency permits. It is critical to meet all legal requirements before initiating operations.

3. Select the Right Legal Form.
It is vital to have a legal structure that is in line with your business aims. In Luxembourg, the most popular options are:
• SARL (Société à Responsabilité Limitée) suitable for small and medium-sized firms with a minimum share capital of €12,000. SARLs are also often used as SPVs in financial transactions and structuring;
• SA (Société Anonyme) ideal for larger firms with a minimum share capital of €30,000. An auditor and a board of at least 3 directors (when there are at least 2 shareholders) are compulsory, but there is more flexibility on share transfers and classes of shares;
• Simplified SARL (SARL-S): Designed for sole proprietors and small firms with share capital starting at €1. However, SARL-S has restrictions on the nature of activity and the type of owners (natural persons only).

There are many other legal forms, especially suited for fund or financial services, which are not covered by this article.

4. Consider the limitations of SARL-S.
While the SARL-S is inexpensive and easy to set up, it is not appropriate for many operations. Certain regulated industries, such as financial services and activities and legal professions, may be excluded. Furthermore, SARL-S imposes shareholder constraints, so consider if this structure corresponds with your long-term growth goals.

5. Create clear, detailed articles of incorporation.
The articles of incorporation (AoA) provide the basis of your company's governance. While standard templates are widely used, it is prudent to add unique provisions on:
• Establish guidelines for selling and transferring shares.
• Specify conditions for admitting new shareholders and partners.
• Develop decision-making processes and management responsibilities.
• Outline exit strategies for stockholders who leave the company.

Remember that for SARL and SA structures, any changes to the AoA require a notarized document, which incurs additional fees. Addressing these issues early on will help you avoid future troubles.

Final Thoughts
Starting a business in Luxembourg requires careful planning and adherence to legal and regulatory regulations. Understanding the steps above can help you traverse the procedure more efficiently. Consider seeking professional help to guarantee that your company is set up for success from the start.

We at BLBInLaw are here to help you along all those lines.

ANTEA Expands Legal Presence with Integration of InLaw in Luxembourg

Wed, 24 Jul 2024 17:32:19 GMT

Antea is excited to announce the integration of InLaw, a dynamic law firm that seamlessly blends classic legal traditions with cutting-edge innovations.

InLaw Luxembourg brings extensive expertise across diverse legal disciplines, delivering profound legal knowledge to a global clientele. With 60% of their services focused on international clients, they offer tailored solutions ranging from corporate law to fintech, effectively bridging traditional and contemporary legal challenges. Their team of highly skilled lawyers is authorized to practice in all areas of Luxembourg law, ensuring clients receive expert advice on any legal matter.

By joining Antea, InLaw gains access to a vast global network of professionals. This collaboration promotes knowledge exchange, unlocks new business opportunities, and enables InLaw to further elevate their exceptional client service.

BLB InLaw Blog

Reforming the Luxembourg Stock Options Regime: Draft Law No. 8782 and the New Framework for 2027

Luxembourg as a Magnet for Global Talent: Beyond the New Tax Regime

As from 2025, Luxembourg offers a 50% tax exemption on salaries up to €400,000 for highly qualified professionals.

Social Impact Companies in Luxembourg: serving sustainability with business

The law creating Social impact companies (SIS) was adopted in December 2016, after ongoing debates and discussions on the establishment of a specific legal status for businesses in the social and solidarity economy.

Investment structuring with Luxembourg and Mauritius SPVs: an ideal route for European investments towards Africa and Asia

Investment structuring with Luxembourg and Mauritius SPVs: an ideal route for European investments towards Africa and Asia

Financial Holding Structures in Luxembourg: Key Benefits

Thinking about the right jurisdiction for your holding structure?

Reserved Alternative Investment Funds (RAIFS) in Luxembourg

The Reserved Alternative Investment Fund (RAIF) has become an extremely popular investment structure since its introduction in Luxembourg in 2016.

Securitization Vehicles in Luxembourg

Luxembourg, together with Ireland, remains the location of choice for securitisation activities.

New rules in Luxembourg for Cross-Border Mergers, Demergers & Transformations in the EU: What Luxembourg Companies Need to Know as from April 1st, 2025

On 17 February 2025, Luxembourg took a significant step in aligning with EU company law by transposing the Mobility Directive (Directive (EU) 2019/2121) into national legislation.

Corporate series- Chronicle #4 Directors’ duties and Legal Liabilities in Luxembourg

Though directors of Luxembourg-based corporations are protected by the so called “corporate shield”

The Role of Shareholders' Agreements in Luxembourg: Why Are They Important?

Shareholders’ agreements (commonly abbreviated as SHA) are widely used in corporate structures.

One Euro Companies in Luxembourg: A Smart Start for Entrepreneurs? Pros and cons of the Société à Responsabilité Limitée Simplifiée (SARL-S)

The Simplified Limited Liability Company (SARL-S) was introduced in Luxembourg in 2016 to encourage entrepreneurship by making business formation easier and more affordable.

Real domicile vs Domicile of convenience: an application in Luxembourg case law in service of process within the EU

On October 18, 2024, a Luxembourg court issued a decision [1] emphasizing the gap between actual and fiscal or administrative domicile, especially in cross-border legal enforcement.

Starting Your Business in Luxembourg: Essential Steps to Success

Luxembourg, with its robust economy, strategic location, and business-friendly legislation, is an excellent destination to start a firm. To ensure a smooth start, follow these crucial steps: ﻿

ANTEA Expands Legal Presence with Integration of InLaw in Luxembourg

Luxembourg, with its robust economy, strategic location, and business-friendly legislation, is an excellent destination to start a firm. To ensure a smooth start, follow these crucial steps: