2.5 Luxembourg Legal Entity Forms (SA, SARL, SNC, SCS, etc.) and Their Accounting Implications

Overview of Luxembourg Business Entities

Luxembourg offers several legal forms for businesses, each with different characteristics and accounting implications. Understanding these forms is essential for proper financial statement preparation.

Société Anonyme (SA) - Public Limited Company

Characteristics:

• Minimum share capital: €30,000
• Shareholders have limited liability
• Managed by Board of Directors
• Can issue shares to public
• Subject to audit requirements (if exceeds certain thresholds)

Accounting Implications:

• Equity Section:
  • Share Capital (101000): Minimum €30,000
  • Can have multiple classes of shares
  • Share Premium (102000) if shares issued above par value
• Financial Statements:
  • Must prepare full financial statements
  • Subject to audit if exceeds thresholds:
    • Balance sheet total > €4.4 million, OR
    • Net turnover > €8.8 million, OR
    • Average employees > 50
• Filing:
  • Annual accounts filed with RCS
  • More detailed disclosure requirements

Example: A large Luxembourg SA with €5 million in assets would need:

• Full financial statements
• Audit (if exceeds thresholds)
• Detailed notes to financial statements

Société à Responsabilité Limitée (SARL) - Private Limited Company

Characteristics:

• Most common form for SMEs in Luxembourg
• Minimum share capital: €12,000
• Shareholders have limited liability
• Managed by managers (gérants)
• Cannot issue shares to public
• Simpler structure than SA

Accounting Implications:

• Equity Section:
  • Share Capital (101000): Minimum €12,000
  • Simpler equity structure than SA
• Financial Statements:
  • Can prepare abbreviated statements if meets criteria:
    • Turnover < €4.4 million
    • Assets < €2 million
    • Employees < 50
  • Otherwise, full statements required
• Filing:
  • Annual accounts filed with RCS
  • Less detailed than SA (if abbreviated)

Example: Tech Solutions SARL (from our earlier example) is a typical SARL:

• Share capital: €15,000
• Can use abbreviated statements if small enough
• Simpler equity presentation

Société en Nom Collectif (SNC) - General Partnership

Characteristics:

• Two or more partners
• Partners have unlimited liability
• Partners manage the business
• No minimum capital requirement
• Partners are jointly and severally liable

Accounting Implications:

• Equity Section:
  • Partner Capital accounts (separate for each partner)
  • No share capital (not a corporation)
  • Current accounts for each partner
• Financial Statements:
  • Must prepare financial statements
  • Can use abbreviated if small
  • Partner equity shown separately
• Filing:
  • Annual accounts filed with RCS
  • Must show partner capital breakdown

Example: A partnership with two partners:

EQUITY
  Partner A Capital                        €30,000
  Partner B Capital                       20,000
  Current Year Profit (split 50/50)       10,000
Total Equity                              €60,000

Société en Commandite Simple (SCS) - Limited Partnership

Characteristics:

• General partners (unlimited liability) and limited partners (limited liability)
• General partners manage the business
• Limited partners are investors only
• No minimum capital for limited partners

Accounting Implications:

• Equity Section:
  • Separate accounts for general and limited partners
  • General partner capital
  • Limited partner capital
• Financial Statements:
  • Must show partner breakdown
  • Similar to SNC but with partner type distinction
• Filing:
  • Annual accounts filed with RCS
  • Must distinguish partner types

Individual Business (Entreprise Individuelle)

Characteristics:

• Single owner
• Owner has unlimited liability
• No separate legal entity
• Simplest form

Accounting Implications:

• Equity Section:
  • Owner's Capital account
  • No share capital
  • Owner's Equity = Assets - Liabilities
• Financial Statements:
  • Must prepare if turnover > €100,000 (excluding VAT)
  • Simpler than corporate forms
• Filing:
  • Annual accounts if required
  • Personal tax implications

Comparison Table

Entity Form	Min. Capital	Liability	Audit Required?	Equity Presentation
SA	€30,000	Limited	If large	Share Capital + Reserves
SARL	€12,000	Limited	If large	Share Capital + Reserves
SNC	None	Unlimited	If large	Partner Capitals
SCS	None	Mixed	If large	Partner Capitals (by type)
Individual	None	Unlimited	No	Owner's Capital

Financial Statement Differences

Corporate Forms (SA, SARL):

• Share Capital (101000)
• Reserves (103000)
• Retained Earnings (104000)
• Current Year Profit/Loss (105000)

Partnership Forms (SNC, SCS):

• Partner Capital accounts
• Current accounts
• Profit/loss allocation

Individual:

• Owner's Capital
• Simple equity structure

Luxembourg Compliance Note

Regardless of legal form, all businesses must:

• Maintain accounting records according to PCN
• Prepare annual accounts (if required)
• File with RCS (if incorporated)
• Comply with tax obligations
• Use proper PCN classifications

The legal form affects:

• Equity presentation
• Disclosure requirements
• Audit requirements
• Filing obligations

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