Reducing the share capital of a Luxembourg company
Published on 10 October 2026 · Updated on 10 October 2026
In short
A capital reduction in Luxembourg is an amendment to the articles decided by the shareholders' meeting before a notary. It serves to repay shareholders or absorb losses. The capital cannot fall below the legal minimum, €12,000 for a SARL and €30,000 for an SA, unless it is increased or the company converted at the same time. Creditors are protected.
Definition
A capital reduction is the operation by which a company decreases the amount of its share capital stated in the articles, either by returning contributions to its shareholders, by clearing accounting losses, or by funding a reserve. It reduces the creditors' security, hence the safeguards the law gives them.
Key points
- Deed
- Notarial for a SARL or an SA
- Floor
- €12,000 SARL, €30,000 SA
- Creditors
- Right to request security
- RCS filing
- Within one month
The two main reasons
| Reason | Effect | Creditors |
|---|---|---|
| Repayment to shareholders | Cash leaves the company for the shareholders | Full protection: payment suspended during the legal period |
| Clearing of losses | Accounting entry, no cash outflow | Lighter regime, to be checked case by case |
The tax treatment of a repayment, notably with regard to withholding tax on dividends, should be validated with a licensed accountant or a tax adviser before the decision.
Reducing the capital, step by step
- 1
Analyse the accounts
Capital, reserves, losses, cash, tax effects of the repayment.
Licensed accountant - 2
Structure the decision
Amount, method (cancelling shares, reducing the nominal value), reason.
businessregistration.lu and lawyer - 3
Meeting before a notary
Decision under the conditions for amending the articles.
Shareholders, notary - 4
RCS and RESA
Filing of the deed and consolidated articles within one month.
Notary, LBR - 5
Creditors' period
No repayment before the period open to creditors after publication has expired.
Management - 6
Repayment
Payment to shareholders, then update of the UBO register if holdings change.
Company
Do not repay too early
Where the reduction leads to a repayment, creditors whose claim predates the publication of the deed may, within 30 days of that publication, ask the court to order security. No payment is made to shareholders before that period expires or the creditors who acted are satisfied. An early repayment engages the managers' liability.
Reducing below the legal minimum
A SARL cannot keep capital below €12,000, nor an SA below €30,000. A reduction below that threshold is possible only if it is immediately followed by an increase that restores the minimum, or combined with a conversion into a form that allows lower capital. Moving from a SARL to a SARL-S also requires all shareholders to be individuals and none of them to already hold another SARL-S.
If the reduction aims to cover significant losses, first check the rules on the loss of half or three quarters of the capital, which require a shareholders' meeting to decide whether to continue the business. For the opposite operation, see SARL capital increase in Luxembourg.
Next step
Prepare your capital reduction
Reason analysed, deed coordinated, creditors' period monitored before any repayment.
Frequently asked questions
Is a notary needed to reduce the capital?
Yes, for a SARL or an SA. The capital appears in the articles, and the reduction is decided by a shareholders' meeting whose decision is recorded in a notarial deed. The notary then files the deed with the RCS for publication in the RESA, which starts the period open to creditors.
Can shareholders be repaid as soon as the deed is signed?
No. Creditors whose claim predates the publication have 30 days to ask the court for security. Repayment to shareholders waits until that period expires, or until the creditors who applied are satisfied. An early payment engages the managers' liability.
Can a SARL reduce its capital below €12,000?
Not while remaining a SARL. Either the minimum must be restored at once by an increase, or the company must be converted into a form that allows lower capital, such as the SARL-S if the shareholders meet its conditions. That conversion also follows notarial formalities and an RCS filing.
Is a repayment of capital taxed?
The tax treatment depends on the origin of the sums and on the situation of the company and its shareholders. A repayment wrongly characterised may be treated as a dividend distribution. Have the operation validated by a licensed accountant or a tax adviser before the decision is taken.