SARL-S or sole trader status: which to choose?
Published on 10 October 2026 · Updated on 10 October 2026
In short
SARL-S vs sole trader in Luxembourg: the sole trader operates in their own name, starts simply, but all personal assets answer for business debts. The SARL-S creates a separate company, with capital from EUR 1 to EUR 11,999, which limits liability to contributions, in return for articles of association, annual filing of accounts and a UBO (RBE) declaration.
SARL-S vs sole trader: the comparison
| SARL-S | Sole trader | |
|---|---|---|
| Legal personality | Company separate from the shareholder | None: the entrepreneur and the business are one |
| Liability | Limited to contributions, except for management fault or personal guarantee | Unlimited, on personal assets |
| Capital | EUR 1 to EUR 11,999 | None |
| Incorporation deed | Private-deed articles, no notary | No deed |
| RCS registration fee | EUR 14.61 excl. VAT | EUR 14.61 excl. VAT for a trader |
| UBO register (RBE) | Declaration mandatory | Not concerned |
| Annual accounts at the RCS | Mandatory filing every year | Only above EUR 100,000 excl. VAT of turnover |
| Business permit | In the company’s name, with a qualified manager | In the entrepreneur’s name |
| Manager’s CCSS status | Self-employed if more than 25% of the shares | Self-employed |
| Taxation of profits | Corporate tax, then manager’s remuneration | Personal income tax |
| Our support | From EUR 1,499 excl. VAT | From EUR 589 excl. VAT |
How to decide
- Choose the sole trader route if your activity carries little financial risk, if you want to test a project or if your turnover will stay modest.
- Choose the SARL-S if you sign large contracts, buy stock, hire, or want to separate your personal assets from the business clearly.
- Think about what comes next : a SARL-S can admit other individual shareholders; a sole proprietorship will have to be taken over by a company if you bring in partners.
- Keep one limit in mind : one person can be a shareholder of only one SARL-S. A company cannot hold shares in one.
The SARL-S protection has limits
Limited liability does not apply if you give a personal guarantee for a loan or a lease, which banks often ask for from a company with low capital. It also does not cover management faults. Since 2 June 2026, founders are also jointly liable for the payment of the subscribed capital.
Tax and contributions: get them calculated
The social status often differs less than expected: a manager holding more than 25% of a SARL-S pays CCSS contributions as a self-employed person, like the sole trader. The real difference lies in taxation: the sole trader is taxed on profit under personal income tax, while the SARL-S pays corporate tax and the manager is taxed on their remuneration.
We do not give tax advice. An independent licensed accountant working with Business Registration can compare the two options based on your expected income. To go further, see setting up a SARL-S and starting as a sole trader.
Next step
Made your choice?
Describe your activity: we check the permit you need and send you a quote for the chosen form.
Frequently asked questions
SARL-S vs sole trader: which is cheaper to set up?
The sole trader. Our support starts at EUR 589 excl. VAT against EUR 1,499 excl. VAT for a SARL-S, and there are no articles of association or capital. RCS registration fees are the same, EUR 14.61 excl. VAT. However, the SARL-S protects your personal assets, which is hard to put a price on.
Is the manager of a SARL-S an employee?
Not if they hold more than 25% of the shares: the CCSS then treats them as self-employed. In a single-shareholder SARL-S, the managing shareholder therefore pays contributions as a self-employed person, exactly like a sole trader. Contributions are calculated on their professional income.
Can you switch from sole trader to SARL-S later?
Yes. The activity can be taken over by a SARL-S set up later. The business permit must then be requested in the company’s name, and contracts, bank accounts and the VAT number must be transferred or recreated. It is better to plan for this when the business changes size.
Must a sole trader file annual accounts?
An individual trader files accounts with the RCS only if annual turnover exceeds EUR 100,000 excl. VAT, according to Guichet.lu, and they are then not open to public consultation by third parties. The SARL-S files its accounts every year, whatever its turnover, which is a recurring cost to plan for.
Can you set up two SARL-S?
No. An individual can be a shareholder of only one SARL-S. For a second company project, you need a SARL, with minimum capital of EUR 12,000 and a notarial deed, or you can carry out the second activity within the same SARL-S if its corporate purpose allows it.