Company Liquidation in Luxembourg: Step-by-Step Procedure
Mickaël LOC
Corporate Lawyer ·
Company Liquidation in Luxembourg: Step-by-Step Procedure
The liquidation of a Luxembourg company is a procedure governed by the amended law of 10 August 1915 on commercial companies, which breaks down into four phases: dissolution, liquidation proper, closure and RCS deregistration. It can be voluntary (shareholder decision) or judicial (ordered by the court). This practical guide details each step, the costs, the timelines and the tax obligations.
Voluntary vs judicial liquidation
| Criterion | Voluntary | Judicial |
|---|---|---|
| Trigger | Extraordinary general meeting decision | District court judgment |
| Cause | Activity ended, restructuring, exit | Bankruptcy, failure to publish, serious breaches |
| Liquidator | Chosen by shareholders | Appointed by the court |
| Average duration | 6 to 18 months | 1 to 3 years |
| Average cost | €3,000 to €8,000 | Variable (liquidator fees) |
The 8 steps of voluntary liquidation
- 1. Extraordinary dissolution meeting Decided by a 3/4 majority of capital for an SARL (2/3 of votes for an SA). Before a notary. RESA publication.
- 2. Appointment of the liquidator Often the manager/director, or an external professional (lawyer, auditor). Powers set out in the articles or the resolution.
- 3. Opening liquidation balance sheet Statement of assets, liabilities and net position. Accounting starting point of the liquidation.
- 4. Realization of assets and discharge of liabilities Collection of receivables, sale of stock and fixed assets, payment of suppliers, banks, tax and social security authorities.
- 5. Liquidator report + liquidation auditor report The auditor (different from the liquidator) verifies the liquidation accounts.
- 6. Closing liquidation meeting Approval of the accounts, discharge to the liquidator and auditor, decision on the distribution of the liquidation surplus.
- 7. Distribution of the surplus Distribution to shareholders pro rata to their shares. Subject to withholding tax on liquidation surplus (specific rules).
- 8. RCS deregistration Filing with the RCS, publication in the RESA. The company legally ceases to exist.
Taxation of the liquidation
The liquidation surplus (excess distributed to shareholders after discharge of liabilities) is treated as a dividend distribution. For Luxembourg-resident individual shareholders, it bears the 15% withholding tax, creditable against the final tax. For corporate shareholders benefiting from the parent-subsidiary regime, the surplus is fully exempt (conditions: holding > 10% or €1.2M, period > 12 months). For foreign corporate shareholders, tax treaties apply. The liquidation loss can be deducted under conditions for corporate shareholders.
Special case: simplified SARL in 2021-2025
The law of 22 December 2022 introduced a simplified dissolution-liquidation procedure in a single act for small, debt-free companies. Conditions: unanimous agreement of shareholders, no employees, no debt (or debts fully settled or assumed). Benefit: a single general meeting is enough, no separate liquidation phase, cost reduced by 30 to 50%. Ideal for a dormant SARL-S or wealth holding company.
Obligations not to forget
- Liquidation tax return: form 500 marked "liquidation", accompanied by liquidation accounts.
- Final VAT return and VAT deregistration with the Registration Duties Administration.
- Closing CCSS numbers if employees are present.
- Filing of final annual accounts up to closure, even for a partial year.
- Keeping records for 10 years after closure (accounting books and vouchers).
Going further
- Meeting closure procedures: assemblee-generale-annuelle-luxembourg.
- Closing down a dormant SPF or SOPARFI: SPF Luxembourg : La société de gestion de patrimoine familial expliquée.
End-to-end liquidation support Bookkeeper.lu drafts the resolutions, keeps the liquidation accounts, secures the taxation of the surplus and handles RCS deregistration.
Frequently Asked Questions
What majority is required to decide on the dissolution of a SARL?
The voluntary dissolution of a SARL in Luxembourg requires a decision of the extraordinary general meeting with a majority of 75% of the shares, before a notary. The articles of association may provide for a higher majority.
How long does a liquidation of a company take in Luxembourg?
A simple liquidation generally takes between 3 and 6 months. This period includes the dissolution decision, realisation of assets, settlement of liabilities, distribution of the liquidation surplus and closing before a notary. Complex liquidations (litigation, hard-to-realise assets) can take several years.
Who can be appointed as liquidator in Luxembourg?
The liquidator may be a shareholder, the sitting manager, or an external third party (fiduciary, lawyer, chartered accountant). They must be appointed by the general meeting at the time of the dissolution decision. Their powers and remuneration are defined by the meeting or the articles of association.
Is there a withholding tax on the liquidation surplus?
Yes, under Luxembourg domestic law, the liquidation surplus distributed to shareholders is subject to a 15% withholding tax, equivalent to a dividend distribution. This withholding may be reduced or eliminated under tax treaties or the parent-subsidiary directive.
Is the RCS removal automatic after the closing of the liquidation?
Yes, after the signing of the deed closing the liquidation before a notary and its publication in the RESA, the removal of the company from the Trade and Companies Register (RCS) takes place automatically. The company then loses its legal personality.
