When do you graduate from an EOR to your own Luxembourg entity?

The table below uses an illustrative EUR equivalent of the Teamed fee. The actual euro amount tracks the exchange rate at the time of invoice. Teamed charges from $599 USD with zero FX mark-up. Luxembourg salaries are among the highest in Europe, so the entity overhead amortises across fewer heads here than in most markets.

Every entity figure in this table is a typical range. It covers a fiduciaire running payroll, bookkeeping, social security filings, and first-point HR for a small SARL. The figures are illustrative, not law figures. Your real cost moves with your outsourcing model and benefits programme.

The statutory employer costs are the same whether you use an EOR or your own entity. Employer pension contributions rose to 8.5% from January 2026 under the pension reform law. Employer health in-kind is 2.8%, health cash benefits 0.25%, accident insurance 0.7%, and occupational health 0.14%. Employer Mutuality is added on top and varies by absenteeism class. These rates sit on both sides of the comparison, so they do not move the crossover. They do add filing work to the entity side.

Run the Crossover Calculator with your own headcount and salary band.

1. Calculate the EOR cost

   Multiply the Teamed fee (from $599 USD) by your planned Luxembourg headcount. This is the fixed per-head cost. It grows in a straight line as you hire.

2. Estimate the entity fixed overhead

   Typically EUR 2,500 to 4,500 per month for a small SARL. This covers a fiduciaire running payroll, bookkeeping, CCSS filings, accounts, and first-point HR. It barely moves until headcount passes twelve.

3. Find the crossover headcount

   The crossover is where EOR monthly cost equals the entity overhead. At typical Luxembourg salaries this lands around five to eight employees. Use the Crossover Calculator for your own numbers.

4. Factor in non-financial triggers

   The maths gives you a headcount threshold. Local substance for regulated work, public contracting eligibility, and the locked share capital are separate questions that can override the cost crossover in either direction.

5. Plan the graduation date

   Allow four to eight weeks for SARL formation before the first payroll on your own entity, including the notary deed and the blocked capital deposit. Start the GEMO process while EOR keeps running.

These are typical market ranges, not law figures. No law sets what it costs to form a Luxembourg SARL. The range reflects real professional services pricing in Luxembourg City. It varies with share structure and how much you outsource to a fiduciaire or notary.

The SARL-S option, and its limits

Luxembourg also offers a simplified SARL-S, where capital can be as little as EUR 1 and the company forms by private deed with no notary, for around EUR 65 in fees. It is built for solo founders. The manager must be a natural person, an individual cannot own more than one SARL-S at a time, and turnover is capped. For a company hiring a team and planning to grow, the standard SARL with its EUR 12,000 capital is usually the right structure, which is why the cost ranges above assume it.

Why the bank account matters for payroll

A standard SARL cannot complete formation until the EUR 12,000 capital sits in a blocked Luxembourg bank account and the bank issues a deposit certificate for the notary. Opening that account with full know-your-customer checks on foreign directors can take 2 to 5 weeks. That turns a fast incorporation into a 4 to 8 week wait before your first payroll if the sequence is not managed tightly.

These figures are typical market ranges for a small Luxembourg company with 1 to 12 employees. They are illustrative, not law figures. Real costs depend on whether you outsource to a fiduciaire or hire in-house, and on the complexity of your payroll and benefits.

Above 12 employees, a dedicated in-house HR and finance hire usually becomes worthwhile and the band widens. Supplementary pension and health top-ups, common in competitive Luxembourg hiring, add cost per employee and sit outside the overhead estimate above.

Most cost comparisons skip the manager-liability dimension because it is hard to put a number on. It is worth naming before you decide.

Personal manager duties under Luxembourg law

Under the loi du 10 août 1915 sur les sociétés commerciales, the gérant of a SARL must manage the company in its interest, keep proper accounts, and meet its filing and tax duties. A gérant who acts negligently, lets the company trade while insolvent, or misses social security and tax payments can face personal civil and, in serious cases, criminal liability. These duties attach to the individual named as manager. They cannot be outsourced to a fiduciaire.

The compliance treadmill

• CCSS declarations: employee social security must be declared and paid monthly to the Centre commun de la sécurité sociale. Late payment attracts interest and added penalties.
• Withholding tax (retenue d'impôt): deducted from salary and remitted to the Administration des contributions directes on the statutory rhythm.
• Annual accounts (eCDF): filed with the RCS and the tax office each year, with penalties for late deposit.
• VAT returns: filed periodically once the company is VAT-registered.
• Payslip obligation: an exact monthly written breakdown of pay and deductions must be handed to every employee.

Each filing is manageable on its own. Stacked across a year, they consume real management attention and carry personal manager risk on every missed deadline. An EOR carries all of them on its own entity.

• Under 5 Luxembourg employees at typical salaries: EOR is cheaper every month. The entity overhead and the EUR 12,000 locked capital have nothing to amortise against at that headcount.
• Market validation phase: you are hiring 1 or 2 people to test commercial fit. A SARL commits capital and a notary deed before you know whether Luxembourg will deliver.
• Project-based hires: 6 to 12 month engagements where the formation cost will not amortise before the project ends.
• Cross-border commuter teams: much of Luxembourg's workforce commutes from France, Belgium, and Germany. An EOR handles the cross-border payroll and tax treatment without you standing up local infrastructure.
• High wind-down risk: pilot programmes or post-acquisition holding patterns where a local entity would only add exit complexity later.

• Sustained headcount above 8 Luxembourg employees at typical salaries: the entity overhead amortises across enough people that per-head cost falls below the EOR fee, even with the locked capital factored in.
• Local substance requirements: regulated activities, especially financial services and fund administration under CSSF oversight, expect a licensed entity with real local substance and resident management. EOR employment does not provide it.
• Public and EU institution contracting: tenders with Luxembourg public bodies or the EU institutions based here can require a locally registered company, not an EOR employer.
• Equity and long-term incentives: senior hires expecting shares or local incentive plans need a Luxembourg-registered company to structure those arrangements.
• Multi-year growth plan: you have line of sight to 10 or more Luxembourg employees over 24 months. Starting formation early means your entity is ready before the crossover, not after it.

The technical mechanic is contract transfer: the employment contract moves from Teamed's partner entity to your new Luxembourg SARL on a set date. All terms carry across. Salary, social security cover, the 26 days of annual leave, and the continuous service date all stay the same. The employee sees a different employer name on the payslip. Nothing else changes.

What we do operationally:

• Stand up your Luxembourg SARL through GEMO, typically 4 to 8 weeks, while EOR keeps running in parallel.
• Handle the notary deed, the EUR 12,000 capital deposit, the RCS filing, and the business permit.
• Register the new entity with the CCSS and the tax office, and open the payroll mandate.
• Open the entity bank account and the blocked capital account.
• Transfer every active employment contract on a single effective date.
• Migrate ongoing benefits, including any supplementary pension or health cover, without a lapse.
• File the final EOR-period declarations and open new filings on the entity from the transfer date.

The Graduation Model exists because every other EOR makes this hard. We plan the move with you from the day you hire your first employee through us, so the decision is data, not guesswork.

Real HR and legal experts handle your Luxembourg hires from the first offer letter through every CCSS declaration and annual filing. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the employer pension line at 8.5%, health in-kind at 2.8%, accident cover at 0.7%, and the 26 days annual leave accrual. Nothing is buried in the fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. Run the Crossover Calculator to see the month the model flips. Start from the Luxembourg hiring overview. Key sources: CCSS contribution rates and Guichet.lu on the SARL.