The law of 26 July 2023 modernising the right of establishment introduces a series of important changes for the Luxembourg business sector. The changeover to electronic issuance of establishment permits and the introduction of a new chance scheme after bankruptcy are some of the key advances of this reform, which aims to modernise and simplify the local regulatory framework for entrepreneurs. The Chamber of Commerce outlines the key points of the reform and their impact on Luxembourg's entrepreneurial landscape.
The law of 26 July 2023 amending the amended law of 2 September 2011 regulating access to the professions of craftsman, trader, industrialist and certain liberal professions came into force on 1 September 2023.
This major reform amends the law governing the authorisation of establishment with a view to modernising it, in particular through efforts to digitalise it, which the Chamber of Commerce welcomes. This law, like the recent reform of bankruptcy law introduced by the law of 7 August 2023 on the preservation of businesses and the modernisation of bankruptcy law, also helps to give people a 'new chance' to obtain a business permit after bankruptcy.
Digitalisation of the establishment permit
The establishment permit is now associated with a unique two-dimensional barcode, replacing the old 'carte grise'. The "business" section of the government portal guichet.lu also allows the public to check the validity of a permit using this barcode and to download it using the existing search engine. In addition, a Gouvcheck 2D barcode affixed to a ministerial letter will be sent by post to the applicant company. The 2D barcode must be displayed on the company's website and in every point of sale. The authorisation number or 2D barcode must appear on letters, e-mails, websites, quotations, invoices and shop-fronts, as well as on the compulsory signs installed on construction sites.
Notification to the Minister of all changes inherent in the establishment permit (addition of a branch, change of the manager's habitual residence, change of the company's place of business, etc.) is also done online via the MyGuichet.lu electronic assistant using a Luxtrust product or a digital identity from another European country (eIDAS).
Modification of the definition of the real link between the holder of the establishment permit and the company
The law now stipulates that in order to hold an establishment permit, the holder must be either the owner of a sole proprietorship or, in the case of a company whose activity is covered by the right of establishment, a corporate officer of the company. The corporate officer, within the meaning of company law, must be registered as such in the Trade and Companies Register (RCS), to prove a real link with the company. It is therefore no longer necessary to be an employee, shareholder or partner to be the holder of the establishment permit. The Ministry of the Economy's Directorate General for Small and Medium-sized Enterprises will also base its investigation on the information available via the RCS, since an automatic exchange of information is planned between these two bodies.
Introduction of new categories of commercial establishment authorisation
The reform provides for new commercial establishment authorisations for specifically identified activities. Companies carrying out the following commercial activities will now be required to hold an establishment permit with a specific wording:
- commercial vehicle sales activities and services ;
- commercial activities and services involving the rental of shared workspace or offices with ancillary services ;
- food retailing activities and services ;
- commercial activities and services involving high-value movable property (negotiating the purchase or sale or acting as a custodian of works of art, precious metals or precious stones, retail or wholesale sales of one or more items of jewellery in a single transaction, watches, or any other movable property where the value of the transaction or a series of related transactions is equal to or greater than €10,000 excluding value added tax).
Any individual or legal entity holding an establishment permit (in principle for "commercial activities and services") when the law comes into force has two years from 1 September 2023 to comply and contact the Ministry of the Economy to update the wording of their permit.
Regulation of the short-term accommodation rental business
The reform introduces a new definition of "operator of an accommodation establishment", which is now defined as "the commercial activity of renting out accommodation units for ninety nights or more, This means that anyone offering one or more furnished properties for rent to a transient clientele who do not take up residence there, and whose stay is based on a daily, weekly or monthly rental, must complete the accelerated training for access to the HORECA professions, offered by the House of Training. This training must be completed by the operator of the furnished accommodation(s) within six months of reaching the threshold of 90 nights, accumulated over one year. The persons concerned will therefore now have to hold a HORECA authorisation - accommodation establishment.
Specification of qualification requirements for certain commercial professions
Real estate business introducers (the commercial activity of putting an estate agent or property developer in touch with any other person wishing to sell or rent a property) are now required to complete the specific accelerated training available from the House of Training, covering professional ethics and all Luxembourg legislation relating to the real estate sector. However, the Law does not require property brokers to have civil liability insurance at all times.
The operator of a discotheque (a commercial activity which consists of operating a public house whose main activity is the operation of a dance floor to the sound of recorded music and which may be operated outside normal public house opening hours) is subject to the same qualification requirements as public house operators (training for access to the HORECA professions).
Introduction of a new list C of craft trades
Comprising professions such as pet groomers, tattoo artists, photographers, building service technicians and taxi hire firms, the new List C includes craft professions for which access is no longer governed by a specific qualification or professional experience.
Details of professional good repute
The law now provides for a list of breaches of professional integrity. These include failure to comply, on at least two occasions in the last three financial years, with the obligations to file and publish company accounts and annual financial statements, persistent failure over a period of at least six months to register beneficial owners, or the accumulation of substantial debts to public creditors in the context of a bankruptcy or compulsory liquidation order.
Setting up a new chance scheme after bankruptcy
The Minister grants a new establishment permit to a former director of a company declared bankrupt if that person is able to establish that the bankruptcy was directly caused by a list of events defined in the law. These events include a natural disaster recognised as such by the Government in Council, the loss of a prominent customer, a major public works project, a pandemic recognised as such by the Government in Council or a loss of profitability following a major market disruption. It is not necessary to obtain a payment agreement from the public authorities to which debts are still owed, if these debts do not exceed certain thresholds, determined on the basis of a calculation defined by law. The Minister's decision to grant a new opportunity is based on an advisory opinion issued by a New Opportunity Committee convened to assess the viability of the proposed business.
The Chamber of Commerce, through its House of Entrepreneurship, is available to answer questions and provide information to businesses as part of the implementation of this reform. In particular, it invites companies involved in activities subject to the above-mentioned changes to come forward so that it can provide guidance on the steps to be taken.
In its successive opinions published prior to the entry into force of the current reform, the Chamber of Commerce welcomed the Government's efforts to modernise the right of establishment, while expressing certain reservations about its overly timid nature, particularly in terms of second chances and simplification of the procedures governing the establishment of a business in Luxembourg.