Being renowned for its thriving economy and as one of the world’s leading financial centers, Luxembourg has been the country of choice for entrepreneurs and in respect of this, Luxembourg never stops reforming its law in order to benefit entrepreneurs more. This is what brought up the “Reform Of The Right Of Establishment” in Luxembourg recently.
Recently, a “draft bill n°7989” was submitted to the Chamber of Deputies by the Minister of Middle Classes to amend the law dated September 2, 2011 – this law regulates access to the professions of craftsman, trader, manufacturer, and certain liberal professions.
This draft bill aims to modernize the right of establishment in Luxembourg by making the law more understandable for entrepreneurs in Luxembourg in order to promote entrepreneurship.
The bill of law provides, among other things the following amendments:
- Principle of a second chance after bankruptcy: the first crucial point in this bill is the principle of a second chance in case of bankruptcy. Bankruptcy was a fate an entrepreneur dreaded, as it will be very hard to obtain a new business permit afterward. But with the principle of a second chance, an entrepreneur can have the right to start a business after bankruptcy, if they failed due to bad luck or mismanagement. But note that, those accused of defrauding bankruptcy do not have access to this second chance.
- Simplification of the requirements relating to the holder of the business license: the manager (holder of the business license) must no longer be a partner, shareholder, or employee of the company. But the obligation of the holder of a business license includes having a real link with the company, as owner or in charge of the daily management of the company.
- It is also now established that the holder of the business license may be domiciled anywhere in the European Economic Area, given that he/she demonstrates a regular presence in the establishment in Luxembourg.
- Improved protection of any new director: following any previous malicious director who hid the financial situation of the company to avoid any obligation for the payment of public debts, there is now enhanced protection for any director taking over the business.
- Facilitation of business transfers: with a view to promoting the right to entrepreneurship, another part of this reform concerns the transfer of businesses. An employee who has held a position in a company for at least three years (as opposed to 10 years previously) will be able to take over the business permit before obtaining professional qualifications within five years.
- Simplification of administrative procedures: it is no longer necessary to inform the Minister in charge of the middle class directly of any amendments to the information entered in the trade and company register. So any changes made to the data entered with the Luxembourg Trade and Companies Register will be automatically traded with the Directorate General of Middle Classes.
- Temporary business licenses: if the holder of a company business license departs suddenly, a provisional business license may be granted for 6 months to avoid any interruption in the company’s activity. Presently, no qualification requirement is essential. And according to the bill, a provisional license can now be approved of only for a company that has already had a business license for at least six months.
- Access to specific craft professions is now simplified: by taking into account the new facts of certain professions whose requirements have changed, another point was considered in the reform to simplify access to certain professions. The qualification requirement will be eliminated for certain activities such as photography, or building services.
- Regulation of short-term rentals: finally, the activity of short-term rental receives a framework in order to oversee any activity that is similar to the operation of a hotel. A person will be free to rent out accommodation for a total period of three months per year. Over that, they will need to have a hotel establishment permit.
Finally, clients in the future will have real-time access to information respecting both the professional qualifications contained in the business permit of an undertaking and the validity of the permit.
In general, through this Bill, the government aims at facilitating the Luxembourg economy through reasonable supervision of professionals and facilitating entrepreneurship. However, this Bill of law will still be subject to several opinions and may thus be amended in the future.
Are you looking to set up your business or investment platforms in Luxembourg? Let’s go ahead and contact your Damalion experts now and let us help you.
