On July 20, 2023, the Luxembourg Parliament marked a significant milestone by adopting the Modernisation Law, heralding a new era in business licensing and establishment regulations. After more than a year of meticulous negotiations, the draft bill, numbered 7989, has been embraced. This pivotal legislation, which revises the law of September 2, 2011, governing access to craftsman professions and certain liberal professions, sets the stage for a more contemporary entrepreneurial framework.
Publication and Commencement
The Luxembourg Modernisation Law is poised for publication in the Luxembourg official gazette on August 28, 2023, with a scheduled commencement date of September 1, 2023. This timeline sets the backdrop for an array of groundbreaking changes that will modernize application procedures and introduce novel business licensing categories.
Clarity on Luxembourg Business License Requirement
The Modernisation Law eliminates ambiguity by explicitly stating that a business license is obligatory for individuals engaging in activities within the law’s scope on a regular basis, as opposed to occasional endeavors. Importantly, this precision retains the option to combine multiple types of business licenses, as stipulated by the Modernisation Law.
Simplified Business License Holder Requirements
A significant overhaul comes in the form of simplified requirements for business license holders. The obligation for the designated manager to be a shareholder, partner, or employee of the company has been abolished. Instead, a distinction is drawn between individuals conducting activities under their own name and those acting through a company. This allows for more flexibility in appointing designated managers, provided there remains a tangible link between the company and its designated manager.
Enhanced Professional Repute Conditions
The Modernisation Law places a renewed emphasis on professional repute, encompassing not only individuals directly involved in daily management but also those with significant influence or majority shareholding in the company. Notably, the law introduces the concept of repeated failures to publish mandatory information as a factor compromising professional repute. It also specifies the disqualifying circumstances related to filing and publication failures with the commercial register.
Limitation on Business Licenses for Individuals
Under the Modernisation Law, a natural person is restricted from holding more than two craft businesses, unless these businesses are interconnected or part of the same corporate group. However, an exception exists for individuals who directly or indirectly own at least 25% of the shares in each of these companies. Furthermore, the law upholds the “group exception” for certain intra-group activities, similar to existing regulations in the financial sector.
Mandatory Display of Two-Dimensional Barcodes
In an effort to enhance transparency, the Modernisation Law introduces the use of two-dimensional barcodes for business licenses. These barcodes must be prominently displayed in a location accessible to the public at the company’s site or shop. Failure to comply with this requirement can result in fines ranging from 25 to 250 euros.
Second Chance After Bankruptcy
A groundbreaking provision in the Modernisation Law is the principle of a second chance for individuals and companies following bankruptcy. This allows the Minister of Economy, following the consultative opinion of the second chance commission, to grant a second business license under specific circumstances, such as natural disasters, loss of pre-eminent customers, or pandemic-related challenges. This provision aims to support entrepreneurs who have faced financial setbacks.
Introduction of New Business License Categories
To accommodate recent developments in various business sectors, the Luxembourg Modernisation Law introduces new categories of business licenses. These include licenses for real estate business introducers and companies offering co-working space rental services. Notably, the law extends disqualifying criteria to these professions, encompassing compliance with anti-money laundering and anti-terrorist financing obligations, as well as tax filing requirements.
New Circumstances for License Withdrawal
Business license holders are now obliged to promptly declare changes in the manager’s residence or the location of the business within one month. Failure to do so carries the risk of business license withdrawal.
As the Modernisation Law prepares to take effect on September 1, 2023, businesses and professionals currently holding business licenses have a two-year window to adapt to its provisions. This landmark legislation paves the way for a more dynamic and transparent business environment in Luxembourg, aligning with contemporary practices and fostering entrepreneurial growth.
To get your business permit in Luxembourg, please contact your Damalion expert now.
