New law on establishment permits
1 September 2023 marks the entry into force of the Act of 26 July 2023 amending the Act of 2 September 2011 regulating the establishment permit applicable to the professions of craftsman, trader, industrialist and certain liberal professions.
The main changes include
- The creation of new categories of authorisation
- The second chance principle
- Digital authorisation
- Clarification of cases of misconduct affecting professional good repute
- Limitation on the number of establishment authorisations for the same person
- Loss of validity of the establishment authorisation
The creation of new categories of establishment authorisation
Creation of new commercial activities
In order to bring greater clarity to the "other services" categories, the legislator has decided to create new categories of authorisation for commercial activities:
- commercial vehicle sales activities and services
- food retailing activities and services
- commercial activities and services for high-value movable goods
Any company (natural or legal person) carrying out one of the above activities has until 31 August 2025 to apply for a new licence with the new wording.
Creation of new real estate activities
Three new categories have been created in the real estate sector, or at least specified. These activities are :
- commercial activity and services for renting shared workspace or offices with ancillary services;
- real estate business introducer,
holders of this authorisation will now have to undergo specific training at the House of Training;
- operator of an accommodation establishment,
the activity in question is the rental of accommodation for 90 nights or more per year.
Creation of a new list C for craft activities
The 2023 Act adds a List C to the two existing lists of craft activities. This list C contains activities that do not require any specific professional qualifications. This list includes, for example
- Distiller, brewer and maltster
- Tattoo artist
- Manual car cleaner
- Vehicle hire companies (ambulances, taxis, cars)
- Domestic help
- Building technician
- Photographer, cameraman
- Instrument tuner
- Mobile communications equipment repairer
- Glass blower
- Potter, ceramist
- Manufacturer of toys and souvenirs
As this list is not exhaustive, we invite you to consult list C available on the Guichet site directly via this link.
The second chance principle
Entrepreneurs who have been bankrupt for the first time can now apply for another chance to start a new business, subject to certain conditions.
The Minister for the Economy may grant a new chance if the applicant is able to establish that the bankruptcy was directly caused by :
- a natural disaster recognised as such by the Government in Council;
- unintentional destruction of the place of production or the production tool;
- the loss of a pre-eminent customer ;
- a major public works project;
- medically certified partial or total incapacity for work of the executive ;
- a pandemic recognised as such by the Government in Council ;
- a loss of profitability as a result of a major market disruption (provided that the bankruptcy was declared on admission).
In addition, the tax and social security debts remaining after bankruptcy will have to be covered by a payment plan with the various authorities, unless they do not exceed certain ceilings:
- VAT - 1% of the net amount paid during the last 5 financial years ;
- Direct tax - 1% of the net amount paid during the last 5 financial years (excluding withholding tax);
- Social security contributions - the equivalent of 4 months' contributions based on the average of the last 24 months.
Digitalisation of the establishment permit
A barcode will now be attached to each premises licence. This unique barcode must be displayed on the company's website and in every point of sale. The authorisation number or barcode must appear on letters, e-mails, websites, quotations, invoices and shop fronts, as well as on the compulsory signs installed on construction sites.
The barcode can be downloaded from the Guichet website using the following tool: Search for an establishment permit - Guichet.lu - Administrative Guide - Luxembourg (public.lu)
Failure to comply may result in a fine of between €25 and €250.
Clarification of cases of misconduct affecting professional good repute
The new 2023 law gives definitions/examples of breaches that deprive a person of his professional reputation and breaches that affect professional reputation.
It is interesting to note the list of failings affecting professional integrity, which includes, for example :
- the use of an intermediary ;
- the use of falsified or misleading documents or declarations in connection with the application for authorisation;
- failure to comply with the obligation to file and publish annual accounts with the LBR on at least two occasions in the last three financial years;
- persistent failure to register in the Register of Beneficial Owners (RBE) within a period of 6 months;
- the accumulation of large debts to public creditors in the event of bankruptcy or compulsory liquidation;
- failure to file direct tax returns;
- any final conviction for a criminal or correctional offence relating to the activity carried out or to be carried out;
- concealment of part of the company's liabilities or exaggeration of its assets.
Limitation on the number of establishment authorisations for the same person
This restriction applies exclusively to professions in the craft sector. As a result, an individual will no longer be able to hold the position of manager in more than two craft companies from lists A and B. It should be emphasised that this restriction does not apply to commercial activities, trades listed in list C, or other types of activity.
However, an exception to this rule is permitted: an individual may be a director of more than two companies from lists A and B if he or she holds at least 25% of shares in each of these companies.
Loss of validity of the establishment authorisation
The establishment authorisation loses its validity in the event of :
- Voluntary cessation of business for more than 2 years ;
- Placing in compulsory liquidation ;
- Judgment declaring bankruptcy ;
- Failure to declare the change of address of the director within 1 month.
Any company (natural or legal person) has until 31 August 2025 to apply for a new licence or to comply with the new rules.
Do you have any further questions? Please do not hesitate to contact contact our team.