The act dated 26 July 2023 amending the act dated 2 September 2011 regulating access to the professions of craftsman, trader, manufacturer and certain liberal professions has been published in the Official Gazette on 28 August 2023 and will enter into force on 1 September 2023 (the “Act”).
The bill in question has already been described in a previous communication from PwC Legal (please find the relevant communication here).
As a reminder, the bill has been proposed to modernise the right of establishment. This modernisation aims to react to the fast changes in the regulatory, economic, technological and of course entrepreneurial environment.
As already developed in our previous communication, the regularisation of co-working space forms part of the modernisation process planned through this Act. The instrument chosen for this is the addition of article 8 quinquies, pursuant to which every company that carries out or intends to carry out the activity of renting out offices or shared workspace must obtain a business licence for the commercial activity and services of renting out shared workspace or offices with ancillary services. The introduction of this article aims to take into consideration the evolution of the concept of establishment in the Grand Duchy of Luxembourg while providing a framework to guarantee the effective maintenance of the notion of establishment.
The definition of accommodation establishment operator is amended to include short-term rentals and includes any person renting out accommodation units for 90 nights or more over one year. The new criterion of 90 nights is used to distinguish the operator of an accommodation establishment, which is to be regarded as a business and therefore subject to business licence, from those who occasionally rent out such units without it becoming a commercial activity.
Always in a view to modernise the right of establishment, different axes of improvement have been developed. For instance, new categories of business licences for activities that are subject to anti-money laundering control obligations such as the sale of motor vehicles or of high-value movable goods are created.
A transition period has been planned to allow holders of business licences to remain to comply with the law. A holder of a business licence has two years from 1 September 2023 to comply with the new provisions.
It is no longer required that there is a real link with the company for the holder of the business licence. The Act allows the holder of the business licence to be registered as a representative of the company (“mandataire de l’entreprise”) with the Luxembourg trade and companies registered without the need to be a partner, shareholder or employee. However, the executive on whose professional reputation and qualifications the business license rests will now have to be physically present in the establishment, in addition to effectively and permanently ensuring the daily management of the business.
The Act creates a new list of professional activities in the craft sector registered on a new C list that do not require any professional qualification which encourages entrepreneurial dynamism. In fact, the creation of creative businesses in the field of crafts will not be blocked by the qualification requirement for these activities.
A person may not be an executive of more than two unrelated artisanal businesses practicing professions covered by lists A (main trades) and B (secondary trades), unless he holds, directly or indirectly, in each of these companies at least 25% of the shares. For the professions on the newly created list C, there is no such limit.
The “second chance principle” enables a business license holders to undertake a second business activity after bankruptcy if that person is able to establish that the bankruptcy was directly caused by (i) a natural disaster recognized as such by the government in council, (ii) an involuntary destruction of the place of production or of the production tool; (iii) the loss of an important customer; (iv) a major public works project; (v) the medically certified partial or total incapacity for work of the executive; (vi) a pandemic recognised as such by the government in council; or (vii) a loss of profitability due to a major market disruption.
Finally, the Act modernises the application procedure via a dedicated online portal and the licence will be issued online only on that portal. The licence can be consulted online by the public on the same portal. Furthermore, each business license will be assigned a two-dimensional barcode which must be displayed by its holder in a place that is accessible to the public.