On 20 July 2023, Bill 7989 amending the Law of 2 September 2011 regulating access to the professions of artisan, merchant, manufacturer and certain liberal professions, as amended (the “Law“), was adopted by the Chamber of Deputies.
The new law was published in the Official Journal on 28 August 2023, with entry into force of the amendments on 1 September 2023.
The aim of the new law is to improve, modernize and simplify the right of establishment in the Grand Duchy of Luxembourg, as well as the digitalization of the administrative procedures for that purpose.
The main amendments are the following:
- The temporary rental of tourist accommodations
The term “on a regular basis” (de manière habituelle) is inserted in Article 1 of the Law to qualify the commercial activity exercised that is the subject of the business permit. This new criterion underpins the fact that the activity must be carried out repeatedly. Thus, this repetition will characterize the commercial activity for short-term rental activities.
The new point 19 of Article 2 of the Law expands the professional qualification for the operator of an accommodation establishment (exploitant d’un établissement d”hébergement). Henceforth, it includes short-term rentals and includes any person who rent accommodation units for a cumulative period of three months and over three months (≥ 90 nights) during the year. The definition of accommodation unit (unité d’hébergement) is also inserted in a new point 34 of Article 2 of the Law.
The goal is to regulate internet platforms which make available short-term rental units such as AirBnb and thus bring the owner into the same competitive and regulatory framework as the operator of an accommodation establishment.
2 - New commercial activities requiring a permit:
- Real estate business introducer (apporteur d’affaires immobilier)
The aim of this addition is to take into account the development of the real estate professions: the real estate business introducer is the intermediary who puts a developer or real estate agent in contact with potential buyers or tenants for a real estate property.
- Commercial activity and services for vehicle sales (activité et services commerciaux de vente de véhicules)
- Commercial activity and services for food retail (activité et services commerciaux de commerce alimentaire)
- Shared workspace or offices with auxiliary services rental activity (“co-working”) (activité de location d’espace de travail partagé ou de bureaux avec services auxiliaires)
- Commercial activity and services for high-value personal property (activités et services commerciaux de biens meubles de grande valeur)
The issuance of a special business permit for these activities is in the context of the harmonization and bringing it into line with the legislation on the fight against money laundering and the financing of terrorism, to reinforce the traceability of these new categories which are more exposed to such risks (property value/transactions ≥ EUR 10.000, excluding taxes).
The new Article 42ter of the Law sets a transitional period starting 1 September 2023 to come into compliance (particularly the new commercial qualifications) with the new legislative provisions. From that point on, businesses coming within the scope of those activities will have to request a new business permit, even if they already hold one under the earlier rules.
3 - Amendment of Article 4
- Physical presence of the permit holder
The requirement for the physical presence of the “executive” (someone in a managerial capacity) is added to point 2 of Article 4 of the Law as follows “ensures effectively and at all times through physical presence in the establishment the day-to-day management of the business”.
To follow up on the State Council’s comments, the residency requirement for the “executive” to be “in the territory of the European Economic Area” was abandoned in favor of maintaining the executive’s actual presence, as opposed to “a virtual presence”. This addition validates the practice observed by the administration and ends the debate on the executive’s remoteness from his/her place of residence.
- Genuine link with the Luxembourg commercial enterprise
Point 3 of Article 4 of the Law relaxes the requirement for the “executive’s” genuine link with the business. A corporate mandate-holder duly recorded with the Luxembourg Trade and Companies Registry can henceforth hold the business permit.
The goal is to more simply establish the link between the “executive” and the business. Allowing businesses to more freely structure themselves greatly facilitates the beginning or resumption of a structure.
A new Article 4bis to the Law sets forth the number of permits (maximum 2) that an “executive” may simultaneously hold with several artisanal businesses. This limitation does not apply in the context of a group or if the “executive” directly or indirectly holds ≥ 25% of the business’s share capital.
4 - Protect and facilitate the transmission of an existing business
Article 28 (1) para. 2 of the Law’s new version establishes new monitoring and requirements for the issuance of a new permit following a change of the business’s “executive”:
- being up to date on its tax declaration obligation;
- not having debt and social security charges and/or tax debt exceeding the thresholds provided by the Law; and
- being up to date on R.C.S. Luxembourg/RESA filing/publication obligations (particularly with respect to annual accounts) and with the beneficial owner register (RBE).
In the context of an artisanal activity on List A, the text also facilitates the option of temporarily transferring the enterprise’s business permit (following a death, occupational disability, duly documented incapacity or retirement of the “executive”) to a salaried employee having worked at least 3 three years with the business (instead of 10 years previously).
5 - Introduction of the “second chance” mechanism
The objective is to facilitate the right to go into business a second time, as quickly as possible. The business rebound must be facilitated as soon as possible after a failure, thus the legislation sets forth an opportunity for the natural person to take advantage of a renewed trust and allows him/her to start a new activity.
The introduction of this “second chance” for an “executive” involved in the bankruptcy or judicial liquidation in the 7 cases listed in the new Article 7 (natural disaster recognized by the State, loss of an important client, total or partial incapacity to work, pandemic, etc.).
Because of this, the Ministry of the Economy can grant a new permit to any “executive” having the required qualifications to exercise the activity, based on an advisory opinion issued by a commission (the composition and functioning of which are set by Grand-Ducal regulation) charged with evaluating the viability of the planned activity.
6 - Keeping up with technical developments
One of the goals is to develop the business permit with respect to the developments of technological and technical practices. The principle of the permit is maintained but it is simplified thanks to the digitalization of the issuing process (on-line submission via the State exchange portal) and the automatic exchange of certain information between administrations (for example, the automatic exchange between the beneficial owner register (RBE) and the Ministry of the Economy in the context of the fight against money laundering and the financing of terrorism or between Registration Duties, Estates and VAT Authority (AED et de la TVA) and the Ministry of the Economy, etc.).
For example, the new §2 of Article 28 of the Law which imposes the obligation to inform the Ministry of the Economy within 1 month of the subsidiaries or business points of sale. This notification does not give rise to the issuance of an additional business permit when a set operating premises already exists in Luxembourg and already has such a permit. The new subsidiary or point of sale should just be added on line (via the State exchange portal, as is done for the notification).
Bar codes are also put in place to be displayed on the business’s website and at each point of sale to allow each person to verify whether the business complies with the administrative requirements for exercising its activity.
Article 5 of the Law also provides the option to digitally preserve the business’s legal and accounting data with one sole obligation, that of “making it accessible at any time”.
7 - Addition of List C for the simplification of access to certain artisanal activities
The goal to react and adapt to the development of practices and bring a “necessary flexibility for the dynamism” of the artisanal sector, by in particular facilitating the search for an “executive”. Given that the exercise of an artisanal activity included in List C, does not require any particular professional qualification or a financial guarantee, no ceiling for the permit is set and its activities cannot benefit from the additional 6-month renewal for the business permit when an “executive” departs (as is the case for the commercial activitiy and services for the sale of vehicles/ co-working/commercial activity and services for food retail/commercial activity and services for high-value personal property).
8 - Addition and strengthening of instances of failures affecting professional honorability (example of which is the failure to file tax returns for 2 consecutive tax years within a 3-year period, etc.)