What is a business license?
A business license in Luxembourg is an official authorization granted by the State that allows the applicant to exercise commercial, craft or service activities in the country in a legal manner. This license is intended to protect consumers by ensuring that businesses meet certain standards and that their operators have the necessary qualifications, experience and financial resources to carry out the activity in question.
It is important to keep in mind that a business license is only one of the permits that a company may need, depending on the sector and the nature of the company's economic activity, it may require other permits.
Legal framework
The legal framework for business licenses in Luxembourg is clearly defined mainly through the Trade Law of September 2, 2011, and the Law of July 26, 2023:
- Law of September 2, 2011: This law is the main legal framework regulating access to commercial, craft, industrial and some liberal professions in Luxembourg. It defines the requirements and conditions that must be met in order to obtain a license and be able to operate in the country.
- Law of July 26, 2023: this law amends the Commercial Law of September 2, 2011, and modernizes the right of establishment by introducing several important changes for the Luxembourg business sector.
This reform aims to modernize and simplify the local regulatory framework for entrepreneurs with multiple changes. Some of the developments introduced by these reforms include the move to electronic issuance of establishment permits, the introduction of a new post-bankruptcy opportunity regime, the modification of the definition of the actual link between the holder of the establishment permit and the business, the introduction of new categories of business establishment licenses and the specification of qualification requirements for certain business professions.
People concerned
Although this permit concerns a large number of businesses and activities, not all activities require obtaining it. An establishment permit must be requested by those who wish to exercise in a commercial activity, a craft activity, or certain liberal professions of a predominantly intellectual nature, either as a self-employed person or through a company.
There are, however, some exceptions:
- Salaried representatives of self-employed commercial agents.
- Lawyers, doctors, dentists, veterinarians or company auditors.
- People who sell their own products such as handicraft manufacturers.
- EU businesses that supply occasional and temporary services in Luxembourg.
- Those who carry out journalistic activities or books that are not self-published.
If you are not sure whether or not an activity requires an establishment permit in Luxembourg, the best thing to do is to consult the complete list of activities requiring an establishment permit available on Guichet.lu.
What are the requirements to obtain a business license?
To obtain a business license in Luxembourg, it is necessary to comply with several requirements to ensure that the person carrying out the activity has professional integrity and possesses the necessary qualifications, experience and resources to carry out the activity. These requirements are:
- Demonstrate professional integrity: the requirement of honorability is intended to ensure the integrity of the profession and the protection of future contractual partners and clients. Since this issue can be somewhat ambiguous and open to interpretation, the Law of July 26, 2023 mentioned above provided clarifications on this point.According to this law, professional honorability is assessed on the basis of the background of the applicant and on all the information provided by the administrative instruction as far as it refers to events that did not occur more than ten years ago. It is also established that it constitutes an offense against professional honorability any behavior or action contrary to a legal, regulatory or administrative provision in such a way that it is unacceptable for the applicant to exercise the activity in question.In addition, the law establishes a list of offenses that automatically affect professional honorability. These include failure on at least two occasions in the last three fiscal years to comply with the obligations to file and publish the company's accounts and annual financial statements, persistent failure for at least six months to register beneficial owners or the accumulation of substantial debts to public creditors in the context of a bankruptcy or compulsory liquidation order.
- Professional qualifications: a professional qualification commensurate with the intended activity is required to obtain the license for liberal activities requiring a business license and for craft activities except those on list C.
- Establishment in Luxembourg: a business permit is granted only if the person or company has in Luxembourg a physical facility appropriate to the nature and scale of the activity exercised. Commercial companies: these companies must have consistent premises, which may be a warehouse or a store, unless the corporate purpose demonstrates that the intended activity only requires the use of a simple office. Craft companies: the company must have a workshop or a warehouse. Companies providing services: the companies need to have an office. This requirement is imposed to ensure that companies genuinely operate in the country, contributing to local economic development and avoiding abusive practices such as the phenomenon of “mailbox” companies. These companies only register an address in Luxembourg without carrying out any significant economic activity allowing them to benefit from the favorable tax environment without actually contributing to the country.
- Effective and permanent management of the company: It is necessary to demonstrate that the permit applicant has a real link with the company, as owner or authorized representative and that he/she will be permanently responsible for the day-to-day management of the company by ensuring a physical presence on the premises.
- Compliance with fiscal and social security obligations: the company director must not have evaded social and fiscal charges either in his own name or through a company that he directs or has directed.
What is the process for obtaining a business license?
Let's talk now about the business permit application in Luxembourg, the process is straightforward and involves three simple steps: preparing the documents, submitting the application and waiting for the decision. Let's see them in detail.
Step 1 - Prepare the necessary documents
Before applying for a business permit it is important to prepare the following documents:
- Application form: if the application is made online, through MyGuichet.lu the form is filled in directly at the moment of making the application, otherwise it is necessary to download and fill the application form in PDF format.
- Proof of payment: the establishment permit has a cost of 50 euros so it is necessary to attach proof of payment of this fee. This can be done in three ways: By presenting a “Droit de Chancellerie” stamp of 50 euros. By presenting a copy of a bank transfer to the BCEE account LU76 0019 5955 4404 7000 of the Diekirch office - recette-droits de timbre. The proof of payment must include the name, surname and address of the applicant and bear the words “autorisation d'établissement”. Making the payment online during the business license application process through MyGuichet.lu.
- Articles of association: If a company is to be set up in Luxembourg a draft of the articles of association is sufficient for processing, however, the articles of association duly registered with the RCS must be requested before the establishment permit is issued.
- Criminal record: If the manager has a Luxembourg registration number it is necessary to attach the extract from the Luxembourg criminal record less than 6 months old (bulletin no. 3).
- Identity document: it is necessary to attach a copy of the identity card or residence permit on both sides.
- Diplomas and certificates: Depending on the type of activity to be exercised, diplomas or certificates may or may not be required: List C commercial or craft activities: no document is required except for activities in the Horeca, transport and real estate sectors. Craft activities on list A or B and liberal professions: copies of diplomas, a certificate of affiliation to the Centre Commun de la Sécurité Sociale and an EC certificate of conformity with Directive 2005/36/EC of 7 September 2005 relating to activities exercised in the country of origin must be added.
In addition, those who are not Luxembourg residents or have been residents for less than 10 years must also add the following two documents:
- Criminal record: An extract from the criminal record less than 6 months old issued by the State(s) in which the person has resided for the last 10 years or if not possible an affidavit.
- Bankruptcy statement: A statement less than 6 months old made under sworn before a notary providing information about any bankruptcy in which you have been involved either personally, as a trustee or as a person in a position to significantly influence the management or administration of the company must be attached.
Step 2 - Submit the application
The next step is to submit the application, this can be done in 2 ways, the first one which is the most recommended is online through the portal MyGuichet.lu the second one is by sending the application by mail.
- Submission through the MyGuichet.lu portal: this method is the most recommended and has several advantages, the system guides and assists you through the process and based on the information entered, the system determines which documents should be attached to the application.
- Postal mailing: If you opt for a postal mailing, it is necessary to send the completed and signed application form together with the required documents to the following address: Ministère de l'Économie Service des autorisations d'établissement BP 535 L-2937 Luxembourg
Step 3 - Wait for a response
Once all the documents have been sent, the only thing left to do is to wait, the general processing time is three months. If there is no response before the end of these 3 months, a tacit authorization is granted. In the case of applications submitted through the MyGuichet.lu portal, the business permit or the administration's response is received directly on your MyGuichet.lu professional space.
The Luxembourg business license comes with a two-dimensional barcode, this code must appear on letters, emails, websites, quotations, invoices and storefronts, as well as on the signs that must be installed in all establishments.
What about license maintenance and renewal?
The establishment permit does not have a specific expiration date, it is valid as long as the company complies with the legal requirements and maintains its activity in the country. However, it should be noted that the General Directorate for SME, Craft and Retail must be notified electronically or by mail within one month if any of the following events occur:
- Obtaining the guarantee for package travel and linked travel arrangements.
- Establishment of a branch office
- Change of the registered office
- Creation or closure of a point of sale
- Change of habitual residence of the manager.
It is also important to understand that the establishment permit may be revoked in certain cases:
- If the change of habitual residence of the manager is not declared within one month.
- If the license is not used for more than 2 years from the date of issue.
- There has been a voluntary cessation of the activity for more than 2 years.
- There is compulsory liquidation.
- The company went bankrupt.
- There is a loss of professional honorability.
- There is no presentation of the package travel and linked travel arrangements.
Finally, it is necessary to apply for a new license if there is a change or an extension of the corporate purpose or if there is a change of director of the company.
