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In brief

On 20 July 2023, the Luxembourg Parliament adopted a law reforming the right of establishment in Luxembourg (“Reform“). It amends the Luxembourg law dated 2 September 2011 regulating access to the professions of craftsperson, trader, manufacturer and certain liberal professions as amended (“Business License Law“).

The Reform aims to adapt the Business License Law to embrace the changes in the regulatory, economic, technical, technological, entrepreneurial and artisanal environments and to stimulate entrepreneurship.

As the State Council waived its second constitutional vote on 21 July 2023, the Law will enter into force on the fourth day following that of its publication in the Luxembourg official gazette. However, a transitional period of two years from 1 September 2023 is granted to any business license holder to comply with new Articles 8ter to 10 of the Business License Law as amended by the Reform.

The purpose of this alert is to outline the key features of the Reform.

For further information on what these developments mean for you or your organization, please get in touch with your usual Baker McKenzie contact.

Key takeaways

The business license holders must meet the following new cumulative conditions (new Article 4 of the Business License Law as amended by the Reform):

  • They must meet the requirements of professional qualification and good repute.
  • They must ensure the effective and permanent management of the company. The Reform clarifies that to meet that condition, they are supposed to be physically present in the establishment. Before the Reform, this was in any event the common practice of the General Directorate for Small and Medium-Sized Enterprises (Department for Authorizations of Establishment).
  • They no longer need to be a partner, a shareholder or an employee of the company, but they must have a real link with the company. Such a real and effective link between the business holder and the company is materialized in the following two cases: either the holder of the business license is the owner of the company (if he/she carries out his/her activity in his/her own name) or he/she is registered as the company’s representative in the Luxembourg trade and companies register if the business is a commercial company. An employment contract will no longer be required. This amendment is welcomed given the confusion that was encountered due to the former requirement.
  • They have not evaded social security and tax charges, including withholding taxes, either in their own name or through a company that they manage or have managed.

The Reform further adds the following disqualifying criteria to the assessment of professional integrity:

  • Not complying on at least two occasions during the last three financial years with the filing and publication obligations arising from the amended law of 19 December 2002 concerning the Luxembourg trade and companies register, as well as the accounting and annual company accounts (“RCS Law“).
  • Persistently failing over a period of at least six months to register as required by the amended law of 13 January 2019 establishing a register of beneficial owners (“RBE Law“).
  • Failing to file direct tax returns, including withholding tax returns, or indirect tax returns relating to two subsequent financial years over a three-year period.
  • Concealing part of the liabilities from or exaggerating the company’s assets to (i) a new manager who must endorse the business license, (ii) the holders of the majority of the shares or (iii) the persons in a position to exercise significant influence over the management or administration of the company.

Additional conditions to be met in the case of a change of business license holder

If a company makes a new request after changing business license holder, the minister will only issue a business license if the following conditions are met:

  • The company does not have excessive social security and tax debts.
  • The company is up-to-date with its tax declarations.
  • The company is up-to-date with the filing and publication obligations arising from the RCS Law and registration required by the RBE Law.

Events to be notified and practical implications

The following events, among others, must be notified to the minister responsible for granting business licenses via the State exchange portal:

  • A change of the business license holder’s habitual residence has been declared within one month: Failure to declare that change constitutes a new ground for the business license to become void.
  • The creation of any branch within the month of the branch’s creation: The Reform clarifies that the notification does not give rise to the issuance of an additional business license if a fixed place of business already exists in the Grand Duchy of Luxembourg.

Facilitating the business transfers

The business license could be transferred on a provisional basis to a person who has been employed for at least three years (against 10 years currently) within the company in the event of death, professional disability, duly established incapacity or retirement of a company’s manager under a craft activity set out in part A of the list of craft activities (e.g., baker, caterer, etc.).

This would require this person to acquire the qualification required for the profession exercised by the company within five years.

New chance

Although the conditions to hold a business license have been strengthened, the Reform also introduces a “new chance” for an entrepreneur who faced bankruptcy to obtain, under certain conditions, a new business license.

In such a case, the granting of a new business license is subject to the following:

1. Proof provided by the person concerned that the bankruptcy in which they were involved was due to one of the following reasons:

  • A natural disaster that has been recognized as such by the government
  • The involuntary destruction of the place of production or the production tool
  • The loss of a prominent client
  • A major public work site (chantier de travail public d’envergure)
  • The manager’s medically certified partial or total incapacity for work
  • A pandemic recognized as such by the government
  • A loss of profitability following major market disruption (assuming, in this case, that the bankruptcy was declared following a self-declaration by the bankrupt person or entity)

2. The obtention of a payment agreement from the public creditors to settle the debts outstanding if the amounts exceed the following thresholds:

  • For value-added tax, it is set at 1% of the net amounts actually paid during the last five financial years.
  • For direct taxes, the same threshold is applied as for value-added tax.
  • For social contributions, the threshold corresponds to the equivalent of four months of contributions as determined by the Luxembourg social security institution (Centre Commun de la Sécurité Sociale).

However, no payment agreement is required if the amounts of the outstanding debts are below the above-mentioned thresholds.

The minister makes his new chance decision after an advisory opinion has been given by a new chance commission (whose composition and functioning will be further determined by a grand ducal regulation) convened on the minister’s initiative to assess the viability of the proposed activity.

Supervision of certain activities that are developing

  • A specific business license will now be required to rent shared offices and/or shared workspaces. A regular business license for commercial activities and services will no longer be sufficient to carry out such an activity.
  • Short-term rental activity meeting a certain threshold of overnight stays will be monitored, by trying to apply the health and safety requirements in place in the hotel sector. The accommodation operator (l’exploitant d’un établissement d’hébergement) will have to successfully complete accelerated training within six months after reaching the threshold of 90 overnight stays over one year.
  • To carry out their activity of connecting a real estate agent or a real estate developer and any other person wishing to sell or rent real estate, the real estate business providers (apporteurs d’affaires immobiliers) will have to complete the same specific training as the real estate agents, property managers, condominium trustees and real estate promoters.

Digitalizing and strengthening consumer protection

The business license is issued (i) following a request and (ii) following an administrative instruction demonstrating that the relevant conditions set out in the Business License Law as amended by the Reform have been met.

The terms of the administrative instruction and the documents to be produced will be further determined by a grand ducal regulation.

The business license will only be issued by online transmission on the dedicated State exchange portal. It will be available online for the public on this same portal.

A two-dimensional barcode will be assigned to each business license. The two-dimensional barcode must be displayed on the company’s website and at each point of sale to grant consumers real-time access to information relating to the professional qualifications contained in the business license, as well as to the validity period of the business license.


Jean-François Findling is a founder and the managing partner of the Firm’s Luxembourg office. Prior to joining Baker McKenzie, he established his own law firm in 2009 and was a partner in a leading Luxembourg firm. Mr. Findling is regularly recommended by Legal 500 for his extensive experience in mergers and acquisitions and private equity.


Elodie Duchêne is a partner in the M&A and Corporate practice groups of Baker McKenzie's Luxembourg office and has more than 16 years of experience. Prior to joining the Firm in 2015, she worked for an independent law firm in Luxembourg for nine years.


Jean-François Trapp is a partner in the Real Estate team of the Baker McKenzie Luxembourg office. He has more than 20 years' experience in Luxembourg law. Prior to joining the Firm, he was a partner in a Luxembourg law firm where he headed the Real Estate department and co-led the Banking & Finance department. In 2007, he co-founded the Luxembourg law firm Roemers Trapp Pautot, a niche firm focusing on the real estate, real assets and infrastructure sectors.


Annie Elfassi is the Partner in charge of the Litigation and Employment departments of Baker McKenzie's Luxembourg office. She has over 19 years of experience. Prior to joining the Firm in 2019, Annie Elfassi was a member of the Litigation and Risk Management practice and headed the Employment department of a leading law firm in Luxembourg.

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