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04 Sep 2017

Newsflash | New Rules on Immigration

The Law of March 8th, 2017 (hereinafter: the “Law”) amending the law of August 29th, 2008 on freedom of movement and immigration, as amended, implements both Directive 2014/36/UE on the conditions of entry and stay of third-country nationals for the purpose of employment as seasonal workers, and Directive 2014/66/UE on the conditions of entry and residence of third-country nationals in the framework of an intra-corporate transfer (the “Directives”).

The Law aims at improving the Luxembourg economy by encouraging entrepreneurial activities and diversification of investments. Its main objective is to attract foreign capital and enhance mobility of workers and investors.

In this context, the Law created two new specific categories of authorisation to stay which do not exist in any other jurisdiction but the Grand Duchy, namely (i) residence permits for investors and (ii) residence permits for employees involved in a “business continuity plan”. Moreover, in accordance with the Directives, the Law introduced new categories of authorisations to stay, namely (iii) residence permits for seasonal workers and (iv) residence permits in case of temporary intra-company transfers. In addition, several of the existing immigration provisions have been amended for the benefit of third-country citizens who have chosen Luxembourg as their professional destination.

I. Establishment of new residence permits in Luxembourg:

A. Introduction of a residence permit for investors

An independent investor engaging in any of the following investment plans is eligible for a specific residence permit, newly-introduced by the Law:

  1. Investments of at least EUR 500,000 in an already-existing Luxembourg company carrying out commercial, industrial or craft activities. Unless the concerned company was in financial difficulties at the time of investment, the investor must also undertake to maintain and secure all the existing job positions in the company for a period of at least 5 years following the initial investment.
  2. Investment of at least EUR 500,000 in a newly created company in Luxembourg carrying out commercial, industrial or craft activities. The investor must commit to create at least five new job positions within three years from the date of incorporation of the company. Investment of at least EUR 3,000,000 in an investment/management fund or vehicle already existing or to be established and having its head office in Luxembourg.
  3. At least 75% of the above-mentioned investments must be composed of the personal resources/funds of the investor. The remaining 25% may be subject to a loan, the duration of which must not exceed three years. Investment of at least EUR 20,000,000 in cash or securities for a minimum period of 5 years with a financial institution established in Luxembourg.
  4. The investment must be entirely funded by personal resources of the investor, excluding any loan possibilities.

In any case, the company where the investment is made must have solid internal governance and employ more than two employees. Investment in the real estate market is outside of the scope of the Law.

Once issued, the authorisation to stay will be valid for a maximum period of 3 years and is renewable.

B. Introduction of an authorisation to stay for a third-country national as an intra-corporate transferee

The Law has implemented Directive 2014/66/EU, which introduced a new concept of the “intra-company transfer” (ICT).
An ICT is a temporary secondment for a duration of more than 3 months of a third-country national who is seconded by a company established outside the EU to an entity based in Europe. Both companies shall belong to the same group of companies.

This new category of authorisation to stay has essentially been created to facilitate intra-group mobility and hence makes companies more flexible in their distribution of labour and talent within the European Union. It applies only to employees with a certain level of seniority (managers) and to employees with specific professional qualifications and skills (specialists). It may also apply to trainees.

Once issued, this authorisation to stay gives an employee and his/her family members the right to reside and to work in Luxembourg.

The maximum length of validity for such a permit is three years for a permanent employee and one year for a trainee, both renewable on demand.

C. Concept of business continuity plans for non-EU companies

Luxembourg is the first EU Member State to introduce the concept of a “business continuity plan” in the event of a major incident within a non-EU company.

According to the Law, in a case of a serious incident in a third-country which effect a business located there, a residence permit may be granted to one or several employees in order to ensure the continuity of that business in Luxembourg.

The opportunity to continue the business in Luxembourg shall be permitted on the condition that the receiving entity (i.e. the location where the business activity should be pursued) was established in Luxembourg prior to the incident. To fulfil a valid registration, the sending entity must file an application with the Luxembourg Ministry of Foreign and European Affairs describing the business continuity plan, the activity to be pursued in Luxembourg, the identity and functions of the employees to be transferred and the shareholders or other members who have an interest in the entity concerned.

The only purpose of the entity located in Luxembourg is to ensure that the business activity can be maintained or restored on short notice in case of failure of the normal course of activities in the country of origin. If a major incident occurs in the country of origin, additional information is required in order to be able to establish a business continuity plan in Luxembourg. The incident must be described and the tasks to be performed by the transferred employees have to be submitted to the Luxembourgish Ministry of Foreign and European Affairs.

If all the above conditions are fulfilled, the authorisation to stay is granted for a maximum period of one year but renewable as long as the situation remains unchanged and, in particular, as long as the major incident that happened in the third-country continues produce negative effects.

The ministerial authorisation is not required if the necessary period of residence is shorter than three months per calendar year. However, the third country national must make a declaration of arrival in his/her commune of temporary residence.

D. The new seasonal workers’ regime

In compliance with Directive 2014/36/EU, a new category of “third-country seasonal worker” has been added to the list of employees who may apply for an authorisation to stay in Luxembourg.

The term “seasonal worker” means a third-country national who retains his/her principal place of residence in a third country and stays legally and temporarily in Luxembourg to carry out an activity dependent on the passing of the seasons, under one or more fixed-term employment contract(s) entered into directly between that third-country national and the employer established in Luxembourg.

The term “activity dependent on the passing of the seasons” means an activity that is tied to a certain time of the year by a recurring event or pattern of events linked to seasonal conditions during which required labour levels are significantly above those necessary for usually ongoing operations. The eligible sectors are listed in the relevant Grand-Ducal regulations.

In order to be entitled to such authorisation to stay, the seasonal worker or his employer must provide a valid employment contract with a Luxembourg entity, a proof of adequate accommodation and evidence of health insurance cover.

The seasonal worker permit is granted for a maximum period of five months over a reference period of one year.

II. Amendments of certain already-existing immigration provisions:

In addition to the innovation in terms of additional categories of residence permit, the Law provides various amendments to the current immigration provisions, which can be summarised as follows:

  • The Law facilitates the application by students to obtain a residence permit as self-employed persons or as employees by allowing them to apply directly from Luxembourg instead of them being obliged to return back home to make such application. This opportunity is provided for students who have completed their university studies with the territory of Luxembourg.
  • Finally, the Law extends the period of validity of the European Blue Card from two to four years. As a reminder, the European Blue Card has been introduced in Luxembourg in 2011 to ensure equal pay and working conditions as well as access to basic socio-economic rights for highly-skilled third-country graduates or employees who may wish to reside in Luxembourg.