On 8 April 2022, the Ministre des Classes Moyennes presented the draft law 7989 (the "Draft Law") aimed at amending the law of 2 September 2011 regulating access to the professions of craftsman, trader and industrialist and to certain professions.
Ten provisions characterise the Draft Law to encourage the entrepreneurial spirit and to simplify business creation.
For the purpose of this paper, we will focus on a proposal to simplify the requirements for the holder of the business license.
Simplification of the business license holder requirements
Today, the holder of the business license must ensure the effective and permanent management of the company's affairs. In this respect, the practice is to designate as the holder of the business license a person who resides permanently on the territory of the Grand Duchy of Luxembourg and who has a real link with the company in his capacity as owner, partner, shareholder or employee.
There is, however, a tolerance on the part of the Ministre des Classes Moyennes consisting in extending this geographical residence requirement to what is commonly called the "Grande Région". This means that the residence cannot be located beyond the “Thionville basin” (bassin thionvillois) for France, in a small part of the Saarland for Germany, and as far as the Arlon region for Belgium.
If the Draft Law is adopted, the major change will be to consider the management as effective, even if the holder of the business license does not reside in Luxembourg but in another State part of the European Economic Area under the condition that he can demonstrate a regular and effective presence in the Luxembourg establishment.
In the current state of the Draft Law, there is no indication of what will or not characterise the justification of an effective and regular presence in the establishment located in Luxembourg. Accordingly, unless the Draft Law is amended to give some precision as to this issue, it will take some time in practice to determine what is considered as constituting this double condition within the Luxembourg establishment.
Furthermore, the Draft Law in order to reinforce the direct relationship between the company and the holder of the business license provides that only the owner of the company can be the holder of the license if the activity is carried out in his personal name, or if the activity is carried out in the corporate form the person shall be a registered person (mandataire) in the Luxembourg Commerce and Companies Register.
A significant change is made by the fact that it will no longer be necessary to be a partner, shareholder or employee to hold a business license following the adoption of the Draft Law. In addition, the Draft Law intends to establish more directly the link between the director and the company in order to avoid more effectively the recourse to intermediaries that could sometimes be the case. However, this last argument must be tempered by the fact that the use of intermediaries is an outmoded practice. Indeed, the persons who proposed to hold a business license and to ultimately bear all the responsibilities and risks attached to the daily management on behalf of a third party, without being an effective and decisional body of the company, are in the minority and nowadays tend to completely disappear, while this practice, if not qualified as illegal in the strict sense of the term, had the effect of circumventing the regime in place.
Persons who proposed to hold a business license on behalf of a third party not located in Luxembourg, even if they were registered as a management body of the company, as a shareholder or as an employee delegated to the daily management, never effectively performed the prerogatives attached to their function.
Finally, the restriction of recourse to intermediaries proposed by the Draft Law is not as revolutionary as it seems, since the practice it seeks to limit is already destined to disappear.
French version: Projet de loi n° 7989 - Nouvelle disposition proposant d'élargir la zone géographique pour le titulaire de l’autorisation d’établissement