Starting a company in the Grand Duchy implies several stages, among which is obtaining a business license in Luxembourg.
Below, our lawyers in Luxembourg explain the conditions for obtaining a trading license in Luxembourg. Should you open a company in an industry that requires this step, feel free to contact us for support.
The application procedure for obtaining a business license in Luxembourg
The following documents must be submitted along with the request for the trading license in Luxembourg:
- the professional qualification documents providing the fact that the entity is allowed to perform that activity;
- the documents which attest the professional integrity, a copy of an ID, proof of payment of the stamp duty (either a tax stamp or a proof of payment deposited in a specific account), in the case of a natural person;
- a draft of the articles of association if the entity is a company.
The documents must be elaborated in German, French, or English or accompanied by a translation in one of these languages. The application may be submitted through email or by standard mail to the General Directorate for SMEs and Entrepreneurship in Luxembourg.
Usually, a business permit in Luxembourg is no longer valid if:
- it has not been used for 2 years;
- the activity of the company ceased for more than 2 years;
- the entity is liquidated or if the business is bankrupted.
The holder of the permit can request a new one if the company’s activities have changed, if the company has new directors or if it opens a branch in Luxembourg.
Certain business activities are regulated differently and individuals who perform them will need to obtain special permits and licenses. This applies to:
- self-employed individuals for performing trade activities;
- lawyers, doctors, dentists, statutory auditors: these are liberal professions that may be subject to additional laws and requirements;
- craftspeople and those who sell their own products are not required to have a business permit to trade their products but they must obtain this document if the items are sold in fairs and markets.
Who needs to obtain a Luxembourg business license?
Companies in Luxembourg will need to obtain certain permits for trade and other activities after they are incorporated. Most commercial, crafts, and certain professions in Luxembourg are subject to specific registration requirements also. A trading license in Luxembourg is required for any person or entity wishing to:
- conduct a business (trade, transport, catering);
- carry out an artisanal activity;
- complete an industrial activity;
- for the exercise of certain professions (architect, engineer, accountant, economic counselor, patent attorney, surveyor).
A license is also required in the following cases:
- a change or extension of the corporate purpose;
- a change of the company manager;
- transfer of a business from one municipality to another;
- when creating a branch.
The change of the legal form and/or the name of a legal entity does not require a new license but must be notified to the Minister within one month.
Artisans and manufacturers need to submit an application for receiving a business permit for skilled craftsmen. The application for this type of business is submitted to the General Directorate for SMEs and Entrepreneurship.
Changes in the business licensing regulations in Luxembourg
In 2023, an important change to Law No. 2 of 2011 was brought by the Parliament. The act that covers the activities of craftsmen, traders, industrialists, and certain liberal professionals has undergone 3 alterations:
- the first one refers to business license holders who no longer need to be shareholders, partners, or employees in a Luxembourg company;
- the second one refers to the possibility for applicants to benefit from a “second chance principle” when going bankrupt;
- the third one provides for the possibility to apply online for a business license in Luxembourg.
Our lawyers in Luxembourg can offer additional information on the new law that has already entered into effect.
Who can apply for a trade license in Luxembourg according to the new law?
One of the main changes covered by the new law refers to the relationship between the person applying for a business license in Luxembourg and the company operating under it. According to it, the permit holder can now be a representative and not necessarily a shareholder or employee of the respective enterprise. His or her name will need to be recorded with the Trade Register.
Another requirement implies for the business license holder to be present on-site and to ensure he or she can complete his/her operations on a daily basis.
If you are interested in applying for a trading license in Luxembourg under the new conditions, you can rely on our law firm for guidance.
Considerations when applying for Luxembourg business licenses
The business permit in Luxembourg is granted to individuals who meet the dual requirement of good repute and professional qualifications. If the applicant is a corporate body, its officer or officers must meet this dual requirement.
The repute is evaluated on the basis of the criminal record. All evidence must be provided by the administrative investigation while the qualification is assessed based on:
- diplomas;
- certificates of course attendance;
- certificates of affiliation to social security;
- the certificates issued by the Member States of the European Union, in the case of foreign companies.
There are several exceptions applicable in certain conditions when the Ministry may exempt the applicants to prove their qualifications. This is the case of opening a small local trade if it proves that it is conducted by one person assisted by family members.
The request for a trade license in Luxembourg can be made at the Chamber of Commerce through the one stop shop initialized by it or by mail to the Department of Small and Medium Sized Businesses with the help of our Luxembourg lawyers.
If the application is submitted online, the system will provide all the requirements for documents according to the candidate’s profile. A pre-filled business permit application form is generated in the first instance, followed by a detailed list of all the documents required for registration. The pre-filled business permit application form must be signed electronically and validated and re-send in the system.
After that, a pre-filled affiliation form to the Social Security Administration is released and a pre-filled VAT registration form which must be signed and submitted via the one stop shop or the traditional post office.
Industries that require special licenses and permits in Luxembourg
Anyone who wants to perform the following professional activities as an individual or under a Luxembourg company must obtain a business permit:
- crafts activities such as: food, fashion, construction, mechanical engineering, audiovisual, entertainment, art, etc.);
- certain liberal professions that are primarily intellectual in character;
- commercial activities such as: trade, HORECA (hotel, restaurant and café), transportation, industry, etc.;
- special industries such as telecommunications, finances, banking, investment, investment management, and insurance are subject to specific laws and special licensing requirements.
The procedure of obtaining a special license in Luxembourg is not complicated, however, it must be approached with care in terms of documents. For this purpose, you can rely on our law firm in Luxembourg.
Special business permits for foreign citizens/companies with operations in Luxembourg
EU companies do not need a business license to provide temporary services in Luxembourg. However, skilled producers and artisans must notify the General Directorate for Small and Medium-Sized Enterprises in advance of their activities.
Non-EU nationals who desire to establish themselves as independent contractors in Luxembourg must submit both their application for a stay authorization and their business permission. By doing this, they only need to submit one dossier to the Ministry of Immigration, which then gives the General Directorate for Small and Medium-Sized Enterprises control of the business permit section.
Apart from this, please mind that, as a non-EU citizen, you will also require a residence permit for immigration to Luxembourg, even for temporary relocation.
Requirements when applying for a Luxembourg trade license
Companies or tradespeople who apply for Luxembourg business permits must meet the requirements listed below:
- they must have professional integrity;
- they must also submit evidence of professional competence based on the selected activity;
- compliance with tax and business requirements: regardless of whether the business activities were carried out in their own name or through a company, the manager must not have evaded tax or business obligations in the past or at the moment;
- they must have a legal establishment in Luxembourg.
The business permit is granted only if there is a physical location in Luxembourg with infrastructure appropriate for the scope and nature of the relevant activity, as well as effective and ongoing management of the business by the permit holder.
Applications are usually processed within 3 months. After getting the Luxembourg trading license, all correspondence, including letters, mail, emails, websites, invoices, and other official documents must include the authorization number.
You can get in touch with our Luxembourg lawyers for support in filing your application.
The ‘second chance’ principle in Luxembourg
Until the 2023 law came into effect, Luxembourg business license holders could no longer apply for such permits if they went bankrupt. However, the new regulations enable certain people to benefit from a second chance to complete a new activity even after undergoing bankruptcy with another company.
To obtain a new trade license in Luxembourg, bankruptcy must have been covered by one of the following grounds:
- the business was destroyed by a natural disaster that was acknowledged by the local council or by the government;
- the business’ equipment of place of activity was destroyed unintentionally;
- the company lost an important client or a large public work project leading to its closing;
- in the case of sole traders, the person lost his/her capacity to work or manage the business;
- pandemics;
- market disruptions leading to the business to file for bankruptcy.
Our lawyers in Luxembourg invite you to watch a video about the mandatory permits and licenses:
Types of businesses operating in Luxembourg
According to recent data centralized by an external aggregator, at the level of July 2024:
- there were 142,824 companies registered in Luxembourg;
- 6,417 were retail trade operators;
- out of these, 87,034 operate in the finance, insurance, and real estate sectors;
- other 31,163 operated in the services industry;
You can contact our law firm in Luxembourg for help in applying for a business permit and obtaining all other additional licenses for performing various business activities.
If you need to obtain permits and licenses for your business in other countries, such as Georgia or Russia, you may contact our local lawyers.