The Business Permit as a Safeguard for a Healthy Economy
Natalia ZuvakAugust 14, 2023
The Business Permit as a Safeguard for a Healthy Economy
With a thousand years of history, first officially mentioned in 964, Luxembourg has always been a geopolitical battleground for its powerful neighbors.
The Luxembourg people and their elites have nevertheless always been guided by the pragmatism and challenges of successive eras, favoring diplomacy over force.
Thousand years later, the Grand Duchy of Luxembourg has created a modern economy whose consecration lies in its recognition as a global financial center. If Luxembourg’s modesty does not seek recognition through the noisy subjugation of its neighbors, then this state, the heart of many European institutions, certainly does not deserve to have to constantly defend itself against external attacks whose sole aim is defamation.
As the Grand Duchy of Luxembourg has been the target of a multitude of attacks in recent years, especially because of the large number of companies setting up there, the question that immediately springs to mind is whether anyone can really set up in Luxembourg.
Now that the law of July 26, 2023 amending the amended law of September 2, 2011 has recently been passed, we take this opportunity to remind you that in the Grand Duchy of Luxembourg, anyone wishing to carry on a commercial, craft or industrial activity must obtain a business permit. Consequently, we will remind you the conditions for obtaining it, and the sanctions for those who risk ignoring it.
When to Apply for a Business Permit
Unlike France, Belgium, and Germany, which allow company formation in 48 hours, Luxembourg prioritizes people over capital. The Ministry of the Economy carefully evaluates each business manager's identity, background, and intent.
A business permit must be requested before forming a company. Draft articles of association must be submitted with the application.
Who Can Be Granted a Business Permit?
Only individuals (usually the future manager) may apply. Legal entities cannot obtain permits.
Requirements:
- Professional qualifications & integrity
- Effective and permanent business management
- Must be the actual business owner
- No history of tax or business fraud
- Must not represent a regulated profession unless separately certified
Having an Infrastructure in Luxembourg
Applicants must provide proof of a fixed place of business in Luxembourg. The premises must suit the business activity, and the manager must be regularly present.
Processing Time
The Ministry has 3 months to approve or reject the application. No response = tacit authorization.
What About Luxembourg Residents Doing Business Abroad?
Luxembourg residents must still apply for a business permit even if:
- the activity is abroad
- the company is registered abroad
Failure to do so is illegal and subject to prosecution.
Sanctions
Operating without a business permit can lead to:
- 8 days to 3 years of prison
- €251 to €125,000 in fines
Examples of Situations
Example 1: Criminal Record
Dr. Rupert Umwelt, convicted in Germany for environmental fraud, is denied a permit.
Example 2: Remote Manager
Prudence's father, residing in Australia, cannot manage her Luxembourg company remotely.
Example 3: Not the Real Owner
Mrs. Generosità applies for a permit on behalf of her sons. Rejected, as she has no ownership.
Example 4: Tax Avoidance
Mr. Dutyfree has unpaid taxes in 3 countries. Automatically disqualified.
Example 5: Unauthorized Profession
Britney wants to practice law with no law degree. Denied due to regulation.
Example 6: No Real Infrastructure
Mr. Schenker only has a mailbox address. Rejected.
Example 7: Activity Abroad
Christophe manufactures surfboards at home for French clients. Needs a permit.
Example 8: Foreign Entity
Greta Grün sells 90% of her products in Luxembourg through a Swedish company. Needs a permit.
Conclusion
Far from being the “Wild West,” Luxembourg is a mature state ensuring compliance, credibility, and responsibility in business. The business permit system is a protective filter, not a barrier.
Need help applying for a business permit? Our team is here to assist you.