Business permit (business licence) in Luxembourg: conditions and procedure

Definition: the business permit

The business permit, sometimes called a 'business licence' or 'trading permit', is the administrative act that authorises a natural or legal person to carry on an economic activity falling within Luxembourg's right of establishment rules. It embodies the State's prior control over access to certain professions, with the aim of protecting consumers, contracting parties and the quality of the market.

It is not the same as registration with the Trade and Companies Register (RCS) or the incorporation of a company: the permit concerns the right to carry on an activity, whereas the company is the legal structure that carries it on. In practice, the permit must be obtained before the effective start of the activity, and the permit number is requested by many parties (banks, administrations, clients).

When is the permit required?

In principle, a business permit is required to carry on a commercial or craft activity, an industrial activity or a liberal profession of a predominantly intellectual nature covered by the law.

Activities concerned (examples). Retail or wholesale trade, including an online shop and a marketplace operated on a regular basis; craft trades (construction, food, mechanics, beauty care and other trades); industrial production or processing activity; certain liberal professions regulated by the 2011 law (for example accountant, business adviser, architect depending on the applicable regimes); Horeca activity (with additional sector-specific authorisations: drinks licence, hygiene).

Exempt or out-of-scope activities (examples). Journalism and the activity of an author of a book that is not self-published; school entrepreneurship projects with an educational purpose that do not generate annual turnover of more than EUR 35,000 excl. VAT; professions with their own access framework (lawyers, doctors, health professions and others), governed by specific legislation and professional bodies; certain purely civil or asset-related activities (for example managing one's own private real estate), to be assessed case by case.

It depends in particular on the exact nature of the activity, whether it is regular and profit-making, and its legal characterisation. Where there is doubt, a prior analysis is recommended, because carrying on an activity without a permit exposes you to penalties.

Legal framework

The regime is mainly based on the amended law of 2 September 2011 regulating access to the professions of craftsman, trader and industrialist and to certain liberal professions (published in the official gazette, Legilux). This law transposed the European 'Qualifications' and 'Services' directives and replaced the former 1988 regime.

The competent authority is the Ministry of the Economy, through the General Directorate for Small and Medium-sized Businesses (direction générale des classes moyennes), which processes applications and issues (or refuses) the permit.

The law organises access around three requirements. Professional good repute (honorabilité professionnelle): it aims to guarantee the integrity of the profession and the protection of future contracting parties; it is assessed on the basis of judicial history (in principle facts dating back no more than ten years) and any information arising from an administrative investigation, and must be met by the director in charge of day-to-day management, the holder of the majority of the shares and any person able to exercise a significant influence over the management or administration of the business.

Professional qualifications (where required): they must correspond to the activity concerned and vary greatly from sector to sector. Genuine and stable establishment: the business must have suitable infrastructure in Luxembourg and a director ensuring effective and permanent management, with a genuine presence; a mere sham domiciliation is not enough.

The reform resulting from the law of 26 July 2023, which entered into force on 1 September 2023, modernised and digitalised the procedure, and introduced a second-chance approach after bankruptcy, overseen by a dedicated committee.

Requirements

Obtaining the permit requires several cumulative conditions to be met: good repute of the director, good repute of the influential shareholders, professional qualifications where required, a genuine and stable establishment, a director exercising effective management, tax and social security compliance, and an application made before the activity starts.

Each failure carries a risk, from refusal or withdrawal of the permit to penalties for unlawful practice or for acting as a straw manager (gérance de paille). The table below sets out each condition and the associated risk.

Obtaining the business permit: the procedure step by step

1. Characterise the activity. Determine whether the activity falls within the right of establishment rules and identify the category (trade, craft List A/B/C, industry, covered liberal profession).

2. Check the qualifications. Check whether a diploma, a master craftsman's certificate (brevet de maîtrise) or experience is required, and identify the person who will be the qualified director.

3. Gather the documents (see checklist).

4. Create or use a professional MyGuichet.lu space, with a LuxTrust identification product ('private' or 'pro').

5. File the application online via MyGuichet.lu, or on paper with the Ministry of the Economy, paying the chancery fees.

6. Processing of the file by the General Directorate for Small and Medium-sized Businesses: checks on good repute, qualifications and establishment.

7. Decision: issue of the permit (with a number) or reasoned refusal.

8. Next steps: registration with the RCS, social security registration, VAT registration, any additional sector-specific authorisations, display of the permit number.

Timescales

Theoretical and practical timescale. Once the file is complete, processing generally takes a few weeks (often around three weeks for a simple and complete file). The application is in principle processed within three months of receipt of the complete file; according to Guichet.lu, the absence of a reply at the end of this period amounts to tacit authorisation.

Frequent slowdowns. Incomplete file, good repute documents missing for a non-resident, qualifications needing recognition, in-depth administrative investigation, or an activity requiring parallel sector-specific authorisations.

Advice. The main source of delay is an incomplete file. Preparing all the documents before filing greatly reduces the actual timescale.

Costs

Chancery fees. A fee of EUR 50 is payable when the application is filed (online payment via MyGuichet.lu or a tax stamp for a paper application).

Possible ancillary costs. Declaration of no bankruptcy before a notary (non-residents), translations, recognition of diplomas, legal advice, company incorporation costs.

Indirect costs. Time spent putting the file together and, where relevant, recruiting a qualified director. The direct administrative cost of the permit is modest; most of the start-up budget lies in structuring the business and bringing it into compliance.

Legal risks

Access to the activity carries several risks: carrying on business without a permit, straw manager arrangements, refusal for lack of good repute, inadequate qualifications, sham establishment, tax or social security debts, and a sector-specific activity that is not covered. The table below summarises these risks, their severity, an example and the appropriate prevention.

Penalties for unlawful practice may include fines, closure of the establishment and criminal consequences depending on the case. No outcome can be guaranteed: each situation is assessed in the light of the facts.

Common mistakes

Confusing the business permit with registration with the RCS or for VAT; starting the activity before the permit is issued; underestimating the good repute requirement that applies to influential shareholders, and not only to the manager; using a qualified director as a front without effective management.

Overlooking sector-specific authorisations (Horeca, transport, security and others); filing an incomplete file, the main source of delay; for non-residents, forgetting the declaration of no bankruptcy before a notary.

Three practical cases

Case 1, simple commercial activity (resident). An entrepreneur resident in Luxembourg opens a clothing shop. The commercial activity does not require any specific qualification. She gathers her declaration on honour, her criminal record extract no. 3 and her right of occupancy document for the premises, and files her application via MyGuichet.lu. Complete file, swift processing.

Case 2, cross-border non-resident. A director resident in Belgium wishes to set up a consultancy company in Luxembourg. In addition to any qualifications that may be required, he must provide a declaration of no bankruptcy before a notary, not limited in time or place, and demonstrate a genuine establishment (premises, effective management on site). The main point to watch is substance: the authority checks that management is genuinely exercised in the Grand Duchy.

Case 3, refusal and litigation. An application is refused for lack of good repute because of a recent bankruptcy of a majority shareholder. Depending on the circumstances of the bankruptcy (for example a cause unrelated to the management), the second-chance approach introduced in 2023 may be relied on. Failing that, an appeal against the refusal decision may be considered before the administrative courts, within the applicable deadlines and formal requirements. The outcome depends on the facts and is never certain.

Comparison: regulated and non-regulated activity

The table below compares an activity not subject to qualifications with an activity subject to qualifications (for example List A crafts), on five aspects: diploma required, director profile, complexity of the file, practical timescale and main risk.

Decision tree

1. Does the activity fall within the right of establishment rules (trade, craft, industry, covered liberal profession)? No: no business permit, check any specific regimes. Yes: continue.

2. Is the activity exempt (journalism, author who is not self-published, educational project below the threshold)? Yes: no permit required under this regime. No: continue.

3. Are professional qualifications required? Yes: identify a qualified director or have the experience recognised. No: move on to good repute.

4. Are the good repute and genuine establishment conditions met? Yes: file the application on MyGuichet.lu. No: regularise the situation, consider the second chance after bankruptcy, or seek advice.

Cerno Law Firm's takeaway

The business permit structures access to the Luxembourg market around three consistent requirements: good repute, qualifications and genuine establishment. The procedure is largely digital and, for a complete file, relatively quick. Difficulties arise mainly from incomplete documents, the characterisation of the activity, the substance of the establishment and sensitive good repute situations, particularly after a bankruptcy.

Rigorous upfront preparation, and an analysis tailored to regulated activities or cross-border profiles, secure the project and prevent refusals. The law firm Cerno Law Firm supports entrepreneurs and directors in characterising their activity, putting together the business permit file and, where relevant, appeals. This process is often linked to the choice of company form, SARL or SA.