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$Unique_ID{COW02259}
$Pretitle{427}
$Title{Luxembourg
Chapter 2A. Business regulation, Part 1}
$Subtitle{}
$Author{Board of Economic Development}
$Affiliation{Chamber of Commerce}
$Subject{law
permit
des
luxembourg
qualification
special
conditions
trade
case
de}
$Date{1990}
$Log{Industrial Park*0225901.scf
Table 4.*0225901.tab
Table 5.*0225902.tab
}
Country: Luxembourg
Book: Investment in Luxembourg
Author: Board of Economic Development
Affiliation: Chamber of Commerce
Date: 1990
Chapter 2A. Business regulation, Part 1
[See Industrial Park: Courtesy Embassy of Luxembourg, Washington DC.]
Concept of trader
A trader ('commer/cant') means any person who, in the capacity of
principal or agent, earns his living by engaging in trade or industry.
Except where otherwise provided by law on grounds of incapacity or
incompatibility, a national of Luxembourg or of any other country can be a
trader.
Under Luxembourg law, the status of trader has three main consequences.
1. Disputes between traders are settled before a special court acting
under simplified rules of procedure.
2. Only a trader can be declared insolvent, the effect of which is
dispossession of his assets and the liquidation of his enterprise by the
court.
3. A trader is subject to a number of special provisions governing
economic activity they include rules on proof, advertising, accounts,
competition and so on.
Legal form
An individual may trade in either of two legal forms: as a sole trader -
which is best suited to smaller businesses - or as a company, of which there
are six different types. Foreign enterprises may also establish a subsidiary
in Luxembourg without a separate legal identity, or simply take orders via a
foreign representative, sent for the occasion, and not even domiciled in
Luxembourg.
2.1. Establishment permit
2.1.1. The principle of freedom of establishment
Under the constitution of 1868 and its underlying principles, every
citizen of Luxembourg is guaranteed freedom of trade and of industry as well
as freedom of establishment. Under the Treaty of Rome of 25 March 1957, these
rights are also secured to the nationals of the twelve Member States of the
European Economic Community and to any other aliens who are nationals of a
country which grants reciprocal arrangements to citizens of Luxembourg.
2.1.2. Activities subject to regulations
For the purposes of administrative policy and in the interest of
industrial and commercial enterprise, legislation has been enacted laying down
the conditions for entry to and exercise of certain trades and professions and
for the creation and management of undertakings.
The Law of 2 June 1962 as amended by the law of 26 August 1975 makes all
industrial and commercial activity subject to a Government permit in writing.
A permit is also required for any alterations or additions to the object or
structure of an undertaking for which a permit has been granted, and for any
change of location.
Activities subject to regulation
These regulations cover especially:
- traders, tradesmen and manufacturers,
- representatives, agents on commission and commercial travellers, and
- self-employed craftsmen, independent architects, engineers and auditors
Holding companies do not need to obtain a permit.
Banking, savings and credit institutions (see chapter 214) as well as
pharmacists, wholesale dealers in pharmaceutical products, distillers and
insurance companies and their agents do not require the permit provided for
under the 1962 Law but they are subject to special and stricter regulations.
Persons who have not settled in the Grand-Duchy but go there from time to
time in order to solicit orders or do business in any of the ways mentioned
are also subject to permit. Proof of professional qualification is only
required in the case of handicraft work.
2.1.3. Conditions for the grant of an establishment permit
The permit is issued by the Ministre des Classes moyennes on the
recommendations of two separate committees, one of which considers the
applicant's qualifications and the other his professional good standing.
It is personal to the licensee and can be revoked on substantial grounds.
It is normally valid for an indefinite period. However, it ceases to be valid
if it is not used within two years of its date of issue, or if trading ceases
voluntarily for more than a year. The permit is compulsory for both natural
and legal persons. In the case of the latter application must be made by the
manager or the managing director in his own name and in that of the company.
In the event of a decision by the Minister refusing or
revoking a permit, an appeal may be lodged before the Council of State within
one month immediately following notification of the decision.
Substantive conditions
In applying for a permit, a natural person must produce certificates of
good standing and professional qualification.
Legal persons (corporations, etc.) must apply for a permit in the same
way as natural persons in the case of legal person the above conditions must
be satisfied by the board. For this purpose the professional qualifications
need only be met by the head of the undertaking or the individual responsible
for its management or control. The same provisions apply to subsidiaries of
foreign companies.
Evidence of good standing is normally provided by a certificate of
solvency. In certain circumstances, the advisory committee may also require a
certificate of good character and of a clean record from the police.
In the commercial sector, qualification is normally demonstrated by the
Certificat d'Aptitude Technique et Professionelle (CATP) certifying the
completion of a theoretical and practical apprenticeship in the trade for
which an application is being made. If the applicant does not satisfy this
qualification he may prove his professional qualification with another diploma
supported by practical experience in another business in the same industry.
The minimum length of such experience varies according to the level of
education followed:
[See Table 4.: Education Levels]
A ministry committee may certify that an applicant with no educational
qualification meets the qualification requirements after three years'
practical experience.
The Ministry may grant a dispensation from qualification requirements in
the case of an applicant proposing to open or take over a small business with
limited resources and restricted premises - normally employing only himself.
In the hotel and restaurant trade, professional qualification is usually
the result of training in the industry, and the Diploma of the Ecole
Hoteliere de l'Etat or a CATP. Failing such training, an alternative diploma
plus practical experience may demonstrate qualification.
In the licensed trade the applicant may produce evidence of training in
the hotel and restaurant trade, or gain practical experience for a certain
time in licensed premises, or finally, pass the final test of the accelerated
course organized by the Chamber of Commerce.
Self-employed representatives must have a normal trading permit salaried
representatives must obtain a representative's card (Carte de representant),
which is issued by the Ministere des Classes Moyennes in the same way as an
establishment permit, except that no evidence need be produced of professional
qualification.
For the road transport industry (goods and passengers) a number of
special conditions are laid down by the Law of 17 November 1978.
Except in the case of enterprises in the building industry, no
qualification is required for industrial activity, an expression which
includes establishments engaged in a complete manufacturing process and, in
consequence, operations on a fairly substantial scale. Nor is any
qualification required from hirers of plant for industria