COVID-19: Emergency allowances for micro-enterprises

By Grand-Ducal Regulation of 25 March 2020, the Luxembourg Government set up an emergency allowance for micro-enterprises which have been forced to close their establishment or to stop their activity following the measures taken within the framework of the fight against Coronavirus.

The allowance is eligible to the following businesses:

  1. i) micro-enterprises with less than 10 employees and a turnover or an annual balance sheet of less than 2,000,000 euros
  2. ii) with an annual turnover which is equal to or greater than 15,000 euros

iii) that are in possession of a valid business license (autorisation d’établissement)

Certain sectors such as fishing and agriculture are specifically excluded.

Are also excluded employers who have been convicted twice for violating the provisions regarding clandestine work and companies that do not comply with the limitations of economic activities taken in the context of the fight against Coronavirus.

Eligible companies will be entitled to a single flat-rate allowance of 5,000 euros.

This allowance can be combined with other financial aids, without however being able to exceed certain thresholds foreseen by EU law.

For any questions do not hesitate to contact us.

 

Self-employment in Luxembourg for third country nationals

The Grand-Duchy of Luxembourg, known, among others, for its stability and strong financial industry, has become a destination of choice for business over the years.

Nationals from an EEA country as well as Swiss nationals only have to fulfill very few conditions to open a business or become self-employed in Luxembourg (at least from an Immigration Law point of view).

The conditions are more restrictive for third country nationals.

The self-employment permit for third country nationals is subject to the following requirements:

  • The person must provide evidence that he/she is in possession of the professional qualification for the given activity,
  • He/she qualifies for a business license (if the activity is subject to such business license)
  • That he/she is in possession of sufficient resources to exercise the contemplated activity,
  • that the exercise of the given activity serves the interests of the country.

The interests of the country for the contemplated activity are assessed in terms of economic utility, ie:

  • a response to an economic need,
  • the integration of the activity in the national or local economic context,
  • the viability and sustainability of the project,
  • job creation,
  • investment (especially in research and development),
  • innovative activity or specialization,
  • or in terms of social or cultural interest.

Once the application has been approved, the third country national can request the self-employment permit if he/she proves to have an appropriate accommodation.

It should finally be noted that a director or manager of a Luxembourg company holding a business license or an agreement delivered by the Ministry, shall request a self-employed permit in case he/she is the legal representative of the company without relationship of subordination towards the company.

If this director or manager has a relationship of subordination towards the company and has concluded an employment agreement, he/she shall apply for a specific employment work permit (which is subject to other requirements both for the application and the company).

Please do not hesitate to contact us for any further questions.

European Anti Dumping Regulation: Latest developments

This article shall briefly explain the current climate in the European Union (“EU”) and apposite European Economic Community (“Community”) with regard to dumping legislation, inclusive of contemporary decisions which have attempted to address how intra-Community markets should indemnify EU industry from, inter alia, mass imports from foreign enterprise which could adversely affect Community industries.

Like most state systems, the EU region has developed measures for counteracting excessive intrusion from third-party providers/sellers that would have a significant effect on its industries. Rules regarding tariff and other measures were passed with respect given to World Trade Organisation (“WTO”) counterparts, most prevalently Article VI of the General Agreement on Tariffs and Trade (“GATT“), which attempts to define the principles and circumstances within which investigations, duties and remuneration for damage to business may be pursued. GATT rules attempt to ensure fair competition between state and third-party actors without unnecessary duties; the EU incorporated WTO articles to require investigations into anti-dumping be applied only as a matter of last resort, and when [EU] regional industry was suffering particular disadvantage via the predatory pricing of third-party goods, this in respect of pricing in their respective home markets.

What is dumping?

Dumping takes place when a third-party provider (in this, case a foreign enterprise outside the EU) sets the price of product for export at below the value of the product on its domestic market, thus giving the export an unfair advantage in its destination market.

World Trade Organization (WTO) law

Under WTO Law, dumping is considered an unfair trade practice which importing countries can counter by introducing an antidumping duty, as long as they prove: (1) the existence of dumping, (2) the existence of serious injury to the domestic industry, and (3) a causal link between dumping and that injury. As the EU is a signatory to GATT, its legislation uses its international treaty mechanisms as a model for its regional anti-dumping instruments.

EU Legislation

Current domestic measures pertaining to anti-dumping legislation can be found under the heading of Council Regulation 2016/1036 (hereafter “the Dumping Regulation”), which also sets out criteria within which anti-dumping duties may be addressed. Under Article I of 2016/1036, Dumping will have to have been shown to exist – i.e. the good in question will be shown to be less than a comparable price for a like product, in the ‘ordinary course of trade’, as established for the exporting country.

As part of GATT, anti-dumping investigations are to end immediately in cases where the authorities determine that the margin of dumping is insignificantly small (defined as less than 2% of the export price of the product); In other words, the price difference of the good in question has to have been shown to be significant enough to warrant anti-dumping measures. EU legislation reiterates that the volume of goods imported cannot be shown to be negligible (de minimis), and further states that the interest of the Community, i.e. the costs of taking measures must not be disproportionate to the benefits.

Finally, the causal link between harm to the industry and the imports in question must be proven to exist, this to satisfy both EU and WTO rules. There are rules governing what form or amount anti-dumping duties can take under the Regulation and WTO.

Current trends

The uptake of the codified Council Regulation 1225/2009 and its amendments on 20 July 2016 was a ‘response to the expiry of parts of China’s WTO accession protocol in December 2016 and to unfair trade practices from third countries’ (http://www.europarl.europa.eu/RegData/etudes/BRIE/2017/595905/EPRS_BRI%282017%29595905_EN.pdf). While the EU has sought to establish a market that allows free competition between all enterprises within a given industry, the obvious complexity of international trade – particularly in light of the malleability of markets in various sectors (e.g. the availability of low-prices imports of high-tech and textile goods) sometimes requires the market to be regulated via the mechanism of imposed duties to exporting agencies abroad, which is accepted as part of GATT’s article VI. This being said, anti-dumping, and trade defence cases in general have seen a significant decline, with average initiations of actions currently at an historical low. Moreover, the overall number of anti-dumping and anti-subsidy measures in force in the EU have been progressively less than in other major WTO members (http://ec.europa.eu/trade/policy/accessing-markets/trade-defence/actions-against-imports-into-the-eu/index_en.htm).

The EU therefore can be seen to apply certain mechanisms of the anti-dumping regime rather stringently – particularly as the EU moves more towards the imposition of duties rather than requesting the exporter to raise their price to avoid the imposition of duties. Arguably, this shift could be seen to have manifested trade conflicts with third-party producers in certain industries.

Latest reforms

The EU has been under increased pressure to reform anti-dumping investigate procedures and decision-making, particularly in light of imposed extra duties on Chinese and Tawainese imports of certain types of steel. In Mid-May 2017, the EU taxed Chinese imports with an added duty, this ranging from 29.2 percent to 54.9 percent, which has foreseeably resulted in complaints. This decision can be seen to be in line with various other applications of anti-dumping trade defence from the European standpoint, with the WTO upholding an Argentina complaint with regard to biodiesel exports, this in conjunction with a similar Indonesian filing.

Further, on 9 June 2016, the Court of Justice of the European Union ruled that the European Commission (EC) violated its own laws by issuing a country-wide anti-dumping (AD) duty on imports of U.S. ethanol (https://www.fas.usda.gov/data/eu-28-eu-s-general-court-rules-against-anti-dumping-duty-us-ethanol).

The European Union, in an attempt to avoid treating any industry or third-party producer as a special case, has reiterated its explanation that it will use international benchmark pricing to determine production cost of industry, this to assess whether manufacturers are dumping product or benefitting from unfair subsidies. However, these recent events have put the EU’s trade defence rules under pressure, and may cause changes to those rules in the near EC mid-term, including discussions of what is likely to happen during the ongoing dispute before the WTO’s Dispute Settlement Body initiated at China’s request.

Finally, the European Parliament and the Council have agreed to change the EU’s anti-dumping and anti-subsidy legislation. One of the main changes was the introduction of a new way to calculate dumping in anti-dumping investigations on imports from members of the WTO, in case prices and costs are distorted because of state intervention (http://europa.eu/rapid/press-release_MEMO-17-3703_en.htm).

The new rules have entered into force on 12 December 2017, date of the publication of the new regulation (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017R2321).

Authorisation of establishment in Luxembourg: Abrogation of the requests for special authorisations for big-box stores

A bill was introduced at the end of December 2017 (7228), in view of the abrogation of the specific autorisation requested for the establishment of superstores in Luxembourg (currently provided for under the amended law of 2 September 2011 on the right of establishment (the « Law of 2011 »).

Indeed, in 2016, the European Commission had considered that Luxembourg was the country in the European Union having the most restrictive regulation for retail businesses.

The bill states that these conclusions are in contradiction with the main attractiveness of the country which identifies itself as an open country.

The authors of the bill have pointed out that this procedure for obtaining a specific autorisation for the superstores nowadays duplicates the existing instruments in the fields of competition law and urban and spatial planning.

By removing that additional administrative burden, the authors of the bill hope to foster the competitiveness of Luxembourg in the Greater Region.

At the same time, the authors of the bill take this opportunity to revise some other aspects of the Law of 2011:

– elimination of the professional qualification requirement for merchants in general, for commercial activity in the HORECA and real estate sector (currently the Luxembourg DAP at the minimum), knowing that the accelerated training for the operators of drinks outlets, eating establishments or accommodation establishments will therefore be open to all,

– abrogation of the specific autorisation for fairs and markets,

– abrogation of the professions providing «economic advice» and «consulting» (whose activities are already covered by a simple authorisation of establishment for commercial activities and services).

New Luxembourg Law Opens the Door for Space Mining Missions

Luxembourg may have taken its first step to passing the final frontier, this with the increasing likelihood that at some point in the not-to-distant future companies may engage in salvage and mining missions in space.  With the advent of increasing numbers of private commercial interests in space exploration, the protection of commercial interests could represent a gap in international law.  As such, with the law of 20 July 2017 on Exploration and Utilization of Space Resources (the “Space Law”), Luxembourg has been the first European Country to implement procedures through which businesses can protect their investments.

The uptake of the Space Law is relevant to the wider SpaceResources.lu initiative, which seeks to develop a unique regulatory framework to capitalise on the recent revolutions in space technology.  Luxembourg has an established record with regard to leadership in the satellite communications industry, and aims to continue this role with regard to exploration and utilization of space resources.

Whereas this could be seen as extraordinarily pre-emptive, there are in fact several established companies that are already receiving investment for the purposes of pursuing deep-space prospecting. The rapid increase in business development in this sector could be seen as naturally in line with the recent success of private enterprises exploring opportunities in space.

The Space Law therefore seeks to provide a sense of legal certainty with regard to the rights of prospecting agencies seeking to mine Near Earth Objects (“NEO”s), such as asteroids.  Article 1 of the Space Law allows that ‘Space resources are susceptible to appropriation’.

We should expect future legal discourse to further evolve laws and liability with regard to private missions and partnered expenditure between private companies and States. Expensive undertakings such as launches – and supervision of launches – are not covered by the Space Law, with registration with the appropriate State authority and supervision of such being the sole aspect covered.  Authorisation for specific operations will be approved on a case-by-case basis, thus allowing for monitoring of particular businesses and their respective capacities to safely carry out the responsibilities they’ve assumed.

A notable separation between the US and Luxembourg follows this argument, in that private companies obtaining authorization in Luxembourg are left in charge of liability with regard to prospective missions.

While space mining missions themselves may still be a few years off, the complexity of this legal field would necessitate the development of robust legal mechanisms now to protect business interests in this regard.  As of November 2016, Luxembourg announced that ‘negotiations are underway to formalize relationships with around twenty companies and entrepreneurs originating both from Europe and from outside of Europe’.  It is clear that Luxembourg has done well to anticipate global changes by passing business-focused space legislation prior to other Western States.  With this level of interest in private space exploration already at the State level, it seems a good idea to start preparing for the future now.

For any questions / comments, please contact the author Cédric SCHIRRER at cschirrer [at] schirrerwalster [dot] lu

Law of 20 July 2017 on Exploration and Utilization of Space Resources (Non-official and non-binding English translation)

Art. 1. Space resources are susceptible to appropriation.

Art. 2. (1) No one can explore or use space resources without being in possession of a written mission authorization from the minister or ministers responsible for the economy and space activities (hereinafter referred to as “ministers”).

  • No one may be authorized to carry on the activity referred to in paragraph (1) either on behalf of another person or as an intermediary for the exercise of that activity.
  • The authorized operator may carry out the activity referred to in paragraph (1) only in accordance with the conditions of its authorization and Luxembourg’s international obligations.
  • The present law does not apply to satellite communications, orbital positions or the use of frequency bands.

Art. 3. Authorization is granted to an operator for a mission to explore and use space resources for commercial purposes upon written request addressed to the Ministers.

Art. 4. Authorization for a mission may be granted only if the applicant is a public limited liability company (société anonyme), a partnership limited by shares (société en commandite par actions) or a private limited liability company (société à responsabilité limitée) incorporated under the laws of Luxembourg or a European company having its corporate seat in Luxembourg.

Art. 5. The authorization is personal and non-transferable.

Art. 6. The application for authorization must be accompanied by all information relevant to its assessment and a program of the mission.

Art. 7. (1) Authorization is subject to proof of the existence, in Luxembourg, of the central administration and the corporate seat of the operator seeking authorization, including the administrative and accounting structure.

(2) The operator seeking authorization must have a solid system of financial, technical and legal procedures and modalities by which the exploration und utilization mission, including the commercialization of space resources are planned and implemented. The operator also needs to have a strong internal governance system, including a clear organizational structure with transparent, coherent and well defined shared responsibilities, effective processes for detecting, managing, controlling and reporting risks to which the operator seeking authorization may be exposed, adequate internal control mechanisms, including sound administrative and accounting procedures and control and security mechanisms for its technical systems and applications.

(3) The measures, processes, procedures and mechanisms foreseen by this article are exhaustive and adjusted to the nature, the scale and the complexity of the risks inherent to the operator’s business model to be approved, as well as the mission for which the authorization is requested.

Art. 8. (1) The authorization is subject to the communication to the ministers of the identity of the direct or indirect shareholders or partners, of natural or legal persons, who hold a direct or indirect holding of at least 10 per cent of the capital or voting rights of the operator, or, if the 10 per cent threshold is not reached, the identity of the 20 largest shareholders or partners.

The authorization shall be refused if, in view of the need to ensure sound and prudent utilization, the quality of such shareholders or partners is not satisfactory.

(2) The concept of sound and prudent utilization is assessed in the light of the following criteria:

a) The professional integrity of the operator seeking approval and that of the shareholders and partners referred to in paragraph (1);

b) The integrity, knowledge, skills and experience of any member of the shareholders’ or partners’ management body referred to in paragraph (1);

c) The financial soundness of the shareholders and partners referred to in paragraph 1;

d) The existence of reasonable grounds to suspect that an operation or attempt to launder money or to finance terrorism is in progress or has taken place in connection with the proposed exploration mission or the intended use of the resources for this exploration could increase such a risk.

The integrity of the shareholders’ or partners’ management body or members referred to in paragraph (1) shall be assessed in accordance with the second sentence of Article 9 (1).

Art. 9. (1) Authorization is subject to the condition that the members of the management board of the operator have, at all times a sufficient sense of integrity, the knowledge, skills and experience required for the performance of their duties. Integrity is assessed on the basis of a judicial record and any evidence that such persons have a good reputation and present all guarantees for an irreproachable activity.

(2) The persons responsible for managing the operator must be at least two and must be empowered to effectively determine the direction of the activity. They must have adequate professional experience demonstrated by having carried out similar activities in the past, with a high level of responsibility and autonomy in the space sector or a related sector.

(3) Any amendments to the persons referred to in paragraph (1) shall be communicated to the ministers in advance.

Ministers may request any necessary information on persons likely to meet the legal requirements of good integrity or professional experience. Ministers can oppose the proposed change if the applicants do not have adequate professional integrity, adequate professional experience, or if there are objective and demonstrable reasons to believe that the proposed change would jeopardize a safe and prudent operation.

(4) The granting of the authorization implies, for the members of the management body, an obligation to notify the ministers, spontaneously in writing and in a complete, coherent and understandable form, of any change regarding the substantive information relied upon by the ministers to process the application for authorization.

Art. 10. (1) The application for approval must be accompanied by a risk assessment of the mission. It specifies the coverage of these risks by means of its own financial means, by an insurance policy from an insurance undertaking not belonging to the same group as the operator seeking approval or by a guarantee from a credit institution that does not belong to the same group as the operator seeking authorization.

(2) The authorization is subject to the existence of an appropriate financial base for the risks associated with the mission.

Art. 11. (1) Authorization is subject to the condition that the operator seeking approval entrusts the audit of his annual accounting documents to one or more approved statutory auditors (réviseurs d’entreprises agréés) who have appropriate professional experience.

(2) Any modification of the approved statutory auditors must be authorized in advance by the ministers.

(3) The institution of commissaires who can form a supervisory board, provided for in the law of 10 August 1915 on commercial companies as amended, applies to operators only in cases where the law on commercial companies mandatorily prescribes so, even if the company has designated an approved statutory auditor.

Art. 12. The approval describes how the operator seeking authorization meets the requirements of Articles 6 to 11 (1). It may also contain provisions on:

a) the activities to be carried out in or from the territory of the Grand Duchy of Luxembourg;

b) The limits imposed on the mission;
c) The methods of surveillance of the mission;

d) The conditions for ensuring compliance of the operator with his obligations.

Art. 13. For every application for authorization, a fee is set by the ministers to cover the administrative costs incurred in processing the application. This fee varies between 5,000 and 500,000 euros depending on the complexity of the application and the associated volume of work.

A Grand-Ducal Regulation shall determine the procedure applicable to the collection of the fee.

Art. 14. (1) The authorization shall be withdrawn if the conditions for its grant are no longer fulfilled.

(2) The approval shall be withdrawn if the applicant does not make use of it within 36 months of its grant, renounces to its use or has ceased to carry on its business within the last six months.

(3) The approval shall also be withdrawn if it has been obtained by means of false declarations or by any other irregular means.

Art. 15. The ministers are in charge of the continuous surveillance of the missions for which an authorization has been granted.

Art. 16. An operator who has obtained an authorization for a mission is fully responsible for any damage caused during the mission, including during any work and obligations of preparation.

Art. 17. Obtaining authorization for a mission does not exempt one of the obligation to obtain additional required approvals or authorizations.

Art. 18. (1) A penalty of imprisonment of eight days to five years and a fine between 5,000 and 1,250,000 euros or one of these penalties only shall be imposed on a person who has contravened or attempted to contravene Article 2.

(2) A penalty of imprisonment of eight days to one year and a fine between 1,250 and 500,000 euros or one of these penalties only shall be imposed on a person who has contravened or attempted to contravene to the provisions of Articles 5, 9 (3) paragraph 1, 11 (1) or (2) or the terms of the authorization.

(3) Without prejudice to paragraphs (1) and (2), the jurisdiction the case has been referred to may order the termination of the operation which violates the provisions of this law, under periodic penalty payment (astreinte), the maximum of which cannot exceed 1,000,000 euros per day of assessed infringement.