Luxembourg Market Entry
- Market entry
- Forms and conditions of operation on the market
- Marketing and Communications
- Issues of intellectual property protection
- Public procurement market
- Payment terms, payment ethics and resolution of commercial disputes
- Visas, fees, specific conditions of travel to the territory
- Employment of citizens from the Czech Republic
- Fairs and events
According to cheeroutdoor.com, the advantages include the country’s central location in the EU, strong personnel and linguistic ties to the surrounding countries of the so-called Greater Region, relative security, an attractive qualified workforce, high-quality telecommunications standards, a highly advantageous fiscal and tax system, investment incentives for SMEs (through the credit company National Society of Investment Credit) and support for the establishment of entrepreneurs (through the LuxInnovation agency). Disadvantages, on the other hand, include high costs (rents and employee salaries), market saturation, habituation and oversaturation of consumers and their price orientation, complex traffic situation, low productivity of selected services (construction and repair companies, cosmetic services) and the level of technical education.
Due to the fact that the Czech Republic and Luxembourg are EU member states, export/import is intra-community trade, i.e. duty-free. However fully liberalized, movements of certain products may be subject to prohibitions/restrictions (threats to public morals, policy, security, protection of human or animal and plant health and life, infringement of competition rules, unfair trade practices, plus exceptions of a strategic nature/weapons material where notification obligation/avis d’exportation applies). Common accompanying documents in business transactions are an invoice (with the value of the goods, VAT and international VAT number) and a transport document (bill of lading).
There is a system of investment incentives, e.g. favorable conditions for (re)investment in former industrial zones, capital grants in the form of loans, innovation center platforms to support budding entrepreneurs or start-ups. All companies are expected to be registered with the Chamber of Commerce (www.guichet.lu, investinluxembourg.lu).
No discriminatory strategy is applied, screening is at an identical level for domestic and foreign investors. There are no limits on non-Luxembourg ownership shares, foreign investors can also participate in privatization programs. Tenders are basically (except for sensitive sectors/military, space) transparent. Incentives can be counted on even in PPP projects (e.g. in the area of innovative industries with high added value / finance, ICT, eco-operations, biotechnology, circular economy). The Inspectorate of the Ministry of Economy examines cases from the point of view of compliance with the rules of competitiveness/competition law.
The country has acceded to all applicable arbitration conventions (International Center for Settlement of Investment Disputes Convention, Convention on the Recognition and Enforcement of Foreign Arbitral Awards). Since 1995, LU has been a member of the WTO (it is consistent with the requirements of TRIMs / Trade Related Investment Measures and TRIPs / Trade-Related aspects of Intellectual Property Rights). LUi has acceded to all applicable agreements (Bern Convention, Patent Cooperation Treaty, Paris Convention, Patent Law Treaty, Madrid Agreement and Protocol, European Patent Convention) in the area of intellectual property protection (it is a member of the World Intellectual Property Organization/www.wipo.int).
Forms and conditions of operation on the market
The license to do business in Luxembourg is issued by the Ministry of Economy (Ministère de l’économie). In order to establish a company (sro/as), it is necessary to deposit the share capital with the bank and obtain the relevant certificate, draw up the financial plan of the company, deposit it with a notary and ensure the prescribed notarization of the founding deed in relation to the locally competent commercial court, which will ensure registration in the commercial register . Subsequently, the company will be assigned an IČO and VAT number. All companies must have an open bank account and register their employees with the Social Security Office.
Corporate consulting is provided by the Luxembourg Chamber of Commerce (Centre de Formalité et d’Information de la Chambre de Commerce, 7, rue Alcide de Gasperi, L-2981 Luxembourg, tel. 00.352/22.214.171.1240, fax 00.352/43. 83. 26, e -mail: [email protected]), which must also be notified of the posting of workers to carry out the work (i.e. without establishing a Luxembourg company branch). Workers are subject to labor law, they do not need a work permit. Since 2017, natural persons in Luxembourg have been able to do business using a variant of the classic limited liability company, the so-called “simplified limited liability company” (“Société à responsabilité limité simplifiée, S.à rl-S. or “S.à rl-S. à 1 euro”). You can set up this so-called “sro for a euro” not only without major costs (from 1 to 12,000 euros), but also special formalities (entry in the register can be made without a notarized signature). A trading company is intended exclusively for natural persons, the owner of a simplified s.r.o. cannot cumulate.
However, for the protection of potential creditors, one twentieth of the annual net profit will be transferred to the company’s mandatory reserve. The obligation will cease when the reserve fund reaches the amount of €12,000, i.e. the amount common in cases of classic s.r.o. The reduction of costs is intended to facilitate the establishment of a company, especially for starting entrepreneurs without a large initial capital (consultants, small sellers, market research agencies). For companies with the necessary initial financial parameters, e.g. restaurants or farms, the classic s.r.o. remains the solution
Marketing and communication
Due to the size, special marketing and PR companies do not work on the market, due to the connection of the market and the absence of a language barrier, this agenda will be covered by companies from the surrounding larger countries. Advertising therefore works to a limited extent as standard on TV, radio and newspapers, or billboards and advertising areas at bus stops transport. The use of social networks can also be used knowing the limited size of the market.
In marketing, it is not advisable to use too provocative, or linguistically rough expressions, or critical bon mots.
Issues of intellectual property protection
Common EU regulations also apply in this area as standard in Luxembourg. At the national level, it focuses on the protection of souls. ownership, fighting fraud, improving patent registration and raising public awareness of the importance of this area National Program for Innovation and Full Employment. The agenda belongs to the Ministry of Economy (directorate for instruments for the protection of companies and individual creators). Copyright is protected up to 70 years after the author’s death. Rights include hereditary and moral aspects. Cases of infringement of intellectual property rights in relation to CZ entities have not yet been recorded by the ZÚ Luxembourg.
Public procurement market
The public procurement market is governed by valid EU legislation. Information on public contracts issued in the territory of the EU and on Union programs and projects is regularly and transparently published (Journal officiel, at the Office des publications officielles de l’UE, rue Mercier 2, L-2144 Luxembourg). Another source of information is the national public procurement portal (http://www.marches.public.lu/fr.html).
Payment terms, payment ethics and resolution of commercial disputes
Local market risks: The LU market does not present any other risks than the markets of other EU countries. The specifics are only the small area of the country, the lack of domestic distribution networks, the large presence of foreign capital, the saturation of the product market and the strong national feeling of the population.
Payment ethics: European standard. Suppliers are forced to accept the trend towards lengthening the maturity of invoices (there are differences in payment terms in individual sectors and commodities) (however exporters try to maximize protection against debt collection risks, especially when it comes to initial or ad hoc deliveries, or cooperation with a partner with whom the supplier has no previous experience). In case of doubt, it is recommended to request bank and business references beforehand (LU commercial register www.rcsl.lu/zaslání vípisu is charged). It is possible to insure yourself against credit risks with EGAP or other commercial banks.
Commercial disputes: The most common reason for commercial disputes is debt collection. Luxembourg debt collection or specialized consulting offices operate in the area (LU benefits from the FR legal tradition, but there are fundamental deviations from FR law – in procedural law, for example, the principle that the convicted party does not cover the costs of court proceedings applies (the debtor can therefore calculate that if for smaller financial claims, it will not be advantageous for the injured party to go to court in view of the relatively high costs associated with the proceedings).
Visas, fees, specific conditions for traveling to the territory
Like the Czech Republic, Luxembourg is a member of the EU/Schengen, so there is no visa requirement, cross-border movement is possible anywhere without border controls.
Employment of citizens from the Czech Republic
The labor market fully complies with EU rules. Therefore, EU citizens do not need to apply for a work permit in LU, they only register for social insurance at the LU Social Security Office, Center Commun de la Sécurité Sociale, www.secu.lu). More detailed information is available on the website of the LU Labor Office (www.adem.public.lu).
Fairs and events
The most important fairs and exhibitions in the territory are held at LuxExpo (The Box, SA, 10 Circuit de La Foire Internationale, 1347 Luxembourg, tel. 00.352/43. 991, www.thebox.lu). However, the pandemic has significantly disrupted the events in the last two years, and not all of them have yet been resumed.
JANUARY Expo Creativ (fair of companies active in the field of artistic creation) and Vakanz (tourism fair).
MARCH SpringBreakLuxembourg (consumer goods fair).
OCTOBER Luxembourg Healthcare Summit (health and safety at work fair) and Home & Living Expo (lifestyle fair).
ICT SPRING (IT trade fair – May/June).