Economy Profile of Luxembourg

Ease of Doing Business in Luxembourg

ease of doing business in luxembourg

Rankings on Doing Business topics – Luxembourg

rankings on doing business topics luxembourg

Topic Scores

topic scores luxembourg

Starting a Business

This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city.

To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to legally start and formally operate a company (number)

  • Preregistration (for example, name verification or reservation, notarization)

  • Registration in the economy’s largest business city

  • Postregistration (for example, social security registration, company seal)

  • Obtaining approval from spouse to start a business or to leave the home to register the company

  • Obtaining any gender specific document for company registration and operation or national identification card

Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day (2 procedures cannot start on the same day)

  • Procedures fully completed online are recorded as ½ day

  • Procedure is considered completed once final document is received

  • No prior contact with officials

Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

  • No professional fees unless services required by law or commonly used in practice

Paid-in minimum capital (% of income per capita)

  • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation

To make the data comparable across economies, several assumptions about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes.

The business:

-Is a limited liability company (or its legal equivalent). If there is more than one type of limited liability company in the economy, the limited liability form most common among domestic firms is chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office.

-Operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

-Performs general industrial or commercial activities such as the production or sale to the public of goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes.

-Does not qualify for investment incentives or any special benefits.

-Is 100% domestically owned.

-Has five business owners, none of whom is a legal entity. One business owner holds 30% of the company shares, two owners have 20% of shares each, and two owners have 15% of shares each.

-Is managed by one local director.

-Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals.

-Has start-up capital of 10 times income per capita.

-Has an estimated turnover of at least 100 times income per capita.

-Leases the commercial plant or offices and is not a proprietor of real estate.

-Has an annual lease for the office space equivalent to one income per capita.

-Is in an office space of approximately 929 square meters (10,000 square feet).

-Has a company deed that is 10 pages long.

The owners:

-Have reached the legal age of majority and are capable of making decisions as an adult. If there is no legal age of majority, they are assumed to be 30 years old.

-Are in good health and have no criminal record.

-Are married, the marriage is monogamous and registered with the authorities.

-Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population.

Starting a Business – Luxembourg

starting a business luxembourg

Figure – Starting a Business in Luxembourg – Score

figure starting a business in luxembourg score

Figure – Starting a Business in Luxembourg and comparator economies – Ranking and Score

DB 2020 Starting a Business Score

figure starting a business in luxembourg and comparator economies ranking and score

Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

Figure – Starting a Business in Luxembourg – Procedure, Time and Cost

figure starting a business in luxembourg procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Details – Starting a Business in Luxembourg – Procedure, Time and Cost

1 Deposit the minimum capital requirement

Agency : Commercial Bank

The promoters must open a bank account in the name of the company in formation and must transfer the amount of the share capital to this account before the passing of the deed of incorporation. For the purpose of the passing of the notarial deed, the bank will remit an escrow certificate (certificat de blocage) certifying that the funds corresponding to the amount of the share capital are "blocked" in the escrow account. The funds are automatically unblocked on delivery of a certified copy of the notarial deed of incorporation and the issue by the notary of the release certificate (certificat de déblocage).

2 Verify uniqueness of company name and reserve name

Agency : Luxembourg Business Registers

Shareholders are free to choose the company's name but must ensure that it is unique (https://www.lbr.lu). Each person requesting the Luxembourg Business Register to confirm the availability or non-availability of a company's name may select four types of documents to reflect the answer of the Luxembourg Business Register.

Less than one day (online procedure)

EUR 4.75 to EUR 10

3 Notary drafts and notarizes the company deed

Agency : Notary

A private limited liability company must be incorporated before a Luxembourg notary public. The Luxembourg notary or lawyer draws up the deed of incorporation which includes the articles of association of the company. Model of articles of association may be found on Internet (the national Chamber of Commerce’s One-stop shop information center can help incorporates to complete the model of documents).

The Luxembourg notary is held by law to pay all the costs relating to the incorporation and registration of the company and which include:

  • The notary fees EUR 450 (fee EUR 150 + sundry expenses EUR 200 + certified copies EUR 100);

  • Company Register fees EUR 250;

  • Publication in Official Gazette EUR 250;

  • Effective Beneficial Owner Register fee EUR 15 (this fee is waived during the six-months transition period of the Law of the Register of Effective Beneficial Owners);

  • Sundries EUR 50.

  • A fixed fee of EUR 75 for the tax registration.

The notary must provide a detailed account/invoice once the company is incorporated.

4 Apply for business license

Agency : General Directorate for Small and Medium-Sized Businesses – Ministry of Economy This license/permit is issued by the Ministry of Middle Classes for a commercial activity or by the Ministry of Economy for industrial activities upon request and on proof of knowledge of business management.

To apply for a business license, promoters must submit the following documents:

  • Application form (completed and signed) for an establishment permit.

  • Tax stamp for EUR 24 EUR (This varies from EUR 24 to EUR 2,500, depending on the type of activity. 24 EUR refers to a sales/trade company). The amount can be transferred to the national Giro account (CCP) of the Registration and Domains Administration (Administration de l’Enregistrement et des Domaines): LU47 1111 0087 9262 0000, with the reference: “Office Fee for Establishment Permit [ENTER APPLICANT’S NAME].” In this case, proof of payment must be presented. The tax stamp can also be obtained from the One-stop shop information center.

  • For non-residents and persons residing in Luxembourg for fewer than 10 years, a recent notarized certificate of non-bankruptcy.

  • Articles of association (executed or draft) for a commercial company.

  • An affidavit on the exercise of any management posts previously held in Luxembourg, for verification of non-bankruptcy.

  • The applicant’s identity card (copy).

  • The applicant’s police record or affidavit. Note: This applies to non-residents and persons residing in Luxembourg for less than 10 years. In practice, the Ministry of the Economy and Foreign Trade tends however to request the provision of a police record or affidavit to every applicant although not required as such.

The business permit application can be submitted before executing the notary deed because the Ministry of the Economy checks the draft articles of association—the company name, business purpose, and identity of directors and officers for compliance with the provisions of the applicable law. Generally, the business license/establishment permit application and notary deed processes start more or less at the same time and are pursued simultaneously. Although the company incorporation process requires a notary, the founder may directly register the company with different administrations and obtain identification numbers and the business license/establishment permit.

Since October 2011, business license requests can be handed in online at www.guichet.lu. The required documents are the same ones. They all need to be transformed into a PDF and attached to the online form. In order to be able to deposit the business license online, the applicant is required to have a LUXTRUST certificate in order to sign the application form electronically.

5 Register at the one-stop shop

Agency : One-stop shop of the Luxembourg Business Register

The notary public must levy an initial payment for all applicable company incorporation fees and taxes, including registration costs. The notary must register:

  1. The articles of association with the tax administration (Administration de l’Enregistrement) at the Registry one-stop shop (Guichet.lu). Applications can be filed for both VAT and social security at the one-stop shop, which distributes the forms to the relevant administrations.

  2. The company with the Trade and Companies Registry, within 4 weeks of the incorporation of the company. The Trade and Companies Register arranges for the publication of the incorporation deed in the Official Gazette within 2 months of the company's registration. Upon usually 24 hours within registration, the Luxemburg Business Register generates an administrative or official (register) number that accompanies the company during its corporate life (matricule). This number forms the basis for all other identification numbers to be issued by the administration for direct taxes (tax number), the administration for indirect taxes (VAT number), or the social security service (pay-as-you-earn number and employer number). The company's registration with the Chamber of Commerce is done automatically.

  3. The beneficial ownership details with the Register of Beneficial Owners. The details required to be provided are: the names of beneficial owners; their nationality; their date and place of birth; their country of residence and business address; their national identification number (for individuals registered with the RNPP) and the nature and extent of their ownership holdings. These details must be submitted within one month of the date on which the entity became aware of the owner's appointment. Within 3 business days, the applicant will receive a confirmation receipt for the successful filing with the Register.

Dealing with Construction Permits

This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information

What the indicators measure

Procedures to legally build a warehouse (number)

  • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates

  • Submitting all required notifications and receiving all necessary inspections

  • Obtaining utility connections for water and sewerage

  • Registering and selling the warehouse after its completion

Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule

  • Procedure is considered completed once final document is received

  • No prior contact with officials

Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

Building quality control index (0-15)

  • Quality of building regulations (0-2)

  • Quality control before construction (0-1)

  • Quality control during construction (0-3)

  • Quality control after construction (0-3)

  • Liability and insurance regimes (0-2)

  • Professional certifications (0-4)

To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used.

The construction company (BuildCo):

  • Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or topographical experts.

  • Owns the land on which the warehouse will be built and will sell the warehouse upon its completion.

The warehouse:

  • Will be used for general storage activities, such as storage of books or stationery.

  • Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita.

  • Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further documentation or getting prior approvals from external agencies, these are counted as procedures.

  • Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements).

    The water and sewerage connections:

  • Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built.

  • Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 gallons) a day.

  • Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.

Dealing with Construction Permits – Luxembourg

dealing with construction permits luxembourg

Figure – Dealing with Construction Permits in Luxembourg – Score

figure dealing with construction permits in luxembourg score

Figure – Dealing with Construction Permits in Luxembourg and comparator economies – Ranking and Score

DB 2020 Dealing with Construction Permits Score

figure dealing with construction permits in luxembourg and comparator economies ranking and score

Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators.

Figure – Dealing with Construction Permits in Luxembourg – Procedure, Time and Cost

figure dealing with construction permits in luxembourg procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Dealing with Construction Permits in Luxembourg and comparator economies – Measure of Quality

figure dealing with construction permits in luxembourg and comparator economies measure of quality

Details – Dealing with Construction Permits in Luxembourg – Procedure, Time and Cost

1 Obtain a recent copy of the cadastre plans from the Cadastre Administration

Agency : Cadastre Administration

2 Obtain commodo/incommodo classe 3 approval from the Ministry of Environment

Agency : Ministry of Environment

An environmental clearance is required if the warehouse will be used for storing greater than 10 tons but less than or equivalent to 100 tons.

120 days no charge

3 Obtain construction permit from the Urban Department (service de l'urbanisme) of the Commune

Agency : Urban Department, Commune

The building plans must conform to the master plan of the city of Luxembourg. The application file comprises an application form, a cadastral extract, and the building design plans. Various departments within the Commune must approve the application, including all the utility and the fire safety departments. The Commune charges EUR 24 as an application processing fee and EUR

0.24 per cubic meter. If after 12 months construction has not started, the permit will be nullified.

4 Obtain approval in principle (accord de principe)

Agency : Urban Department, Commune

An application for authorization and declaration of work, an agreement is required for any building with a total built area of more than 2,000 cubic meters.

This agreement is valid for a period of 12 months. The final request must be submitted within the deadline.

90 days EUR 960

60 days EUR 60

5 Obtain excavation permit from the Ministry of Public Works

Agency : Ministry of Public Works

Assuming the warehouse will be built near a main road, BuildCo must obtain an excavation permit to dig for utility connections. The Ministry of Public Works charges a stamp duty of EUR 10.

6 Obtain feasibility study for the sewage (canalization) connection

Agency : Sewage Department, Commune

BuildCo applies for a sewage connection online. The following plans and documents must be attached in duplicate:

  1. an extract of the cadastral map

  2. the location map of the land and any building or structure (or erect), scale 1:500

  3. plans for all levels of the building, scale 1:100 or 1:50

  4. Construction cuts along the plan of the connecting line, scale 1:100 or 1:50, indicating the location of the network and the level of public sewers

The construction permit is valid only if a sewage connection authorization has been granted.

60 days EUR 10

30 days EUR 1,950

7 Hire independent surveillance company to carry out inspections of construction works

Agency : Independent Surveillance Company

BuildCo must hire an independent inspection company to perform inspections during construction, which costs about 0.5% of the construction value.

1 day EUR 17,451

8 Request and receive inspection of completed works from the Urban Department

Agency : Urban Department, Commune

According to Article 66 of the Building Code, an application must be made to the Police des Batisses once the major construction work is completed.

The authorization shall be deemed received if within three weeks after the formulation of the relevant application, “La police des batisses” has not raised any objections in writing. Without this authorization, no internal works can be completed.

1 day no charge

9 Request and receive sewage (canalization) inspection

Agency : Sewage Department, Commune

BuildCo applies for a sewerage connection and requests water services from the Commune in order to prepare an estimate for all the costs associated with the sewerage connection.

10 Obtain sewage (canalization) connection

Agency : Sewage Department, Commune

32 days

no charge

11 Obtain water connection

Agency : Water Services Department, Commune

5 days EUR 3,000

Details – Dealing with Construction Permits in Luxembourg – Measure of Quality

details dealing with construction permits in luxembourg measure of quality details dealing with construction permits in luxembourg measure of quality

Getting Electricity

This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to obtain an electricity connection (number)

  • Submitting all relevant documents and obtaining all necessary clearances and permits

  • Completing all required notifications and receiving all necessary inspections

  • Obtaining external installation works and possibly purchasing material for these works

  • Concluding any necessary supply contract and obtaining final supply

Time required to complete each procedure (calendar days)

  • Is at least 1 calendar day

  • Each procedure starts on a separate day

  • Does not include time spent gathering information

  • Reflects the time spent in practice, with little follow-up and no prior contact with officials

Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

  • Value added tax excluded

The reliability of supply and transparency of tariffs index (0-8)

  • Duration and frequency of power outages (0–3)

  • Tools to monitor power outages (0–1)

  • Tools to restore power supply (0–1)

  • Regulatory monitoring of utilities’ performance (0–1)

  • Financial deterrents limiting outages (0–1)

  • Transparency and accessibility of tariffs (0–1)

To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used.

The warehouse:

  • Is owned by a local entrepreneur and is used for storage of goods.

  • Is located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway.

  • Is a new construction and is being connected to electricity for the first time.

  • Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square feet). The plot of land on which it is built is 929 square meters (10,000 square feet).

The electricity connection:

  • Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW).

  • Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more common in the area where the warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road.

  • Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service panel or switchboard and the meter base.

The monthly consumption:

  • It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh.

  • If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier.

  • Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used.

Price of electricity (cents per kilowatt-hour)*

Price based on monthly bill for commercial warehouse in case study

Getting Electricity – Luxembourg

getting electricity luxembourg

Figure – Getting Electricity in Luxembourg – Score

figure getting electricity in luxembourg score

Figure – Getting Electricity in Luxembourg and comparator economies – Ranking and Score

DB 2020 Getting Electricity Score

figure getting electricity in luxembourg and comparator economies ranking and score

Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity.

Figure – Getting Electricity in Luxembourg – Procedure, Time and Cost

figure getting electricity in luxembourg procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Getting Electricity in Luxembourg and comparator economies – Measure of Quality

figure getting electricity in luxembourg and comparator economies measure of quality

Details – Getting Electricity in Luxembourg – Procedure, Time and Cost

1 Submit application to Creos Luxembourg and await connection conditions

Agency : Creos Luxembourg S.A.

The client submits an application along with a cadastre map and a sketch of the building.

14 calendar days

EUR 0

Upon receiving the application, Creos Luxembourg S.A. will prepare the technical conditions for connecting the client's premises to the grid. It will send the client an offer along with an order confirmation and an authorization for the client's electrical contractor to fill out.

The offer is valid for 6 months. It includes all aspects of the connection works, except for the excavation works and repairing of the road, which the customer will be responsible for.

2 Accept offer and sign connection and network usage contracts

Agency : Creos Luxembourg S.A.

The client accepts the offer and estimate of fees provided by the utility. The utility will then request an excavation permit from the local road authorities (Administration des Ponts et Chaussées) and in parallel, will draft a connection agreement and a contract of usage of network. The client will sign both contracts and send them back to Creos.

7 calendar days EUR 0

3 Await completion of excavation works by contractor

Agency : Client's contractor

The client will be in charge of excavating the road crossing. They will also be responsible for repairing the road once Creos has laid down the cable.

The client's contractor will also need to fill out the authorization provided by Creos confirming he has completed the works according to the agreed conditions.

4 Sign supply contract with electricity supplier

Agency : Electricity supplier on the free market

For electricity to be provided, it is necessary to have a supply contract with a supplier. The network manager and provider functions are separated in Luxembourg (based on European law) and Creos does not act as a supplier. The customer therefore needs to sign a contract with a supplier of his choice on the market as soon as he has enough technical details of its consumption. If he does not do so before the final consumption, a default provider will automatically be designated by the regulatory body. The client will still be able to change suppliers at no extra costs thereafter.

5 Await completion of external works and final connection by Creos Luxembourg

Agency : Creos Luxembourg S.A.

Creos will then inspect the contractor's internal installation as well as the road opening. Upon satisfactory inspection, it will lay down the low-voltage cable to connect the client's premises to the grid and install the meter.

Details – Getting Electricity in Luxembourg – Measure of Quality

Registering Property

This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to legally transfer title on immovable property (number)

  • Preregistration procedures (for example, checking for liens, notarizing sales agreement, paying property transfer taxes)

  • Registration procedures in the economy's largest business city.

  • Postregistration procedures (for example, filling title with municipality)

    Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day – though procedures that can be fully completed online are an exception to this rule

  • Procedure is considered completed once final document is received

  • No prior contact with officials

    Cost required to complete each procedure (% of property value)

  • Official costs only (such as administrative fees, duties and taxes).

  • Value Added Tax, Capital Gains Tax and illicit payments are excluded

    Quality of land administration index (0-30)

  • Reliability of infrastructure index (0-8)

  • Transparency of information index (0–6)

  • Geographic coverage index (0–8)

  • Land dispute resolution index (0–8)

  • Equal access to property rights index (-2–0)

To make the data comparable across economies, several assumptions about the parties to the transaction, the property and the procedures are used.

The parties (buyer and seller):

  • Are limited liability companies (or the legal equivalent).

  • Are located in the periurban (that is, on the outskirts of the city but still within its official limits) area of the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Are 100% domestically and privately owned.

  • Perform general commercial activities.

    The property (fully owned by the seller):

  • Has a value of 50 times income per capita, which equals the sale price.

  • Is fully owned by the seller.

  • Has no mortgages attached and has been under the same ownership for the past 10 years.

  • Is registered in the land registry or cadastre, or both, and is free of title disputes.

  • Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required.

  • Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its entirety.

  • Will not be subject to renovations or additional construction following the purchase.

  • Has no trees, natural water sources, natural reserves or historical monuments of any kind.

  • Will not be used for special purposes, and no special permits, such as for residential use, industrial plants, waste storage or certain types of agricultural activities, are required.

  • Has no occupants, and no other party holds a legal interest in it.

Registering Property – Luxembourg

image

50.0

image

87.8

image

32.6

image

85.0

Procedures

Time

Cost

Quality of the land administration index

Figure – Registering Property in Luxembourg and comparator economies – Ranking and Score

DB 2020 Registering Property Score

image

0 100

89.9: Denmark (Rank: 11)

80.1: Netherlands (Rank: 30)

77.0: Regional Average (OECD high income)

63.9: Luxembourg (Rank: 93)

63.3: France (Rank: 99)

51.8: Belgium (Rank: 139)

Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators.

Figure – Registering Property in Luxembourg – Procedure, Time and Cost

image

image

Time (days) Cost (% of property value)

image

12

25

Cost (% of property value)

10

20

Time (days)

8

15

6

10

4

5 2

0 0

1 2 * 3 * 4 5 6 7

Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Registering Property in Luxembourg and comparator economies – Measure of Quality

image

28.5

25.5

22.0

24.5

24.0

23.2

35

30

Index score

25

20

15

10

5

0

Luxembourg Belgium Denmark France Netherlands OECD

high income

Details – Registering Property in Luxembourg – Procedure, Time and Cost

image

No. Procedures Time to Complete Associated Costs

  1. Parties visit notary to draft and authenticate the sale agreement (Compromis de Vente)

    Agency : Civil Law Notary

    After signing a sale agreement ("compromis de vente") between each other, as per common practice, the parties will visit a Civil Law Notary for the drafting and authentication of the notarial deed. The sale is complete between the parties, and ownership is acquired by the buyer, as soon as the property, and the price have been agreed, although the property has not yet been delivered or the price paid (Article 1583 of the Civil Code). As a sale of real estate must be registered (which triggers the payment of registration taxes) and recorded in the mortgage registry in order to be enforceable vis-à-vis third parties and as only duly certified deeds may be entered in the register, the sale must be recorded in a notarial deed ("acte de vente").

    The Civil Law Notary is deemed a public official with powers delegated by the State to authenticate the deeds he drafts and provides complete security to the contracts he supervises. The authenticity of the deeds grants the parties an undisputable date and content in Court. The law imposes personal liability on the notary for his professional acts which are more extensive than that of other branches of the legal profession.

    As of February 2018, there are 36 Civil Law notaries, 18 of those in Luxembourg canton, in the Grand-Duchy of Luxembourg and the sale may be drawn up in front of anyone of them. This study assumes that parties would call on day one and receive an appointment for the same or following day.

  2. days EUR 10; (4 EUR stamp per page of the deed (2-3 pages))

  1. Notary conducts full search at property registry

    Agency : Property registry (Bureau des Hypotheques)

    The Civil Law Notary may go in person to the Bureau des Hypotheques to request and receive either a 'releve des inscriptions hypothecaires' (containing a list of mortgages), or a 'recherche par case hypothecaire' (containing a list of all land transactions effected by the landowner together with that of every mortgage or charge burdening the property). For each excerpt of the registry EUR 1.24 is payable per property owner and EUR 0.50 per each registered property. If the excerpt includes photocopies, EUR 0.50 is payable per each photocopy. For a closing certificate which confirms that the excerpts are the only existing ones, EUR 1.24 per property-owner is payable.

    For a negative excerpt ( no properties registered) EUR 2.48 is payable per person.

    1 day EUR 2.48; (EUR 2.48 for

    full search)

    image

  2. Notary conducts search at the Administration du Cadastre (online)

    Agency : Administration du Cadastre

    The Civil Law Notary should also check the status of the property at the cadastre. The notary can equally obtain this information through the cadastre's webpage where all this information is online. Free information is available to the general public on the website http://www.geoportail.lu.

    Authorized users, such as notaries, have direct access to all information whereas the general public has only limited but adequate access to the land register information.

    Less than one day, online

    EUR 0 (electronic) or EUR 5 (paper)

    image

  3. Notary notifies tax administration of transfer and obtains tax clearance

    Agency : Tax Administration office

    The Civil Law Notary contacts the tax administration office to notify them that the property will be sold. The tax administration office confirms that the property has no claims or unpaid taxes delivering a document called "certificat de non-obligation" . If there are outstanding claims or taxes, the tax administration may register a hidden mortgage ("hypothèque occulte") on the property.

    1 day no charge

    image

    image

  4. Buyer sends funds, fees, taxes and anti-money laundering documents to notary

    Agency : Civil Law Notary

    The buyer will pay the taxes, fees, and funds for the property by wire transfer to the Notary, in addition to notarial fees. Notarial fees are determined by the Regulation of 24 July, 1971 on notary fees. The buyer must also send anti-money laundering documentation to the Civil Law Notary at this time, regarding the origin of the funds he is using. The Civil Law Notary also checks whether the persons signing the authenticated deed have the necessary power of representation.

    2 days EUR 352,645.01; (6% of

    the market value of property (registration fee)

    + 3% of the market value of property (municipal surcharge within city of Luxembourg) + 1% market value of property (transcription duty)+ EUR 3,236,766.13 (Notary fee according to the official schedule).

    Notary fee schedule for dafting and authenticate the sale agreement (Act #7 – cumulative fee): EUR 3.718,40 : 4%

    EUR 3.718,40 : 2%

    EUR 9.915,74: 1.5%

    EUR 7.436,81: 0,80%

    EUR 49.578,7: 0,6%

    EUR 74.368,06: 0,5%

    EUR 99.157,41: 0,3%

    EUR 991.574,10: 0,10%

    1.239.467,62: 0,05%

    1.239.467,62: 0,05%)

  5. Parties sign the transfer deed

    Agency : Civil Law Notary

    The parties return to the Civil Law Notary to sign the transfer deed.

    2 days already paid in Procedure 5

    image

  6. Notary registers transfer deed at the Administration de l'Enregistrement et des Domaines

Agency : Administration de l'Enregistrement et des Domaines

The Civil Law Notary registers the transfer deed at the Administration de l'Enregistrement et des Domaines, which charges the transfer duty to the notary. The Administration will record the transfer after two to five days. The Administration will also send the deed to the Administration du Cadastre for registration of the new owner there. It will take the Cadastre about two weeks to record the new owner. At the same time, the Administration will take about two weeks to send a copy of the registered deed, with the stamp of the Administration and a reference number on it, back to the notary. The parties pay the registration, municipal and inscription fees to the Civil Law Notary, who pays the Administration.

image

Takes place simultaneously with previous procedure.

18 days already paid in Procedure 5

image

Details – Registering Property in Luxembourg – Measure of Quality

Answer

Score

Quality of the land administration index (0-30)

25.5

Reliability of infrastructure index (0-8)

8.0

Type of land registration system in the economy:

Title Registration System

What is the institution in charge of immovable property registration?

Property Registry (Bureau des Hypothèques, Administration de l'Enregistrement et des Domaines)

In what format are past and newly issued land records kept at the immovable property registry of the largest business city of the economy —in a paper format or in a computerized format (scanned or fully digital)?

Computer/Fully digital

2.0

Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, restrictions and the like)?

Yes

1.0

Institution in charge of the plans showing legal boundaries in the largest business city:

Cadastre (Administration du Cadastre et de la Topographie)

In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business city of the economy—in a paper format or in a computerized format (scanned or fully digital)?

Computer/Fully digital

2.0

Is there an electronic database for recording boundaries, checking plans and providing cadastral information (geographic information system)?

Yes

1.0

Is the information recorded by the immovable property registration agency and the cadastral or mapping agency kept in a single database, in different but linked databases or in separate databases?

Different databases but linked

1.0

Do the immovable property registration agency and cadastral or mapping agency use the same identification number for properties?

Yes

1.0

Transparency of information index (0–6)

3.5

Who is able to obtain information on land ownership at the agency in charge of immovable property registration in the largest business city?

Anyone who pays the official fee

1.0

Is the list of documents that are required to complete any type of property transaction made publicly available– and if so, how?

Yes, on public boards

0.5

Link for online access:

Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property registration in the largest business city made publicly available–and if so, how?

Yes, online

0.5

Link for online access:

http://www.aed.public. lu/enregistrement/ind ex.html

Does the agency in charge of immovable property registration agency formally commit to deliver a legally binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard?

No

0.0

Link for online access:

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency in charge of immovable property registration?

No

0.0

Contact information:

Are there publicly available official statistics tracking the number of transactions at the immovable property registration agency?

Yes

0.5

Number of property transfers in the largest business city in 2018:

Who is able to consult maps of land plots in the largest business city?

Freely accessible by anyone

0.5

Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how?

Yes, online

0.5

Link for online access:

http://legilux.public.lu/ eli/etat/leg/rgd/2009/0 3/09/n6/jo

Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and if so, how does it communicate the service standard?

No

0.0

Link for online access:

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the cadastral or mapping agency?

No

0.0

Contact information:

Geographic coverage index (0–8)

8.0

Are all privately held land plots in the largest business city formally registered at the immovable property registry?

Yes

2.0

Are all privately held land plots in the economy formally registered at the immovable property registry?

Yes

2.0

Are all privately held land plots in the largest business city mapped?

Yes

2.0

Are all privately held land plots in the economy mapped?

Yes

2.0

Land dispute resolution index (0–8)

6.0

Does the law require that all property sale transactions be registered at the immovable property registry to make them opposable to third parties?

Yes

1.5

Legal basis:

Article 11 from Law of 25 September 1905 on the transcription of real property rights

Is the system of immovable property registration subject to a state or private guarantee?

Yes

0.5

Type of guarantee:

State guarantee

Legal basis:

Article 1 of the Law of 1st September 1988 on civil responsibility of the State and public authorities

Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry?

No

0.0

Legal basis:

Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., checking the compliance of contracts with requirements of the law)?

Yes

0.5

If yes, who is responsible for checking the legality of the documents?

Notary;

Does the legal system require verification of the identity of the parties to a property transaction?

Yes

0.5

If yes, who is responsible for verifying the identity of the parties?

Notary;

Is there a national database to verify the accuracy of government issued identity documents?

Yes

1.0

What is the Court of first instance in charge of a case involving a standard land dispute between two local businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city?

Tribunal d’arrondissement (District court)

How long does it take on average to obtain a decision from the first-instance court for such a case (without appeal)?

Between 1 and 2 years

2.0

Are there publicly available statistics on the number of land disputes at the economy level in the first instance court?

No

0.0

Number of land disputes in the economy in 2018:

Equal access to property rights index (-2–0)

0.0

Do unmarried men and unmarried women have equal ownership rights to property?

Yes

image

Do married men and married women have equal ownership rights to property? Yes 0.0

image

Getting Credit

This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

Strength of legal rights index (0–12)

  • Rights of borrowers and lenders through collateral laws (0-10)

  • Protection of secured creditors’ rights through bankruptcy laws (0-2)

    Depth of credit information index (0–8)

  • Scope and accessibility of credit information distributed by credit bureaus and credit registries (0-8)

    Credit bureau coverage (% of adults)

  • Number of individuals and firms listed in largest credit bureau as a percentage of adult population

    Credit registry coverage (% of adults)

  • Number of individuals and firms listed in credit registry as a percentage of adult population

Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through a credit registry or a credit bureau. The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary secured transactions system exists. Then two case scenarios, case A and case B, are used to determine how a nonpossessory security interest is created, publicized and enforced according to the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a secured lender, BizBank.

In some economies the legal framework for secured transactions will allow only case A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral.

Several assumptions about the secured borrower (ABC) and lender (BizBank) are used:

  • ABC is a domestic limited liability company (or its legal equivalent).

  • ABC has up to 50 employees.

  • ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Both ABC and BizBank are 100% domestically owned.

The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests).

In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.

image

Getting Credit – Luxembourg

Indicator

Luxembourg

OECD high income

Best Regulatory Performance

Strength of legal rights index (0-12)

3

6.1

12 (5 Economies)

Depth of credit information index (0-8)

0

6.8

8 (53 Economies)

Credit registry coverage (% of adults)

0.0

24.4

100.0 (2 Economies)

Credit bureau coverage (% of adults)

0.0

66.7

100.0 (14 Economies)

Figure – Getting Credit in Luxembourg – Score

image

15.0

Score – Getting Credit

Figure – Getting Credit in Luxembourg and comparator economies – Ranking and Score

DB 2020 Getting Credit Score

image

0 100

70.0: Denmark (Rank: 48)

65.0: Belgium (Rank: 67)

64.3: Regional Average (OECD high income) 50.0: France (Rank: 104)

45.0: Netherlands (Rank: 119)

15.0: Luxembourg (Rank: 176)

Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index.

Figure – Legal Rights in Luxembourg and comparator economies

image

8

8

6.1

4

3

2

9

8

Index Score

7

6

5

4

3

2

1

0

Luxembourg Belgium Denmark France Netherlands OECD

high income

Details – Legal Rights in Luxembourg

image

Strength of legal rights index (0-12) 3

image

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description

of collateral?

No

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy?

image

May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the

original assets?

No

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of collateral?

Yes

image

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an

electronic database indexed by debtor's name?

No

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered?

Yes

Does a notice-based collateral registry exist in which all functional equivalents can be registered? No

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No

image

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell No the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it?

Figure – Credit Information in Luxembourg and comparator economies

image

7

6.8

6

6

5

0

8

7

Index Score

6

5

4

3

2

1

0

Luxembourg Belgium Denmark France Netherlands OECD

high income

image

Details – Credit Information in Luxembourg

image

Depth of credit information index (0-8)

Credit bureau

Credit registry

Score

Are data on both firms and individuals distributed?

No

No

0

image

Are data from retailers or utility companies – in addition to data from banks and

financial institutions – distributed?

No

No

0

Are both positive and negative credit data distributed? No No 0

image

Are data on loan amounts below 1% of income per capita distributed?

No

No

0

Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.)

No No 0

By law, do borrowers have the right to access their data in the credit bureau or credit registry?

No No 0

image

Can banks and financial institutions access borrowers’ credit information online (for example, through an online platform, a system-to-system connection or both)?

No No 0

image

Total Score ("yes" to either public bureau or private registry)

0

Are bureau or registry credit scores offered as a value-added service to help banks and financial institutions assess the creditworthiness of borrowers?

No No 0

image

Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.

Coverage

Credit bureau

Credit registry

Number of individuals

0

0

Number of firms

0

0

Total

0

0

Percentage of adult population

0.0

0.0

image

Protecting Minority Investors

This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

  • Extent of disclosure index (0–10): Disclosure, review, and approval requirements for related-party transactions

  • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for prejudicial related-party transactions; Available legal remedies (damages, disgorgement of profits, disqualification

    from managerial position(s) for one year or more, rescission of the transaction)

  • Ease of shareholder suits index (0–10): Access to internal corporate documents; Evidence obtainable during trial and allocation of legal expenses

  • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of shareholder suits indices

  • Extent of shareholder rights index (0-6): Shareholders’ rights and role in major corporate decisions

  • Extent of ownership and control index (0-7): Governance safeguards protecting shareholders from undue board control and entrenchment

  • Extent of corporate transparency index (0-7): Corporate transparency on ownership stakes, compensation, audits and financial prospects

  • Extent of shareholder governance index (0–20): Sum of the extent of shareholders rights, extent of ownership and control and extent of corporate transparency indices

  • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices

To make the data comparable across economies, a case study uses several assumptions about the business and the transaction.

The business (Buyer):

  • Is a publicly traded corporation listed on the economy’s most important stock exchange.

  • Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not specifically required by law.

  • Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members.

  • Has not adopted bylaws or articles of association that go beyond the minimum requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory.

  • Is a manufacturing company with its own distribution network.

    The transaction involves the following details:

  • Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to Buyer’s five-member board.

  • Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores.

  • Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of Buyer’s assets and is higher than the market value.

  • The proposed transaction is part of the company’s principal activity and is not outside the authority of the company.

  • Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently.

  • The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and directors that approved the transaction.

image

Stock exchange information

Stock exchange Luxembourg Stock Exchange

Protecting Minority Investors – Luxembourg

Stock exchange URL http://www.bourse.lu

Listed firms with equity securities 23

image

City CoveredLuxembourg

image

Indicator

Luxembourg

OECD high income

Best Regulatory Performance

Extent of disclosure index (0-10)

6.0

6.5

10 (13 Economies)

Extent of director liability index (0-10)

5.0

5.3

10 (3 Economies)

Ease of shareholder suits index (0-10)

4.0

7.3

10 (Djibouti)

Extent of shareholder rights index (0-6)

4.0

4.7

6 (19 Economies)

Extent of ownership and control index (0-7)

2.0

4.5

7 (9 Economies)

Extent of corporate transparency index (0-7)

6.0

5.7

7 (13 Economies)

Figure – Protecting Minority in Luxembourg – Score

image

54.0

Score – Protecting Minority Investors

Figure – Protecting Minority Investors in Luxembourg and comparator economies – Ranking and Score

DB 2020 Protecting Minority Investors Score

image

0 100

72.0: Denmark (Rank: 28)

68.2: Regional Average (OECD high income) 68.0: Belgium (Rank: 45)

68.0: France (Rank: 45)

58.0: Netherlands (Rank: 79)

54.0: Luxembourg (Rank: 97)

Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index.

Figure – Protecting Minority Investors in Luxembourg and comparator economies – Measure of Quality

Luxembourg

Belgium

Denmark

France

Netherlands

OECD high income

image

image

6

5

6

2

4

4

6

6

8

3

4

7

6

5

7

5

5

8

7

3

8

6

4

6

5

4

4

5

5

6

5.6

5.6

6.6

4.3

4.5

7.4

0 5 10 15 20 25 30 35 40

Sub-Indicator Score

image

image

image

image

image

image

Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10)

image

Details – Protecting Minority Investors in Luxembourg – Measure of Quality

Answer

Score

Extent of conflict of interest regulation index (0-30)

Extent of disclosure index (0-10)

6.0

Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3)

Board of directors excluding interested members

2.0

Must an external body review the terms of the transaction before it takes place? (0-1)

No

0.0

Must Mr. James disclose his conflict of interest to the board of directors? (0-2)

Existence of a conflict without any specifics

1.0

Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2)

Disclosure on the transaction only

1.0

Must Buyer immediately disclose the transaction to the public? (0-2)

Disclosure on the transaction and on the conflict of interest

2.0

Extent of director liability index (0-10)

5.0

Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Buyer? (0-1)

Yes

1.0

Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2)

Liable if negligent

1.0

Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2)

Liable if negligent

1.0

Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1)

Yes

1.0

Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1)

No

0.0

Is Mr. James disqualified upon a successful claim by shareholders? (0-1)

Yes

1.0

Can a court void the transaction upon a successful claim by shareholders? (0-2)

Only in case of fraud or bad faith

0.0

Ease of shareholder suits index (0-10)

4.0

Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? (0-1)

Yes

1.0

Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3)

Any relevant document

3.0

Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1)

No

0.0

Can the plaintiff directly question the defendant and witnesses at trial? (0-2)

No

0.0

Is the level of proof required for civil suits lower than that of criminal cases? (0-1)

No

0.0

Can shareholder plaintiffs recover their legal expenses from the company? (0-2)

At the discretion of the court

0.0

Extent of shareholder governance index (0-20)

Extent of shareholder rights index (0-6)

4.0

Does the sale of 51% of Buyer's assets require shareholder approval?

No

0.0

Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders?

Yes

1.0

Must Buyer obtain its shareholders’ approval every time it issues new shares?

No

0.0

Do shareholders automatically receive preemption rights every time Buyer issues new shares?

Yes

1.0

Do shareholders elect and dismiss the external auditor?

Yes

1.0

Are changes to the rights of a class of shares only possible if the holders of the affected shares approve?

Yes

1.0

Extent of ownership and control index (0-7)

2.0

Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors?

No

0.0

Must the board of directors include independent and nonexecutive board members?

No

0.0

Can shareholders remove members of the board of directors without cause before the end of their term?

Yes

1.0

Must the board of directors include a separate audit committee exclusively comprising board members?

No

0.0

Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer?

Yes

1.0

Must Buyer pay declared dividends within a maximum period set by law?

No

0.0

Is a subsidiary prohibited from acquiring shares issued by its parent company?

No

0.0

Extent of corporate transparency index (0-7)

6.0

Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%?

Yes

1.0

Must Buyer disclose information about board members’ primary employment and directorships in other companies?

Yes

1.0

Must Buyer disclose the compensation of individual managers?

No

0.0

Must a detailed notice of general meeting be sent 21 days before the meeting?

Yes

1.0

Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda?

Yes

1.0

Must Buyer's annual financial statements be audited by an external auditor?

Yes

1.0

Must Buyer disclose its audit reports to the public?

Yes

1.0

image

Paying Taxes

This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information.

image

What the indicators measure

Case study assumptions

Tax payments for a manufacturing company in 2018 (number per year adjusted for electronic and joint filing and payment)

  • Total number of taxes and contributions paid or withheld, including consumption taxes (value added tax, sales tax or goods and service tax)

  • Method and frequency of filing and payment

    Time required to comply with 3 major taxes (hours per year)

  • Collecting information, computing tax payable

  • Preparing separate tax accounting books, if required

  • Completing tax return, filing with agencies

  • Arranging payment or withholding

    Total tax and contribution rate (% of commercial profits)

  • Profit or corporate income tax

  • Social contributions, labor taxes paid by employer

  • Property and property transfer taxes

  • Dividend, capital gains, financial transactions taxes

  • Waste collection, vehicle, road and other taxes

    Postfiling Index

  • Time to comply with VAT refund (hours)

  • Time to obtain VAT refund (weeks)

  • Time to comply with a corporate income tax correction (hours)

  • Time to complete a corporate income tax correction (weeks)

Using a case scenario, Doing Business records taxes and mandatory contributions a medium size company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax laws, time taken to comply with the requirements of postfiling processes and time waiting.

To make data comparable across economies, several assumptions are used:

  • TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government.

    The VAT refund process:

  • In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output VAT in June 2018.

    The corporate income tax audit process:

  • An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period.

image

Paying Taxes – Luxembourg

Indicator

Luxembourg

OECD high income

Best Regulatory Performance

Payments (number per year)

23

10.3

3 (2 Economies)

Time (hours per year)

55

158.8

49 (3 Economies)

Total tax and contribution rate (% of profit)

20.4

39.9

26.1 (33 Economies)

Postfiling index (0-100)

83.8

86.7

None in 2018/19

Figure – Paying Taxes in Luxembourg – Score

image

66.7

image

99.1

image

100.0

image

83.8

Payments

Time

Total tax and contribution rate

Postfiling index

Figure – Paying Taxes in Luxembourg and comparator economies – Ranking and Score

DB 2020 Paying Taxes Score

image

0 100

91.1: Denmark (Rank: 8)

87.4: Luxembourg (Rank: 23)

87.4: Netherlands (Rank: 22)

84.3: Regional Average (OECD high income)

79.2: France (Rank: 61)

78.4: Belgium (Rank: 63)

Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold.

Figure – Paying Taxes in Luxembourg and comparator economies – Measure of Quality

image

92.4

92.0

89.1

86.7

83.8

83.5

94

92

Index score

90

88

86

84

82

80

78

Luxembourg Belgium Denmark France Netherlands OECD

high income

Details – Paying Taxes in Luxembourg

image

Tax or Payments

mandatory (number) contribution

Notes on Payments

Time (hours)

Statutory tax rate

Tax base

Total tax and contribution rate (% of profit)

Notes on TTCR

Social security 12.0

contributions employers

14.0

12.52%-15.01%

gross salaries

15.40

Municipal tax 5.0

6.75%

taxable profits with an allowance of EUR 17,500

4.19

Net wealth tax 0.0

jointly

0.005 (minimum tax of EUR 16,050)

net equity with some exemptions

0.45

Property tax 1.0

750.00%

0.9% to 1% of unitary value

0.23

Tax on insurance 1.0 contracts

4.00%

insurance premium

0.08

Vehicle tax 1.0

varies

vehicle weight or CO2 emission of the vehicle

0.01

Value added tax 1.0

(VAT)

online

22.0

17%

value added

0.00

not included

Social security 0.0

contributions on employee

jointly

11.05%

gross salaries

0.00

Stamp duty 1.0

EUR 1.86-9.92

paper size

0.00

small amount

Corporate 0.0

income tax

jointly

19.0

19.26%

taxable profit

0.00

Fuel tax 1.0

included in fuel price

0.00

small amount

Totals 23

55

20.4

Details – Paying Taxes in Luxembourg – Tax by Type

image

Taxes by type

Answer

Profit tax (% of profit)

4.2

Labor tax and contributions (% of profit)

15.4

Other taxes (% of profit)

0.8

image

Details – Paying Taxes in Luxembourg – Measure of Quality

image

Answer

Score

Postfiling index (0-100)

83.8

image

Does VAT exist?

Yes

VAT refunds

image

Restrictions on VAT refund process

none

Does a VAT refund process exist per the case study? Yes

image

Is there a mandatory carry forward period?

No

Percentage of cases exposed to a VAT audit (%) 50% – 74%

image

Time to obtain VAT refund (weeks)

15.0

76.9

Time to comply with VAT refund (hours) 12.0 77.0

image

Does corporate income tax exist?

Yes

Corporate income tax audits

image

Time to comply with a corporate income tax correction (hours)

4.5

94.5

Percentage of cases exposed to a corporate income tax audit (%) 0% – 24%

Time to complete a corporate income tax correction (weeks) 4.3 86.6

image

Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable.

The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.

The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction.

N/A = Not applicable.

image

Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

Documentary compliance

  • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in origin economy

  • Obtaining, preparing and submitting documents required by destination economy and any transit economies

  • Covers all documents required by law and in practice, including electronic submissions of information

    Border compliance

  • Customs clearance and inspections

  • Inspections by other agencies (if applied to more than 20% of shipments)

  • Handling and inspections that take place at the economy’s port or border

    Domestic transport

  • Loading or unloading of the shipment at the warehouse or port/border

  • Transport between warehouse and port/border

  • Traffic delays and road police checks while shipment is en route

To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions:

Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours.

Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector experts in international trade logistics and are informed about exchange rates.

Assumptions of the case study:

  • For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy.

  • It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000.

  • The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport or land border crossing.

  • All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process.

  • A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy.

  • Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities.

image

Trading across Borders – Luxembourg

Indicator

Luxembourg

OECD high income

Best Regulatory Performance

Time to export: Border compliance (hours)

0

12.7

1 (19 Economies)

Cost to export: Border compliance (USD)

0

136.8

0 (19 Economies)

Time to export: Documentary compliance (hours)

1

2.3

1 (26 Economies)

Cost to export: Documentary compliance (USD)

0

33.4

0 (20 Economies)

Time to import: Border compliance (hours)

0

8.5

1 (25 Economies)

Cost to import: Border compliance (USD)

0

98.1

0 (28 Economies)

Time to import: Documentary compliance (hours)

1

3.4

1 (30 Economies)

Cost to import: Documentary compliance (USD)

0

23.5

0 (30 Economies)

Figure – Trading across Borders in Luxembourg – Score

Time

Cost

Time

Cost

Time

Cost

Time

Cost

to

to

to

to

to

to

to

to

export:

export:

export:

export:

import:

import:

import:

import:

Border

Border

Documentary

Documentary

Border

Border

Documentary

Documentary

compliance

compliance

compliance

compliance

compliance

compliance

compliance

compliance

Figure – Trading across Borders in Luxembourg and comparator economies – Ranking and Score

image

100.0

image

100.0

image

100.0

image

100.0

image

100.0

image

100.0

image

100.0

image

100.0

image

DB 2020 Trading Across Borders Score

94.3:

Region 100: Be

100: De

100: Fra

100: Lu

100: Ne

0 100

al Average (OECD high income) lgium (Rank: 1)

nmark (Rank: 1)

nce (Rank: 1)

xembourg (Rank: 1)

therlands (Rank: 1)

Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import.

Figure – Trading across Borders in Luxembourg – Time and Cost

image

image

1.2

Time (hours) Cost (USD)

image

1

1

0

0

0

0

0

0

1.2

11

Time (hours)

Cost (USD)

0.80.8

0.60.6

0.40.4

0.20.2

0

Export

Border Compliance

Export

Documentary Compliance

Import

Border Compliance

0

Import

Documentary Compliance

Details – Trading across Borders in Luxembourg

image

Characteristics

Export

Import

Product

HS 72 : Iron and steel

HS 8708: Parts and accessories of motor vehicles

Trade partner

Germany

Germany

Border

Luxembourg-Germany border crossing

Luxembourg-Germany border crossing

Distance (km)

45

45

Domestic transport time (hours)

1

1

Domestic transport cost (USD)

70

70

Details – Trading across Borders in Luxembourg – Components of Border Compliance

Time to Complete (hours)

Associated Costs (USD)

Export: Clearance and inspections required by customs authorities

0.0

0.0

Export: Clearance and inspections required by agencies other than customs

0.0

0.0

Export: Port or border handling

0.0

0.0

Import: Clearance and inspections required by customs authorities

0.0

0.0

Import: Clearance and inspections required by agencies other than customs

0.0

0.0

Import: Port or border handling

0.0

0.0

image

Details – Trading across Borders in Luxembourg – Trade Documents

image

Export

Import

CMR waybill CMR waybill

Commercial invoice Commercial invoice

Packing list Packing list

Intrastat Intrastat

image

image

Enforcing Contracts

The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

Time required to enforce a contract through the courts (calendar days)

  • Time to file and serve the case

  • Time for trial and to obtain the judgment

  • Time to enforce the judgment

    Cost required to enforce a contract through the courts (% of claim value)

  • Average attorney fees

  • Court costs

  • Enforcement costs

    Quality of judicial processes index (0-18)

  • Court structure and proceedings (-1-5)

  • Case management (0-6)

  • Court automation (0-4)

  • Alternative dispute resolution (0-3)

The dispute in the case study involves the breach of a sales contract between two domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement.

To make the data on the time and comparable across economies, several assumptions about the case are used:

  • The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of adequate quality.

  • The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater.

  • The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater.

  • The Seller requests the pretrial attachment of the defendant’s movable assets to secure the claim.

  • The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods was not adequate.

  • The judge decides in favor of the seller; there is no appeal.

  • The Seller enforces the judgment through a public sale of the Buyer’s movable assets.

image

Standardized Case

Claim value EUR 129,471

Enforcing Contracts – Luxembourg

image

City Covered Luxembourg

image

Court name Luxembourg District Court, Commercial Section

Indicator

Luxembourg

OECD high income

Best Regulatory Performance

Time (days)

321

589.6

120 (Singapore)

Cost (% of claim value)

9.7

21.5

0.1 (Bhutan)

Quality of judicial processes index (0-18)

8.5

11.7

None in 2018/19

Figure – Enforcing Contracts in Luxembourg – Score

image

83.5

image

89.2

image

47.2

Time

Cost

Quality of judicial processes index

Figure – Enforcing Contracts in Luxembourg and comparator economies – Ranking and Score

DB 2020 Enforcing Contracts Score

image

0 100

73.9: Denmark (Rank: 14)

73.5: France (Rank: 16)

73.3: Luxembourg (Rank: 18)

67.8: Regional Average (OECD high income)

64.3: Belgium (Rank: 56)

59.9: Netherlands (Rank: 78)

Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators.

Figure – Enforcing Contracts in Luxembourg – Time and Cost

700

600

Time (days)

500

400

300

200

100

0

Time (days) Cost (% of claim value)

image

589.6

505

23.3

485

514

23.9

21.5

18.0

447

17.4

321

9.7

image

image

Cost (% of claim value)

30

25

20

15

10

5

0

Belgium Denmark France Luxembourg Netherlands OECD

high income

Figure – Enforcing Contracts in Luxembourg and comparator economies – Measure of Quality

Luxembourg

Belgium

Denmark

France

Netherlands

OECD high income

image

image

2.5

1

0.5

4.5

2.5

1 0

4.5

2.5

4.5

3.5

3.5

2.5

3

2

4.5

1.5

0.5

2

3

2.5

3.2

2.4

3.6

0 2 4 6 8 10 12 14 16

Sub-Indicator Score

image

image

image

image

Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5)

Details – Enforcing Contracts in Luxembourg

image

Indicator

Time (days) 321

Trial and judgment 240

Filing and service 21

Cost (% of claim value) 9.7

Enforcement of judgment 60

Court fees0.1

Attorney fees8.7

Quality of judicial processes index (0-18) 8.5

Enforcement fees 0.9

Case management (0-6) 1.0

Court structure and proceedings (-1-5) 4.5

image

Alternative dispute resolution (0-3) 2.5

Court automation (0-4) 0.5

image

Details – Enforcing Contracts in Luxembourg – Measure of Quality

Answer

Score

Quality of judicial processes index (0-18)

8.5

Court structure and proceedings (-1-5)

4.5

1. Is there a court or division of a court dedicated solely to hearing commercial cases?

Yes

1.5

2. Small claims court

1.5

2.a. Is there a small claims court or a fast-track procedure for small claims?

Yes

2.b. If yes, is self-representation allowed?

Yes

3. Is pretrial attachment available?

Yes

1.0

4. Are new cases assigned randomly to judges?

Yes, but manual

0.5

5. Does a woman's testimony carry the same evidentiary weight in court as a man's?

Yes

0.0

Case management (0-6)

1.0

1. Time standards

0.0

1.a. Are there laws setting overall time standards for key court events in a civil case?

No

1.b. If yes, are the time standards set for at least three court events?

n.a.

1.c. Are these time standards respected in more than 50% of cases?

n.a.

2. Adjournments

0.0

2.a. Does the law regulate the maximum number of adjournments that can be granted?

No

2.b. Are adjournments limited to unforeseen and exceptional circumstances?

No

2.c. If rules on adjournments exist, are they respected in more than 50% of cases?

n.a.

3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report?

Yes

1.0

4. Is a pretrial conference among the case management techniques used before the competent court?

No

0.0

5. Are there any electronic case management tools in place within the competent court for use by judges?

No

0.0

6. Are there any electronic case management tools in place within the competent court for use by lawyers?

No

0.0

Court automation (0-4)

0.5

1. Can the initial complaint be filed electronically through a dedicated platform within the competent court?

No

0.0

2. Is it possible to carry out service of process electronically for claims filed before the competent court?

No

0.0

3. Can court fees be paid electronically within the competent court?

No

0.0

4. Publication of judgments

0.5

4.a Are judgments rendered in commercial cases at all levels made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

No

4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

Yes

Alternative dispute resolution (0-3)

2.5

1. Arbitration

1.5

1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects?

Yes

1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— that cannot be submitted to arbitration?

No

1.c. Are valid arbitration clauses or agreements usually enforced by the courts?

Yes

2. Mediation/Conciliation 1.0

image

2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or

section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig

Yes

2.a. Is voluntary mediation or conciliation available? Yes

2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)?

Resolving Insolvency

Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Time required to recover debt (years)

  • Measured in calendar years

  • Appeals and requests for extension are included

    Cost required to recover debt (% of debtor’s estate)

  • Measured as percentage of estate value

  • Court fees

  • Fees of insolvency administrators

  • Lawyers’ fees

  • Assessors’ and auctioneers’ fees

  • Other related fees

    To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used:

    • A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties.

    • The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater.

    • The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. The hotel cannot pay back the loan, but makes enough money to operate otherwise.

    In addition, Doing Business evaluates the quality of legal framework applicable to judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered.

    Outcome

  • Whether business continues operating as a going concern or business assets are sold piecemeal

    Recovery rate for creditors

  • Measures the cents on the dollar recovered by secured creditors

  • Outcome for the business (survival or not) determines the maximum value that can be recovered

  • Official costs of the insolvency proceedings are deducted

  • Depreciation of furniture is taken into account

  • Present value of debt recovered

    Strength of insolvency framework index (0- 16)

  • Sum of the scores of four component indices:

  • Commencement of proceedings index (0-3)

  • Management of debtor’s assets index (0-6)

  • Reorganization proceedings index (0-3)

  • Creditor participation index (0-4)

image

Indicator

Luxembourg

OECD high income

Best Regulatory Performance

Recovery rate (cents on the dollar)

43.9

70.2

92.9 (Norway)

Resolving Insolvency – Luxembourg

image

Cost (% of estate)

14.5

9.3

1.0 (Norway)

Time (years) 2.0 1.7 0.4 (Ireland)

image

Figure – Resolving Insolvency in Luxembourg – Score

image

Strength of insolvency framework index (0-16)

7.0

11.9

None in 2018/19

Outcome (0 as piecemeal sale and 1 as going concern) 0 .. ..

image

47.2

image

43.8

Recovery rate Strength of insolvency framework index

Figure – Resolving Insolvency in Luxembourg and comparator economies – Ranking and Score

DB 2020 Resolving Insolvency Score

image

0 100

85.1: Denmark (Rank: 6)

84.4: Netherlands (Rank: 7)

84.1: Belgium (Rank: 9)

74.9: Regional Average (OECD high income)

74.6: France (Rank: 26)

45.5: Luxembourg (Rank: 93)

Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index.

Figure – Resolving Insolvency in Luxembourg – Time and Cost

2.5

Time (years)

2

1.5

1

0.5

0

Time (years) Cost (% of estate)

image

14.5

1.9

2.0

1.7

9.0

9.3

1.1

0.9

1.0

3.5

4.0

3.5

image

image

16

Cost (% of estate)

14

12

10

8

6

4

2

0

Belgium Denmark France Luxembourg Netherlands OECD

high income

Figure – Resolving Insolvency in Luxembourg and comparator economies – Measure of Quality

Luxembourg

Belgium

Denmark

France

Netherlands

OECD high income

image

image

3

2.5

1

0.5

6

2.5

2

1

6

3

2

1

6

3

1

1

6

2.5

2

1

5.3

2.8

2.1

1.9

0 2 4 6 8 10 12 14

Sub-Indicator Score

image

image

image

image

Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3)

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Figure – Resolving Insolvency in Luxembourg and comparator economies – Recovery Rate

figure resolving insolvency in luxembourg and comparator economies recovery rate

Details – Resolving Insolvency in Luxembourg

details resolving insolvency in luxembourg

Details – Resolving Insolvency in Luxembourg – Measure of Quality

details resolving insolvency in luxembourg measure of quality

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Employing Workers

Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business.

The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Hiring

(i) whether fixed-term contracts are prohibited for permanent tasks; (ii) maximum cumulative duration of fixed-term contracts;

(iii) length of the maximum probationary period; (iv) minimum wage;(v) ratio of minimum wage to the average value added per worker.

Working hours

(i) maximum number of working days allowed per week; (ii) premiums for work: at night, on a weekly rest day and overtime;

(iii) whether there are restrictions on work at night, work on a weekly rest day and for overtime work; (iv) length of paid annual leave.

Redundancy rules

(i) whether redundancy can be basis for terminating workers; (ii) whether employer needs to notify and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment.

To make the data comparable across economies, several assumptions about the worker and the business are used.

The worker:

  • Is a cashier in a supermarket or grocery store, age 19, with one year of work experience.

  • Is a full-time employee.

  • Is not a member of the labor union, unless membership is mandatory.

    The business:

  • Is a limited liability company (or the equivalent in the economy).

  • Operates a supermarket or grocery store in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Has 60 employees.

  • Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them.

  • Abides by every law and regulation but does not grant workers more benefits than those mandated by law, regulation or (if applicable) collective bargaining agreements.

Redundancy cost

(i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected.

Employing Workers – Luxembourg

Details – Employing Workers in Luxembourg

Hiring

Fixed-term contracts prohibited for permanent tasks? Yes

Maximum length of a single fixed-term contract (months) 24.0

Maximum length of fixed-term contracts, including renewals (months)24.0

Minimum wage applicable to the worker assumed in the case study (US$/month) 2770.8

Maximum length of probationary period (months) 6.0

Ratio of minimum wage to value added per worker 0.3

Standard workday 8.0

Working hours

Premium for night work (% of hourly pay) 0.0

Maximum number of working days per week 5.5

Premium for overtime work (% of hourly pay) 40.0

Premium for work on weekly rest day (% of hourly pay) 70.0

Restrictions on weekly holiday? Yes

Restrictions on night work? No

Paid annual leave for a worker with 1 year of tenure (working days)26.0

Restrictions on overtime work? No

Paid annual leave for a worker with 10 years of tenure (working days) 26.0

Paid annual leave for a worker with 5 years of tenure (working days)26.0

Redundancy rules

Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 26.0

Third-party notification if one worker is dismissed? Yes

Dismissal due to redundancy allowed by law? Yes

Third-party notification if nine workers are dismissed? Yes

Third-party approval if one worker is dismissed? No

Retraining or reassignment obligation before redundancy? No

Third-party approval if nine workers are dismissed? No

Priority rules for reemployment? Yes

Priority rules for redundancies? No

Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 8.7

Redundancy cost

Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 26.0

Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 17.3

Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 0.0

Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 17.3

Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 8.7

Unemployment protection after one year of employment? Yes

Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3

PEO Luxembourg

Luxembourg stands as a thriving hub for international businesses and a prime destination for those seeking to expand their global operations. As a PEO country, Luxembourg offers a strategic advantage with its business-friendly environment, favorable tax regulations, and a skilled workforce. Its central location in Europe facilitates easy access to major markets, making it an attractive choice for companies looking to establish a strong presence in the region. With its stable economy, multicultural atmosphere, and commitment to innovation, Luxembourg provides an ideal platform for companies to navigate the complexities of international employment through Professional Employer Organizations, fostering growth and success on a global scale.

PEO services in Luxembourg serve as a strategic solution for businesses aiming to navigate the intricacies of its dynamic workforce landscape. Operating in Luxembourg necessitates a deep understanding of its complex employment regulations, legal frameworks, and administrative procedures. PEOs excel in managing these complexities, offering comprehensive support in areas such as payroll management, benefits administration, tax compliance, and recruitment. By partnering with a PEO, companies can confidently navigate the Luxembourg business landscape, allowing them to concentrate their resources on core operations. Whether it’s market entry or expansion, businesses can leverage PEO services to streamline HR processes, ensure compliance, and foster growth within Luxembourg’s thriving economy.

Business Reforms in Luxembourg

From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by

Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008.

=Doing Business reform making it easier to do business. = Change making it more difficult to do business.

DB2020

Employing Workers:

Luxembourg changed regulations pertaining to paid annual leave.

DB2019

Employing Workers:

Luxembourg increased post-natal maternity leave, amended statutory provisions for leave for personal reasons and family leave, introduced state co-financing of professional trainings and amended pre-retirement rules.

DB2018

Protecting Minority Investors:

Luxembourg strengthened minority investor protections by making it easier to sue directors in case of prejudicial related-party transactions and increasing access to corporate information.

DB2011

Starting a Business: Luxembourg eased business start-up by speeding up the delivery of the business license.

DB2010

Starting a Business: Luxembourg made starting a business easier by allowing entrepreneurs to reserve a company name online and by eliminating the capital duty.

Employing Workers:

Luxembourg increased the severance payments applicable in redundancy dismissals.

DOWNLOAD

Table of Contents