Recent developments in Luxembourg’s immigration regulations: new opportunities for investors

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​On 8 February 2017, the Luxembourg Parliament voted a new law on immigration (hereafter the “Law”) which aims at increasing Luxembourg’s attractiveness as a host country for foreign talents. The main innovation of the Law is to implement a new category of residence permit in Luxembourg for investors.

On 8 February 2017, the Luxembourg Parliament voted a new law on immigration (hereafter the “Law”) which aims at increasing Luxembourg’s attractiveness as a host country for foreign talents.

The main innovation of the Law is to implement a new category of residence permit in Luxembourg for investors.

Immigration represents a major pillar of Luxembourg’s economy which has always relied on foreign labour and investments. This dynamic economy has made Luxembourg not only a global hub for finance, insurance and banking activities but also an attractive location for numerous investors over recent years.

The new immigration provisions are responses to several requirements, including the need to diversify the local economy and to continue attracting certain categories of migrants to encourage further investment in Luxembourg in order to diversify the national economy.

Residence permit for investors

The most important feature of the Law, primarily from an economic point of view, is undeniably the creation of a residence permit for investors which aims at diversifying the national economy and encouraging entrepreneurship in Luxembourg while at the same time boosting the financial industry.

A third-country national interested in investing in Luxembourg may opt for one of the following investment plans in order to be granted a residence permit as an investor:

- Invest at least EUR 500,000.- in an existing Luxembourg company (with commercial, industrial or craft activities) and commit to maintaining the existing jobs for five years, except if the company is in difficulties at the time of purchase in which case the aforementioned employment condition is not applicable; or

- Invest at least EUR 500,000.- in a new Luxembourg company (with commercial, industrial or craft activities) and commit to creating at least five jobs in the next three years (the vacancies have to be filled in collaboration with the Luxembourg Employment Agency); or

- Invest at least EUR 3,000,000.- in an existing or new investment/management structure which has its registered office in Luxembourg and has proven appropriate substance (the latter condition is assessed with respect to the activity of the structure, the office space configuration, the financial, human and technical resources needed, the number of jobs and the contractual relations with the professionals of the financial sector). Furthermore, the investment and management structure must employ at least two persons and have appropriate accounting and governance rules; or

- Deposit at least EUR 20,000,000.- with a financial institution established in Luxembourg and maintain this investment for at least five years.

For all of these options, investments relating directly or indirectly to real estate are prohibited and investments must be made prior to the delivery of the temporary authorisation to stay.

Concerning the first three options, the investments must be composed of 75% of the applicant’s own funds whilst the remaining 25% may be borrowed for a period of three years at least. The last option excludes any loan.

The residence permit for investors will be valid for an initial period of three years, subject to renewal.

Authors:Eric Fort, Partner Private Wealth, andPhilippe Schmit, Partner Employment Law, Pensions & Benefits