Luxembourg - End of Exceptional Covid-19 measures

Luxembourg ends exceptional Covid-19 measures which allowed the holding of corporate meetings without a physical presence in Luxembourg.

The unprecedented Covid-19 pandemic triggered governments around the world to introduce containment measures which impacted economies and created significant challenges for society. In order to ensure effective continuance of business activity and sustain operations during the pandemic, there was an immediate need for greater flexibility around corporate governance matters to adapt to the exceptional crisis.

In response, the authorities in Luxembourg promptly took action through the passing of the Grand-Ducal Regulation of 20 March 2020 which included measures on the holding of meetings for companies and other legal entities, which were subsequently extended several times up until 31 December 2022 (the Corporate Covid-19 Emergency Laws).

The Corporate Covid-19 Emergency Laws allowed corporate meetings to be held remotely without the need for any physical attendance and provided companies with additional flexibility in their decision-making processes, notwithstanding any contrary provisions in the constitutional bylaws of those companies. In addition, some reporting deadlines were extended to support the continuation of business activity during the crisis while adhering to travel restrictions and health and safety measures in place.

Now that the risks posed by the Covid-19 crisis have subsided, the authorities in Luxembourg have decided not to extend the Corporate Covid-19 Emergency Laws further. Accordingly, companies must comply with pre-Covid-19 standards, rules and legislation, and must consider holding their corporate meetings in person again.

It should be noted that while the Luxembourg law of 10 August 1915 regarding commercial companies does not require the holding of corporate meetings in person, and even makes provision for the holding of meetings by electronic means, companies must be cognisant of applicable tax residency rules, particularly in relation to substance and the central management of companies.

Under Luxembourg law, a company is considered to be Luxembourg tax resident when its registered office or place of central administration is located in Luxembourg. In order to determine whether the central administration of a company is located in Luxembourg, the company must establish that it is effectively managed from Luxembourg. Therefore, companies should ensure that important decisions are made at physical meetings held in Luxembourg, rather than at meetings held remotely or by means of written consent. In cases where there have been no major decisions or activity during the course of a financial year, companies should ensure that at least one physical meeting is held in Luxembourg annually to discuss and approve the annual accounts.