If you have a company in a foreign country and you plan on extending your business in Luxembourg as well, you may choose to open a branch or subsidiary in Luxembourg, that requires registration with the Trade Register, or set up a liaison office, meaning a lighter structure also known as a representative office.
Why open a liaison office in Luxembourg
Unlike a branch or subsidiary, that requires registration with authorities, a liaison office is a much simpler alternative that allows a foreign legal entity to create on-site contacts in Luxembourg with stakeholders such as potential customers or suppliers. The liaison office can help the business development by ensuring communication, advertising and other public relation activities with partners and clients, undertakings that are hard to perform remote. A liaison office allows a company to be at the heart of the business environment with less documentation and responsibilities.
Actions allowed to be undertaken in a liaison office
A liaison office in Luxembourg is not allowed to conclude contracts in the name and for the account of the foreign company, as its main purpose is related to research, public relations and communication and not at all with commercial activity. The liaison office has a very strict preparatory relay role in the early stage of the negotiation process lead between client and the respective foreign company. Therefore, all documents, such as invoices or contracts, must be issued or signed, depending of the type of document, by the foreign parent company.
The liaison office does not have legal personality
In Luxembourg, the liaison offices opened by a foreign entity do not have a legal personality. Hence, it is not separated by the foreign company’s heritage, it does not have a distinct name, a trade name, own property or capital. If the liaison office has financial problems, then the foreign company that opened the liaison office in Luxembourg is liable for the debts of the office.
Representatives in Luxembourg
The foreign company can assign a representative, but depending on the type of activity the company undertakes, it can assign a team of several representatives. It is mandatory for the foreign representatives to hold a residence permit. However, if the assigned person is a member of a state part of the European Union that has signed an agreement with the foreign country where the company has residence, then the residence permit is not mandatory.
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