LUXEMBOURG Law and Practice Contributed by: Stefanie Ferring, Oliver Zwick and Geoffrey Scardoni, Clifford Chance
2. Regulatory Environment 2.1 Licensing and Regulatory Approval Licence Requirements for Lending The provision of lending services to the public in Luxembourg generally triggers a licence require - ment as a professional performing lending oper - ations, where such lending activity is carried out on a professional basis and the lender does not refinance itself by taking deposits or other repay - able funds from the public (otherwise the activity would require a credit institution licence). This may also include credit funds purchasing loans, for example where the loans are subject to fur - ther drawdowns. Depending on whether the lender is a Luxem - bourg or foreign entity, specific scope consid - erations apply in relation to the above licence requirement. For instance, an exemption may be available to both Luxembourg and foreign lend - ers where either loans are granted to a limited group of previously determined persons or (i) the nominal value of each loan amounts to EUR3 million at least and (ii) the loans are granted exclusively to professionals (within the meaning of the Luxembourg Consumer Code). Lending on a pure cross-border basis by foreign enti - ties should normally not trigger a local licence requirement either. Private credit funds are further regulated in the European Union under AIFMD. The rules that apply pursuant to AIFMD are, however, only in relation to the business operations of the fund manager and do not cover the extension of cred - it. Certain regulated Luxembourg undertakings for collective investment (which are subject to funds specific legislation) are generally excluded from the scope of Luxembourg financial sector law licensing requirements, including the above lending-related one.
to specific types of borrowers. That is a different matter and AIFMD2 is therefore without preju - dice to local rules on corporate and consumer lending, including license requirements (please refer to 2.1 Licensing and Regulatory Approval ), which will continue to apply. AIFMD2 must be implemented by 16 April 2026. CRDVI The current European Capital Requirements Directive (CRD) provides for a harmonised regime on banking business (including lending) across the European Union. CRD has, however been amended among other matters to include lending from outside of the European Union but the most recent amendments are yet to be implemented across the European Union. It is referred to as CRDVI in its amended form. CRDVI introduces rules on lending by non-EU credit institutions (ie, banks) to European bor - rowers and will require such non-EU credit insti - tutions to set up a branch office in the country of the borrower and obtain authorisation locally (exemptions are available). Other types of non- EU based lenders should remain unaffected pro - vided they do not meet the materiality require - ments of qualifying as a credit institution under CRDVI. Private credit funds should therefore not be affected in Luxembourg. CRDVI implement - ing legislation is, however, still to be published in Luxembourg. The CRDVI provisions in relation to lending by third country credit institutions must be imple - mented by 11 January 2027.
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