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ARTICLE · 15 JULY 2020

Luxembourg Law On Professional Payment Guarantees Published

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Yesterday, the law of 10 July 2020 regarding professional payment guarantees was published (the "Law"). This Law introduces a new personal guarantee regime for guarantees granted within a...

LuxembourgTax
Jérémie Schaeffer
Jérémie Schaeffer
Richard Fauvel
Richard Fauvel

Yesterday, the law of 10 July 2020 regarding professional payment guarantees was published (the "Law").

This Law introduces a new personal guarantee regime for guarantees granted within a professional context and aims to provide a flexible alternative to the existing suretyship (cautionnement) and first demand guarantee (garantie à première demande) regimes.

This new guarantee regime aims at reinforcing the attractiveness of Luxembourg as place of choice for international financial transactions.

The professional payment guarantee will be for sure a useful tool in the scope of structuring (i) security packages for financial transactions and (ii) joint-venture deals as it offers contractual freedoms and legal certainty (no risk of requalification into suretyship).

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