INTRODUCTION

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To set up a Luxembourg-based company, you need an address and, for operating companies, an operational office. In certain circumstances, a company may not be interested in establishing its own private premises. Instead, it may choose to be domiciled at the premises of a third party, using these premises as the company's official domicile.

 

This domicile can serve as the company's head office or as an ordinary branch of its business. Domiciliation is a suitable solution for companies that, due to the nature of their activities, do not require their own premises. However, domiciliation is not a valid option for commercial companies, which are legally required to have physical premises in Luxembourg. The domiciliation of companies is an activity regulated by the law of May 31, 1999.

 

Domiciliation is a service offered by certain providers. Not everyone can domicile other companies within their premises. The law reserves the exercise of domiciliation to certain regulated professions, including (see the law for more details):

• Credit institutions

• Other professionals in the financial and insurance sectors

• Registered attorneys at law (avocats à la Cour)

• Registered European lawyers practicing by virtue of their original professional qualification

• Company auditors

• Approved statutory auditors

• Chartered accountants

 

All these professionals can become domiciliary agents. They are expected to operate professionally and in good faith. Specifically, professionals in the financial sector (PSF) require prior authorization from the CSSF (Commission de Surveillance du Secteur Financier) before starting domiciliation activities.

 

THE PILARS OF THE DOMICILIATION SERVICES

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The domiciliary agent and the domiciled company are required to sign a written domiciliation agreement. This agreement allows the company to establish a head office at the domiciliary premises and conduct business from there. It also outlines the services that the domiciliary agent provides to the domiciled company.

 

Domiciliation services primarily include:

• Providing a registered domicile for the company at the registered office of the service provider.

• Storing all books, registers, contracts, correspondence, and other documents related to the company.

• Providing any requested documents and information to supervisory, administrative, and fiscal bodies.

• Additionally, the domiciliary agent can offer typically optional administrative and corporate secretarial services, such as:

 

Convening and holding the company's board of directors meetings and annual general meetings, including the preparation and sending of convening notices, statements, reports, letters, proxies, and other related documentation.

• Drafting and distributing meeting minutes.

• Handling deposit formalities with the Luxembourg Register of Trade and Companies (RCS), including registering, lodging, and publishing all mandatory legal notices on behalf of the company.

• Providing accounting and payment services.

 

Professionals of the Financial Sector (PSF) are regulated entities overseen by the CSSF. A domiciliation agreement issued by a PSF is strictly regulated and must include a series of elements including (but not limited to) the details of the person in charge of the domiciliary agent, the details of the services being provided, particulars of the rights and responsibilities of the domiciled company, and the means of communication between the parties to the agreement. In addition, Anti-Money Laundering (AML) obligations apply. By strictly regulating the domiciliation service offered by these entities, the regulator reinforces the reliability and integrity of this service.

 

DOMICILIATION VS. RENTING OR SUB-RENTING

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It is probably worth emphasizing the difference between domiciliation and renting or sub-renting agreements. These have almost nothing in common outside of the fact that the contract provides an address to the tenant or lessee. Anyone could rent or sub-rent offices, private individuals as well as companies (sub-rent should however be allowed in the rental agreement). Regarding domiciliation, it is regulated service offered by certain entities only and within a framework defined by law. It is a service that is attractive for many companies because it reduces the fixed cost of running a company. It has, however, to be set-up by respecting the rules and laws.

 

CONCLUSION

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Domiciliation has been established in Luxembourg for decades and has been strictly regulated since 1999. It is an effective way for smaller companies or companies that do not require operational offices for their employees (if they have any) to save money.

FARAD I.M., as a Professional of the Financial Sector (PSF), has had CSSF authorization to provide domiciliation services since 2014, building a consolidated experience over the years. If you are looking for more information on this topic or for a domiciliation agent, don’t hesitate to contact us.