Domiciliation services in Luxembourg

What are domiciliation services?

Domiciliation services are a set of administrative and legal services that allow a company to have a registered address in Luxembourg without the need to maintain a physical office or staff in the country. These services include the provision of a legal seat, administrative management, reception of correspondence, and representation before local authorities.

The registered office is not just an address in Luxembourg, it represents the place from which the company is administered and managed. It is therefore the address where the company will receive all official correspondence, as well as the place where it must keep several official legal documents such as accounting documents, establishment authorizations, shareholders' register and even minutes of the Board of Directors' ordinary and extraordinary general meetings.

Functions and benefits of domiciliation services

The registered office is therefore a vital place and domiciliation services play a very important role. Let's look closer at the main functions and benefits of domiciliation services in Luxembourg.

Legal presence without the need for a physical office. Domiciliation services provide an official address in Luxembourg which serves as a legal seat for tax and administrative purposes so that the company does not have to maintain a physical office. By not requiring physical infrastructure, companies can significantly reduce operating costs, this allows international and multinational companies to operate in Luxembourg and manage investments or activities in Europe at lower costs.
Administrative management. Domiciliation providers can take care of administrative tasks such as receiving mail, managing documents, preparing reports and handling correspondence with authorities. They can also include the management of board meetings and shareholders' meetings as well as the preparation and preservation of minutes and corporate documents.
Regulatory compliance. Domiciliation services help ensure the company complies with regulations such as anti-money laundering (AML) and Know Your Customer (KYC) regulations.
Legal representation before authorities. Domiciliation providers can act as the company's representative before regulatory bodies such as the CSSF, tax bodies or the Commercial Registry.
Accounting and tax services. In some cases, providers also offer accounting, tax filing and bookkeeping services, ensuring compliance with tax obligations.

Legal and regulatory framework in Luxembourg

Given the importance of domiciliation services, this is a strictly regulated activity. The legal basis is provided by the law of May 31, 1999, on the domiciliation of companies, however, there are other laws and regulations that intervene in one way or another:

Law of May 31, 1999, on the domiciliation of companies. This law is the main regulation governing domiciliation services in Luxembourg, it defines the conditions under which a company can be domiciled in Luxembourg and the obligations of the providers of these services.
Régulation de la Commission de Surveillance du Secteur Financier (CSSF). The CSSF is the main regulatory body that supervises entities providing domiciliation services. The CSSF ensures that providers of these services comply with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations and that they correctly apply know-your-customer (KYC) principles.
Law of November 12, 2004, on the fight against money laundering and the financing of terrorism. This law imposes on domiciliation service providers in Luxembourg the obligation to carry out strict controls on their clients to prevent domiciliation companies from being used for illicit activities. According to this law, the domiciliation agent is obliged to act with due diligence even before establishing a business relationship and to identify its client based on documentary evidence, understanding the client not as the domiciled company but as the natural person behind it. In addition, domiciliation services must also identify the activity of their client, the objectives of the business relationship and the geographical and economic origin of the client's funds.
EU Anti-Money Laundering (AML) Directives. Luxembourg is subject to EU Directives and several of these have a direct impact on the operation of Luxembourg domiciliation companies. In particular, the 4th and 5th European Union Directives aimed at reinforcing the fight against money laundering.
Law of January 13, 2019, and the register of beneficial owners (RBE). The law of January 13, 2019, introduced the Register of Beneficial Owners (RBE) and stipulates that every company must disclose its beneficial owners, that is, any natural person, who ultimately holds directly or indirectly, a percentage of shares or voting rights or participation of more than 25% in a legal entity. This obliges Luxembourg domiciliation service providers to ensure that their clients comply with this obligation by providing information on the true owners of the domiciled companies.

Companies that can use domiciliation services

Not all companies can make use of domiciliation services in Luxembourg, this is because certain companies need an establishment permit and this requires compliance with several administrative criteria that prevent them from being able to make use of domiciliation. In particular, the following companies require an establishment permit:

Commercial companies: these companies must have consistent premises, which may be a warehouse or a store unless the corporate purpose demonstrates that the intended activity only requires the use of a simple office.
Craft companies: the company must have a workshop or a warehouse.
Service companies: the companies need to have an office.

In these cases, it is then impossible to use the domiciliation services in Luxembourg and the company must have its own premises. Moreover, following the major disputes that have arisen in the past as a result of the “mailbox” phenomenon, the authorities and the Ministry of Economy systematically and scrupulously check that each legal entity has actual physical premises where the regular presence of a legal representative is essential.

On the other hand, certain types of companies can make use of this type of service, here are the main ones:

Holding Companies (Soparfi). These companies are used to hold shares in other companies, they are generally used by multinational groups to manage their stakes in other companies. These companies do not carry out direct commercial activities but focus on investment management and therefore require an active physical operation and can benefit from domiciliation services.
Investment Funds (SIF, SICAV, SICAR). Investment funds such as Specialized Investment Funds (SIF), Open-Ended Investment Companies (SICAV) and Private Equity Investment Companies (SICAR) are used to manage collective investments. The main activity of these investment vehicles is the management of financial assets and therefore they do not require a physical operational presence in Luxembourg and can access domiciliation services.
Special Purpose Vehicles (SPV). Special purpose vehicles (SPVs) are legal structures created for specific purposes such as bond issuance, asset securitization or project finance. Since they are not involved in commercial activities, SPVs can use these services.
Family Wealth Management Companies (SPF). SPFs are structures designed for family wealth management and are not involved in commercial or industrial activities but focus on holding and managing financial assets. Due to their purely wealthy nature, they can resort to these services.
Securitization Companies. These structures are used for asset securitization, a process by which assets such as loans or mortgages are pooled and securities backed by them are issued. As these companies do not carry out commercial activities they can use these services.
Civil Real Estate Companies (SCI). Civil Real Estate Corporations (SCI), can use domiciliation services as long as they do not engage in commercial activities that require an establishment permit. SCIs are usually used by individuals or families to manage real estate properties for investment purposes or to hold family real estate assets. They generally do not engage in commercial activities so they do not require an establishment permit and can use domiciliation services.
Inactive companies. Companies that have temporarily suspended their commercial or craft activity can temporarily domicile their registered office with a domiciliation agent who will manage the company during the entire period of inactivity. In this case, the establishment permit must be returned for the duration of the domiciliation.

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Recourse to domiciliation services in Luxembourg

We will now examine how to have recourse to domiciliation services, we will discuss the type of companies that can offer these services, the responsibilities of the domiciliation agent and the services that are generally offered by these entities.

Entities that can offer domiciliation services

As the domiciliation of companies is a heavily regulated activity and involves multiple responsibilities, not just anyone can offer domiciliation services in Luxembourg. Only certain entities and licensed professionals can act as domiciliation agents in Luxembourg:

Credit institutions.
Other professionals in the financial and insurance sectors.
Attorneys at law registered on list I.
European lawyers, practicing by virtue of their original professional qualification, registered on list IV.
Company auditors.
Approved statutory auditors.
Chartered accountants.

In addition, the authorization to act as a domiciliation agent of companies is subject to the presentation of documentary evidence of having completed a university degree in law, economics or business administration and of having financial assets of at least 125,000 euros.

Responsibilities of the domiciliation agent

The various regulations mentioned above impose several obligations on the domiciliation agent. The first of these takes place even before signing any contract and involves verifying compliance with the legal provisions relating to the registered office of the company and knowing the real identity of the members of the governing bodies of the company to be domiciled.

After performing these verifications, the company offering domiciliation services must enter into a domiciliation agreement with the customer. The minimum content of this agreement includes:

The details of the person in charge of the domiciliary agent.
The details of the services being provided
The particulars of the domiciliary agent's rights and responsibilities
The anti-money-laundering (AML) obligations that apply
The domiciliary agent's disclaimers
The particulars of the rights and responsibilities of the domiciled company
The means of communication between the parties to the agreement
The cost for the services rendered
The duration of the agreement and particulars of its termination
The details of the revocation of the agreement without notice
The applicable law, that is Luxembourg law.

The signing of the contract will formalize in writing the legal relationship between the domiciliation agent and the domiciliary detailing the terms of the agreement. This agreement also serves as proof of the establishment of the company in the Grand Duchy in place of a lease agreement and can be presented as evidence to government departments or financial organizations.

Supplementary services

Simple domiciliation in Luxembourg, without associated services, is prohibited. Companies offering domiciliation services then offer multiple associated services, among which the following can be found:

Mail handling: Domiciliation companies receive correspondence on behalf of the domiciled company and can propose forwarding services and forward correspondence to its final destination either to directors, shareholders or other persons.
Corporate secretarial services: These companies can also offer services for the organization of general meetings and board meetings. They can also take care of the company's corporate books, such as the shareholders' register, minutes of meetings or other official documents.
Accounting and financial services These companies can offer accounting services such as the preparation of annual accounts, balance sheets and financial statements. They can also prepare tax returns and even offer tax advice.
Company incorporation and legal advice Domiciliation companies can offer assistance in company formation and drafting of articles of association.

FAQ

What legal framework regulates domiciliation services in Luxembourg?

Domiciliation services in Luxembourg are primarily regulated by the Law of 31 May 1999 on domiciliation of companies. This law outlines the requirements and conditions under which domiciliation services can be provided. It also specifies the entities authorized to offer these services, such as lawyers, notaries, accountants, and certain financial institutions. Providers of domiciliation services must comply with regulations concerning anti-money laundering (AML) and counter-terrorism financing (CFT), and are subject to supervision by the CSSF (Commission de Surveillance du Secteur Financier) for entities in the financial sector.

Are domiciliation services compatible with commercial or artisanal businesses in Luxembourg?

No, domiciliation services are generally not compatible with commercial, artisanal, or service-based businesses that require a permit of establishment. These businesses must have a physical presence and cannot rely solely on domiciliation services to fulfill their operational requirements. However, holding companies, investment funds, and Special Purpose Vehicles (SPVs), which do not require a physical operational base, can benefit from domiciliation services.

What services are typically included in domiciliation services?

Domiciliation services typically include the provision of a registered office address, management of correspondence, secretarial services (such as organizing board meetings and maintaining corporate records), compliance with regulatory obligations (e.g., AML/KYC), accounting and tax services, and representation before authorities. These services help companies meet their legal and administrative requirements without needing a physical office in Luxembourg.