Process to open a real estate business in Luxembourg
With a robust economy, a transparent legal framework and a steady demand for real estate, the Luxembourg real estate sector offers great opportunities for those wishing to start a business as agents, developers or property managers. However, setting up a real estate company in Luxembourg involves complying with several legal, administrative and professional requirements and following an incorporation process. All this is shown in detail below in an orderly and structured manner.
1. Determining the type of business
Before starting any formalities in Luxembourg, it is essential to determine the type of real estate activity to be carried out. When thinking about real estate business, it is very common to think about the activity of a real estate agency or a real estate developer, but there are many more alternatives. Here are the main ones:
- 🏠 Real estate agency: is a company dedicated to the intermediation in the purchase, sale, rental or lease of real estate on behalf of third parties. It offers advisory services, negotiation and closing of real estate transactions, collaborating with both owners and buyers or tenants.
- 📬 Property manager: this is a professional or company in charge of the management and administration of other people's real estate. Their services usually include rental management, rent collection, maintenance and representation of owners before third parties.
- 🏗️ Real estate developer: an entity engaged in the acquisition of land, development of real estate projects and subsequent sale or rental of the resulting units.
- 🏦 Real estate fund manager: a specialist in the creation and management of real estate investment funds (REITs, SICAVs, SCPIs, etc.), which raise capital from investors to acquire, manage and monetise real estate assets on a large scale.
- 📋 Real estate consultant: is an independent professional who provides consulting services in real estate-related matters such as market research, valuations, investment advisory, project development or optimisation of real estate assets, among others.
- 🧳 Short-term rental manager: company that manages properties destined for short-term rentals, such as properties destined for tourism with platforms such as Airbnb. This type of company offers marketing services, check-in/check-out, maintenance and compliance with tourist rental regulations.
- 📜 Real estate appraiser: this is a professional qualified to carry out the valuation of real estate, whether for sale and purchase, inheritance, mortgage loans or legal proceedings.
- 🧑🔧 Facility manager: an entity specialised in the management of buildings and general services, including maintenance, security, energy efficiency and services for tenants or business users.
2. Conduct a market study
Once the activity to be carried out is clear, it is necessary to carefully prepare the business project before starting the legal process of incorporation and one of the first steps to be taken, if not the first, must be to make sure that the real estate business project is viable and sustainable. One of the fundamental elements required to start the analysis is a market study, it allows the collection of a large amount of data on different aspects:
3. Develop a business plan
Once a market study has been carried out, it is necessary to create a business plan, which should include the information from the market study and incorporate additional elements related to the economic and financial aspects of the project.
4. Domiciliation of the company
Once the feasibility of the project has been verified and a solid business plan is in place, it's necessary to get things moving and find a suitable location to set up. For most real estate activities, such as those carried out by real estate agencies, development companies, or property management companies, it is necessary to have physical premises suitable for the activities to be conducted. However, some activities, such as real estate consulting, can be carried out from the owner's domicile if the owner operates independently, even if the company is incorporated.
It is possible to register the company using a temporary address, and then change the registered office once the appropriate premises are available.
5. Choosing the legal structure
When setting up a real estate company in Luxembourg, it is necessary to choose the legal structure it will have. This is of great importance and should not be taken lightly as the legal structure affects aspects such as liability, start-up costs or governance structure.
When it comes to open a real estate business in Luxembourg, some of the most recommended options are a Limited Liability Company (SALR), a Public Limited Company (SA) and in some cases a Limited Partnership (SCS) or a Partnership limited by shares (SCA) although other options may also be valid and even more adapted depending on the project you have in mind.
6. Choosing a name for the company and checking its availability
Before creating the company, it is necessary to choose a name that it will bear. This name cannot be the same as that of an existing individual, association, or company. It is therefore advisable to check the availability of the chosen name to ensure that it is not already in use and to avoid rejection during the official registration. The availability check is completed by submitting an electronic application for a name availability certificate to the Luxembourg Business Registers (LBR).
7. Opening of a bank account and deposit of the capital stock
Another step before incorporating the company is opening a bank account in the company's name and depositing the share capital. In doing so, the bank will issue a certificate of blocking of funds, which must be presented to the notary as proof. For this step, the final articles of association of the company are not required, but a draft of the articles of association is necessary.
8. Drafting and signing of articles of association
In order to register the company, it is indispensable to first draft its articles of association; these must contain essential information such as the name of the company, the registered office, the corporate purpose, the duration of the company, the share capital and other details. Most of the elements to be included should have been prepared in advance during the creation of the business plan. Once the articles of association have been drafted, they must be signed privately or before a notary, depending on the type of legal form chosen.
9. Registration with the Register of Commerce and Companies (RCS)
Once the articles of association have been signed, it is necessary to register the company with the Luxembourg Register of Commerce and Companies (RCS). This registration is carried out electronically through the RCS portal and involves completing a registration form and attaching the articles of association already signed.
10. Publication in the RESA
Once registered with the RCS, the company's incorporation must be published in the Recueil Electronique des Sociétés et Associations (RESA), the official gazette of Luxembourg, where all acts related to companies and associations are published. This publication is a necessary step to make the company's existence known to the public and to ensure transparency about its incorporation, domicile, share capital, and administration.
11. Registration of beneficial owners
Although the company is already registered, the process doesn't end here. The next step is to register the beneficial owners. This registration is a legal requirement that aims to promote transparency and combat money laundering. It involves identifying and declaring to the Registry of Beneficial Owners (RBO) the individuals who own or control, directly or indirectly, more than 25% of the company's capital or voting rights, or who exercise control over the company's management.
12. Professional liability insurance
Before being able to start operating, real estate professionals in Luxembourg must have professional liability insurance. This policy protects against claims for property damage, bodily injury or economic loss caused to third parties as a result of professional activity such as errors, omissions or negligence in the management, brokerage or real estate advice. This insurance is also a requirement to obtain the establishment authorisation mentioned in the following section.
13. Application for an establishment authorisation
In Luxembourg, all persons or companies intending to carry out commercial, industrial or artisanal activities must apply for an establishment authorisation. Most of the real estate activities, including real estate agents, real estate developers and property managers, fall within the commercial field and require the future manager of the company to apply for such a permit.
To do so, it is necessary to comply with several requirements that are intended to ensure that whoever carries out the activity has professional integrity and possesses the necessary qualifications, experience and resources to perform such activity.
14. Social Security affiliation
If the company is going to hire employees, it must register with the National Health Fund (CNS) to comply with social security and pension contribution obligations.
15. Registration for VAT purposes
If the bakery expects to invoice more than 50,000 euros per year, it must register with the VAT administration to obtain a VAT number.
Conclusion
To open a real estate business in Luxembourg is an attractive and interesting idea, however, the process is long and requires careful planning. In this guide, we have seen the steps involved and the necessary requirements. However, one thing is to understand them and another thing is to carry them out. Certain steps, such as the drafting of the articles of association, require certain knowledge and experience to be carried out properly, and doubts may also arise during the process, especially when it is the first time it is done or when the project is large or has specific particularities.
If you think you need some help with the process or have any questions, keep in mind that EasyBiz is here to help you. Contact us and we will make your project a reality and make the creation process flow smoothly.
