The law dated May 31st 1999 regulating the activity of domiciliation applies if a company sets up office with a third party service provider with a view to carrying out an activity in connection with its corporate purpose and if that third party provides services to the company in relation with that activity. The company and the third party, the so-called agent, are then required to enter into a domiciliation agreement. The agent is subject to a number of obligations under the law of April 5th 1993 on the financial sector, as amended, just like any specialized professional of the financial sector (PFS). In practice, the line is blurred between a domiciliation and an office accommodation, especially in the case where the office rental is complemented by the provision of other services by the third party service provider.
In its decision dated December 16th 2015, the Court of Appeal ruled that the qualification of a contract for the provision of services including the provision of office space must be qualified as a contract of domiciliation, entered into by a company with a business center, because the provision of services had prevailed over the mere rental of offices. After referring to the long list of services to be provided by the third party service provider to the company, and after having noted that the contract contained a mobility clause of the allocated office space, the Court of Appeal concluded that the provision of an office was not the dominant element of the contract between the parties. The Court of Appeal reiterated that "In exercising its discretionary powers, the judge must consider the respective roles of the agent and the company that has established its headquarters with the latter. To determine if there is a domiciliation or not, the judge must take into account indicators such as the lack of space, the failing or non-existent infrastructure, the number of people who actually work in the premises and the activity of the concerned companies”.
This decision does not shed new light on this matter. Courts had indeed already ruled in the same direction in the past (see, in particular TA Diekirch, ch correct., January 15th 2004, n°28/2004, or, CA Luxembourg, 5e ch correct., July 11th 2006, n°398/06). This decision aims above all to reiterate, for the record, the components of domiciliation of companies and seriously discourage the setting up of “letter box companies" at the risk of being in breach of the law and being sentenced to a criminal offence.