Professional leases in Luxembourg, intended for liberal professions (lawyers, doctors, accountants etc.) of simple offices for example, differ from residential leases and commercial leases. They are subject to the general provisions of the Civil Code (Articles 1713 et seq.) and not to specific regulations. This type of contract concerns premises used for non-commercial activities and is based on the intention of the parties and the activity carried out. It is essential to clearly define the contractual clauses, in particular the duration, the termination conditions, the amount of rent (with the possibility of indexation), and the use of the premises. Its flexibility and adaptability make it an ideal option for liberal professions, provided that the rights of landlords and tenants are protected.

Contrary to popular belief, a lease agreement entered into by a natural or legal person exercising a liberal profession (such as lawyers, doctors or even accountants) is not, in principle, a commercial lease or a residential lease.

The classification of a professional lease

The classification of a residential lease should be ruled out if the tenant does not intend to use the rented premises for personal use.

Similarly, a commercial lease does not apply in principle, as the tenant does not intend to carry out any commercial, industrial or agricultural activity.

Whatabout law firms, doctors, physiotherapists, or even professional leases concluded between two commercial companies?

The corporate purpose of the company and the activity carried out on the leased premises are essential. If the property is leased by a commercial company for the purpose of carrying out a liberal profession, the contract will be classified as a professional (non-commercial) lease. As soon as the lease is intended for commercial activities, it falls under the scope of Article 1762-3 of the Civil Code and the provisions relating to commercial leases.

For example, a public limited company and a limited liability company entered into a lease agreement. The lessor claims that it is a professional lease, while the lessee argues that it is a commercial lease and that it benefits from the protections provided by law. As the latter was a commercial company carrying out a commercial activity, the Court reclassified the professional lease as a commercial lease[1].

When examining the classification of a professional lease, the Luxembourg courts also take into account the intention of the parties. In particular, a contract concluded between a public limited company and a limited liability company is classified as a professional lease if the parties have agreed that the activity carried out by the limited liability company is not of a commercial nature[2].

In the case of a lease concluded by a law firm, it should be noted that Article 34-2 of the Law of 10 August 1991 on the legal profession provides that law firms are civil in nature despite adopting the form of a commercial company[3].

Clauses to be included

The provisions of the Act of 21 September 2006 on residential leases and the Law of 3 February 2018 on commercial leases do not apply to simple professional leases.

To date, professional leases are not regulated by specific provisions. Therefore, the provisions of the Civil Code common to all leases (Articles 1713 et seq. of the Civil Code) apply.

It is therefore essential to clearly define the clauses of the professional lease agreement that are not governed by the provisions of the Civil Code in order to protect the rights of both the lessor and the lessee.

It is important to clearly define the term of the contract and the terms and conditions for renewal or non-renewal of the lease. A term of six years could be considered, where a longer lease term should be avoided.

A clear definition of the conditions for termination and the notice period is required. Can the lease be terminated before expiry? How much notice must the tenant give to terminate the contract?

It is obviously necessary to specify the amount of rent and the terms of payment, as well as the distribution of charges (maintenance, repairs, taxes, etc.) and, above all, any indexation. While automatic rent indexation is prohibited for residential leases, it is perfectly permissible for professional leases, as is the case for commercial leases.

It is also essential to specify the professional activity that the tenant is authorised to carry out on the premises. In the case of a professional lease, only non-commercial professions are authorized. In any case, if the tenant wishes to change their activity, the landlord’s consent must be sought.

It is advisable to specify whether the tenant is authorised to carry out activities on the rented premises, and under what conditions, as liberal professions sometimes require specific fittings.

As with other types of leases, the security deposit must be mentioned, as it serves as cover for any damage or failure to pay rent.

The professional lease in Luxembourg therefore appears to be the ideal option for liberal professions and other non-commercial activities. As it is subject to contractual freedom, its flexibility in terms of duration, termination and rent makes it a contract that is suitable for many needs. However, it is important to pay attention to the wording of the contractual clauses and their consequences for your rights as a lessor or tenant.

A clear understanding of the differences between residential leases and commercial leases will enable you to choose the contract that best suits your professional situation.

[1] District Court of Luxembourg, 27 June 2023, No. 2023TALCH03/00126

[2] Justice of the Peace of Luxembourg, 2 February 2023, Rep. No. 330/23.

[3] District Court of Luxembourg, 4 January 2021, No. 2021TALCH14/00001