LUXEMBOURG Law and Practice Contributed by: Claire-Marie Darnand, Victorien Hémery, Johan Léonard and Benjamin Marthoz, Stibbe
Code and (to the extent the lease exceeds a term of one year) by Articles 1762-3 et seq of the Civil Code, concerning real estate used for commercial, industrial or craftsmanship activities; and • lease agreements with respect to real estate used for other purposes (eg, office build - ings used for administrative purposes or for liberal professions), which are not subject to the specific rules of residential or commer - cial leases – the leases benefit from the most extensive contractual freedom, and are only subject to the general rules of the Civil Code applying to leases (to the extent not other - wise contractually agreed). 6.2 Types of Commercial Leases There is only one type of commercial lease, which applies exclusively to real estate used for commercial, industrial or craftsmanship activi - ties. 6.3 Regulation of Rents or Lease Terms Rents and lease terms for commercial leases are generally freely negotiable, but the tenant (or subtenant, if subleasing is allowed) may request the renewal of the lease at the end of its term, Commercial leases are usually concluded for a duration of nine years, with a possibility for the tenant to terminate the lease after three and six years of occupancy. However, commercial leas - es can be entered into for any other terms or for an undetermined duration. Leases with a fixed term exceeding nine years must, in principle, be entered into by notarial deed. Major repairs are at the charge of the landlord, whereas the tenant is liable for the costs of main - tenance and “minor” repairs, unless such repairs subject to specific conditions. 6.4 Typical Terms of a Lease
are caused by dilapidation or force majeure. The parties may derogate from these rules. As no specific lists of repairs incumbent upon the landlord or the tenant have been established, this has to be determined on a case-by-case basis by the competent courts in cases of dis - pute. The frequency of rent payments is freely determined by the parties. 6.5 Rent Variation Periodic rent adjustments during the course of the contractual relationship are usually provided for in the lease agreement. 6.6 Determination of New Rent A commonly used mechanism is a contractual reference to an index published by the Service Central de la statistique et des études économ - iques . It is important to determine in the lease agreement which index is to be applied, and rent will then be adjusted. Lease agreements usu - ally stipulate that the amount of rent may not decrease should the relevant index drop. 6.7 Payment of VAT The rental of real estate property located in Lux - embourg is generally VAT exempt. However, the right to opt for VAT may be exercised under cer - tain conditions. The VAT exemption waiver form is to be sub - mitted to the Luxembourg VAT authorities for approval. The standard 17% rate then becomes applicable on the rent. 6.8 Costs Payable by a Tenant at the Start of a Lease The tenant may be liable to settle agency fees to the real estate agents. In addition, the tenant will, in principle, have to make advance payments
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