In May, the Luxembourg Workspace Association started taking on members. Association president and Silversquare Luxembourg head Claudine Bettendroffer talks about the regulations that are shaking up the sector.
How many workspaces are there in Luxembourg and what proportion of the market do they represent?
In the last study that we did we had around 80 different spaces in Luxembourg in the industry. It represents more or less 2 to 3% of the market. If we compare New York, or other big cities, this percentage is much closer to 30%. It is still going to grow quite a lot. Because in other big cities, a lot of companies and big corporations are choosing flexible workspaces. You can’t know what is going to happen in two years or in three years and how many people you will have, so you need a flexible solution where you can easily upgrade or downgrade according to your needs.
The Luxembourg Workspace Association was established to give a united response to a new regulation that aligns coworking services with domiciliation services. Why is that problematic for your sector?
Business centers, co-working spaces and incubators don’t do domiciliation services because domiciliation services mean that you need to control the company which you are domiciliating. So, you need to open their mail, often you’re administrator of that company, you need to check that they put everything correctly into the register of commerce. You have more obligations and you are in fact responsible for that company.
For us that is another job completely to being a provider of services and community spaces, shared spaces, or private offices. Because the goal for us is that we don’t mix any activities with our members. We provide them an address and we want to ensure these companies are complying with anti money laundering laws and that they have substance in Luxembourg.
“You can’t just work within a small ecosystem: the more connections, the more business opportunities you have.”
Association president and Silversquare Luxembourg head, Claudine Bettendroffer
The activities of the association’s members are currently in a gray area as a result of this regulation. When and how will this be clarified?
The domiciliation law dates back to the 1980s so it is not very up-to-date with digital working. As such, there have been a lot of talks with the different authorities. It’s something that the ministry of economy wanted to rectify because they had difficulties to see how many companies are acting in our sector. There will be a new law coming where our sector will get a specific business permit. The ministry of economy will then declare that companies under specific business law can do that kind of business. For the moment, we are all regulated under the commercial business licence.
It will be the first time that our sector is recognised as a sector by law and there will be certain obligations as well. A lot of companies have been created in Luxembourg, but not all of them are up-to-date with AML laws and other obligations around AML, so it’s great that the sector will become more transparent. That’s something we are looking for as the Luxembourg Workspace Association.
What’s the timing and is the government consulting with your association?
For the moment, no timeframe has been defined. In terms of consulting, our association is available to inform the government about our sector as well as to spread information about what is needed, and to help implement things. For example, we are working on a guide on how to apply anti money laundering in our sector. We will also establish some training for the sector as well.
The goal for us is really to make sure that businesses are compliant with legal rules, but on the other side, that we can still commercially do a viable business, because it should still be possible to support entrepreneurship in Luxembourg.
What are the remaining pain points for the sector after the permits are clarified?
For the moment there is no definition for the substance of a company. Does substance mean they need to be everyday sitting on a desk in a space or does it mean they can come in once a week and what if they are a consultant traveling a lot for work? So how would you define that a company has enough substance that it can register in one office? There are a lot of unanswered questions still, which will need to be clarified in the future. But I think the first step of integrating and having a business permit specialised for our sector is already a big step in that sense because it will finally define the sector.
What other matters does the association plan to work on with members?
We want to get the sector to exchange best practices. For example, during covid we asked what do we need to do, do we created 3G zones or 2G+ zones? Exchanging best practices is quite important. Also, leveraging the communities we have. For the moment everybody does their own thing, but I think it’s really interesting especially in such a small country like Luxembourg for communities to mingle, to help them move further. You can’t just work within a small ecosystem: the more connections, the more business opportunities you have, the better it is for all of the companies.
