To begin… let’s talk about location?
When getting a business off the ground, choosing a location may seem a minor issue to some project leaders, but to others, finding the ideal space can feel more like an uphill battle.
The choice of location
It's actually decisive for two major reasons:
- the success of a business startup project largely depends on location as the location generates both interactions and opportunities (with customers, partners…),
- and leasing a space can be a substantial financial commitment depending on the type of business activity: it could mean signing on to pay rent for a long period of time (up to 9 years).
For activities that depend on the right of establishment (activities that require an “authorisation of establishment” from the Ministry of Economic Affairs), which could be of liberal, commercial, industrial or artisanal nature, it is important to ensure that your location is consistent with the requirements of the right of establishment.
The law dated 2 September 2011 recalls that premises chosen for business activities must be suited to the nature and size of the activity in question. For example, it would be hard to set up a restaurant in 30m²… though it would be more than enough space for a consulting business. Beyond those aspects, the level of security and accessibility of the premises is just as important, given that important business documents (accounting, HR management, etc.) are supposed to be store at the business headquarters.
Choose your location by ranking your options based on certain criteria. A few important elements from a strategic standpoint are:
- the type of zone (business, residential, etc.)
- your clientele
- your competition
- urban growth (future construction/development projects)
- the rent and/or investments required in the case of a transformation
- space configuration and technical facilities
And for you:
- your needs in terms of flexibility, if you are more nomadic or travel frequently,
- your needs in terms of interactions with a community of entrepreneurs, if you are starting a business on your own and do not wish to be isolated,
- your long term vision, if you hope to hire on a team and/or expand your business.
Types of locations
Once you have determined the above criteria, you can start looking into your options: renting a dedicated desk in a co-working space, an office in a business center, a retail space with or without storage, a multimodal space with a specialized incubator, a restaurant space equipped with kitchen… You can check the website of the real estate board*1 for ads.
If you will be working in a technological field or a high-tech sector that requires specific material resources (3D printers, industrial halls, etc.) or specific expertise (competence center), consider looking into specialized incubators such as Technoport or Paul Wurth Incub.
Working from home: good or bad idea?
Though a great many entrepreneurs who work essentially with their brainpower have a natural tendency to opt for a home office at the time of launch (thus cutting back on expenses), there are a few things to check and some precautions to take first.
For homeowners, some tax considerations:
- Bëllegen Akt
A tax credit of up to € 20,000 can be granted on registration and transcription fees for the purchase of a private dwelling. If within a 2-year period for an existing dwelling or a 4-year period for a building site or building under construction, the dwelling is sold or assigned to another purpose than that of a main residence, the total amount of the grant must be reimbursed (including legal interests from the day the grant was disbursed). In cases of force majeure, exemption can be possible. After the 2 or 4-year period, accordingly, owners are free to dispose of their property as they wish. These elements are recalled on the website of the Administration de l’Enregistrement des Domaines*2 (AED), who you can contact should you have any doubts.
- Housing VAT
This applies to work relating to the creation or renovation of a dwelling at 3% super-reduced rates rather than 17% for spaces used as a main residence, either directly by the owner or indirectly by a third party.
If within a 2-year period the use designation changes (starting January 1 of the year the work is completed), the full amount of the tax advantage must be repaid with legal interests from the day it was granted.
If the space allotted to professional use does not exceed 20% of the total surface area, in principle, there is no need to reimburse the tax advantage. If this is your case, you should notify the Administration de l’Enregistrement et des Domaines as soon as possible.
- Property tax
Property tax is likely to vary depending on the surface area allocated to professional use: if the professional area represents less than 20% of the total surface area, in principle, the building should not change use designations. There are a number of use designations (residential, mixed, commercial,etc.). Should you have any questions or doubts, it is best to check with the Real-estate Appraisal Division of the Direct Tax Department (Administration des Contributions Directes)
- Housing assistance, acquisition bonus
This aid does not include cellars, garages, attics, workshops, commercial premises or other professional outbuildings.
When a buyer declares/intends to declare a business headquarters at their private address, they must submit and application in advance to the Single Point of Contact for Housing Assistance (Guichet Unique des Aides au Logement) with all the supporting information (surface area allocated to the activity, etc.).
A commission meets on a weekly basis to analyze applications case by case and decide whether all or part of the surface is excluded from the scope of the aid.
Lastly, a few good practices for any tenant: get written consent from the owner and/or other owners in the building beforehand to avoid any legal dispute.
And to conclude, all entrepreneurs, whether they are renting a space or own it, should check that their project does not contradict town planning rules applicable in the concerned area (PAG). It is highly recommended that you ask the town planning department as a preventative measure. It will not take much of your time and will allow you to move forward through the steps to your business launch with peace of mind, or bounce back if ever feasibility is not confirmed.
Now get out there and find that perfect location! Happy hunting!
The House of Entrepreneurship of the Chambre of Commerce is the national contact point for future entrepreneurs and established company heads alike. (Future) entrepreneurs can contact the House of Entrepreneurship’s information point to move forward with their business creation/takeover project or be put in touch with the relevant structures or partners.
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