In the past few years, we have witnessed the appearance of exotic magnetism of atoms in nano-scaled systems associated with compounds that are non-magnetic in their bulk form. Different models ranging from orbital magnetism delocalized over the whole molecule to localized one associated to the modification of the electronic structure have been proposed. Hence, one of the main challenges is to determine the mechanism that induces both the magnetic moment and the exchange interactions, leading to the ferromagnetic-like behaviour in these nanostructures. Aimed at obtaining a deeper insight into the induction of magnetic moments on nominally non-magnetic atoms, we have performed an XMCD study on rare-earth–iron Laves phase compounds containing Ga or Ge. XMCD probes the magnetic polarization of both Ga and Ge in these compounds. Our results show that when the rare-earth (R) is non-magnetic this polarization is uniquely due to the hybridization with the Fe neighbours, while it is enhanced when R is magnetic due to the Fe–R hybridization. As a consequence, the magnetic polarization of both Ge and Ga atoms differs as this hybridization does.