Open a SPF in LuxembourgUpdated on Monday 10th October 2016
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In order to comply with EU regulations related to the holding companies regime and to provide foreign investors with an attractive alternative, Luxembourg has enabled a law on private wealth management companies (sociétés de gestion de patrimoine familial, SPF). The law, which was issued in 2007, provides the framework for the new type of company that replaced the old holding company.
The Luxembourg SPF Law allows foreign investors to register an investment entity which will handle the management of the estate of private individuals. SPFs in Luxembourg can be employed to buy, hold, manage or sell any type of financial assets, but it may not engage in commercial activities. Our team of financial specialists can offer assistance for the registration of a SPF in Luxembourg.
Registering a SPF in Luxembourg
The Luxembourg SPF can be incorporated under one of the following legal forms:
- public limited company (SA);
- private limited liability company (Sàrl);
- partnership limited by shares (SCA);
- limited partnership (SCS);
- cooperative company organized as public limited company (SCoSA).
The Luxembourg SPF’s articles of association must specify that the company is a private wealth management entity.
The shareholders in a Luxembourg SPF may be resident or non-resident individuals. The SPF is restricted to certain investors, as only family groups, family offices or investment groups being allowed to set up this type of company in Luxembourg. A characteristic of this type of legal entity is that the shareholders can only be natural persons, who are managing their own assets.
The term “patrimoine familial” designates the term “family wealth”, but it is important to know that the shareholders do not have to be members of the same family or to be related in any way.
The share capital and number of shareholders to open a SPF in Luxembourg depend on the type of vehicle:
- a minimum share capital of EUR 31,000 and at least one shareholder are required, if the SPF is a public company;
- a minimum share capital of EUR 12,500 and a maximum number of 40 shareholders are required, if the SPF is a private limited liability company.
The legislation also establishes the Luxembourg company must have a place of management in the country and its name must end in SPF; our financial consultants can provide more an in-depth presentation on the characteristics of a SPF.
Special characteristics of SPFs in Luxembourg
The Luxembourg SPF has a series of special features among which:
- the Luxembourg SPF holding shares in a company may not get involved in its management;
- the shareholders must be natural persons;
- the investors must submit a declaration of eligibility;
- the shares of a Luxembourg SPF may not be publicly traded or listed on the Stock Exchange.
From a taxation point of view, the Luxembourg SPF is exempt from paying the corporate, the municipal business and the net wealth taxes. The SPF will only be subject to an annual subscription tax of 0,25% calculated on a specific tax base. The annual subscription will be paid on a quarterly basis, its minimum value being established at EUR 100 per year. Still, the subscription tax can’t have a value higher than EUR 125,000.
However, due to the fact that the SPF is exempted of numerous taxes, the company can’t benefit from the stipulations of the treaties for the avoidance of double taxation signed by the local authorities.
The activities of a SPF in Luxembourg
A SPF in Luxembourg is allowed to perform investment in the financial domain, which can cover a wide area of permitted activities, through instruments such as shares, funds, bonds, bank accounts or precious metals. However, the SPF is not allowed to own patents or real estate properties.
The only regulator of the SPF is the Indirect Tax Administration, to which the main administrator of the company should submit an annual report.
For detailed information about SPFs and assistance in opening a company in Luxembourg, do not hesitate to contact our financial experts.