Taxation of SPF in LuxembourgUpdated on Monday 27th February 2017
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Private asset management companies (SPF) in Luxembourg are taxed following a taxation scheme applicable to investment funds domiciled in this country. Foreign investors who are interested in setting up an investment fund in Luxembourg will need to comply with the set of taxation requirements, on which our team of financial specialists can offer more details.
Tax requirements for a SPF in Luxembourg
Foreign investors interested in the investment legislation applicable in Luxembourg should know that the local regulations provide numerous types of investment funds, which are taxed in accordance with the tax category in which they are included. For example, those who are interested in opening a SICAR in Luxembourg will be taxed following a different taxation scheme than the one applicable to SPFs.
A SPF in Luxembourg is required to pay a subscription tax on an annual basis, which is applicable at the rate of 0.25% of the company’s paid-up capital. Still, it is necessary to know that the maximum value of the tax can’t exceed EUR 125,000 and our team of financial representatives can provide more details on the manner in which the tax must be paid.
Tax exemptions for SPFs in Luxembourg
Opening a SPF in Luxembourg can offer numerous advantages to the investors. Amongst these, we mention a set of tax exemptions, as follows:
• income tax;
• municipal business tax;
• tax on wealth;
• corporate tax;
• value added tax.
The main reasons related to the exemption from the above mentioned taxes refer to the fact that the local authorities have concluded that the SPF does not perform commercial activities, thus such taxes should not be applied to this type of vehicle.
It is also necessary to know that the SPF in Luxembourg is not a beneficiary of the double taxation treaties signed by the local authorities and the tax exemptions mentioned in such documents are not applicable for this type of investment fund.
Also, it is important to know that, in a SPF, the investors are not required to pay the withholding tax on the distribution of dividends.
Investors are invited to contact our financial consultants in Luxembourg for more details on the taxation of a SPV vehicle.