I. Private Asset Management Company (SPF) : concept

The Private Asset Management Company in Luxembourg (Société de gestion de patrimoine familial, SPF) is not a new business form. Instead, it is a suitable investment vehicle for the management and planning of family assets, of a system for matrimonial property and of the succession of natural persons. The Private Asset Management Company (SPF) has been in existence in Luxembourg since 2007 and is the successor to the abolished Luxembourg Holding 1929.

II. Legal structure of a Private Asset Management Company (SPF)

1. Legal form

A Private Asset Management Company (SPF) in Luxembourg is only permitted to be formed as a corporation (Public Limited Company (PLC., Corp./SA); Limited Liability Company (LLC., Ltd./SARL); Partnership Limited by Shares (SCA) or Co-operative in the form of a Public Limited Company (SCOSA)). In practice in Luxembourg, the SPF is however predominantly formed (Link Info-Seite) in the legal forms of the Public Limited Company (PLC., Corp./SA) and the Limited Liability Company (LLC., Ltd./SARL).

2. Formation

A Private Asset Management Company (SPF) in Luxembourg is formed through the recording of its articles of association by a notary . The articles of association will subsequently be published in the Official Bulletin (Mémorial C) and lodged with Luxembourg's Trade and Companies Register. It is required that the articles of association expressly regulate that the company is subject to the provisions of Luxembourg's law on Private Asset Management Companies. The minimum capital of a SPF in Luxembourg is dependent upon which legal form is chosen.

The shareholders of a SPF in Luxembourg, whose number must remain restricted, must be natural persons who are resident or not resident in Luxembourg who will be active in the management of the private assets. Furthermore, trustees or patrimonial entities with or without legal personality, such as Trusts or private Foundations managing the private assets of natural persons, may be used. In contrast thereto, other corporations are not permitted to hold the position of shareholder in a Private Asset Management Company (SPF) in Luxembourg.

3. Activity

3.1.  Permitted activity

The permitted activities of a Private Asset Management Company (SPF) in Luxembourg are as follows: the acquisition, possession, management and realisation of investments in financial instruments, in the broadest sense, including derivatives; shares; investments; Funds; futures; bonds; options; precious metals as well as bank accounts. Furthermore, as long as a SPF is not involved in the management of the individual companies, a SPF in Luxembourg is permitted to hold majority or 100% company shareholdings. The unlimited taking out of loans from shareholders or from external third parties as well as the issuing of securities are also permitted.

3.2. Prohibited activity

A SPF in Luxembourg is prohibited from carrying on any type of commercial activity including the provision of management activity or financial services to third parties or shareholders. Furthermore, the guaranteeing of loans is not permitted even where a SPF has an interest in the respective company. The exception thereto is where the guaranteeing involves a gratuitous deposit or surety. A Private Asset Management Company in Luxembourg is likewise not permitted to hold patents or rights, to directly possess real estate, to receive more than 5% of the complete dividend income of the shareholders which is liable to taxation of less than 11% as well as the stock market flotation of SPF shares or their public offering. Notwithstanding this, a SPF can have a financial interest in structures carrying on the prohibited activities listed.

4. Supervision

A Private Asset Management Company (SPF) in Luxembourg is subject to the supervision of Luxembourg's Indirect Tax Administration (Administration de l’Enregistrement et des Domaines, AED) and to no further supervision.

III. Tax advantages of a Private Asset Management Company (SPF)

1. Taxation

In Luxembourg, a SPF is liable to the so-called „subscription tax“ annually at a rate of 0.25% on its paid-up share capital, the share premium plus on a proportion of its debts exceeding 8 times the paid-up share capital and the share premium.

2. Tax exemptions

The income and gains of a Private Asset Management Company (SPF) in Luxembourg are exempt from corporation tax, municipal business tax as well as from the net wealth tax. Furthermore, gains from the transfer or sale of shares in a SPF in Luxembourg by a non-resident shareholder as well as a SPF's liquidation proceeds are exempt from taxation. The afore-mentioned tax exemptions consequently mean that a SPF is not permitted to benefit from Luxembourg's multiple double taxation agreements (DTA's).

Moreover, the distributions of a SPF in Luxembourg in the form of dividends to non-resident investors as well as interest are exempt from withholding tax.

In the absence of commercial transactions, a SPF in Luxembourg is not liable to value-added tax (VAT) and is consequently not required to register for value-added tax (VAT).

LEGAL and TAX ADVICE and SUPPORT

Our lawyers and tax experts stand ready to advise you personally and free of charge during the decision-making process and throughout the formation/incorporation/setting up process of a Private Asset Management Company (SPF) in Luxembourg.

Please contact us by telephone through the following telephone number

00352 250 345 27

(Monday - Friday between 9am and 4pm)

or by e-mail at the following e-mail address
info(at)startup-luxembourg.com

or simply use our online contact form.

TIME REQUIRED FOR FORMATION/INCORPORATION/SETTING UP

The formation/incorporation/setting up of a company in Luxembourg takes place within a few days.

FORMATION/INCORPORATION/SETTING UP PROCEDURE

For the formation/incorporation/setting up of a company in Luxembourg, the following steps require to be taken:

  • The choosing of the legal form and the company name
  • The drawing up of the articles of association
  • The opening of a company bank account
  • The paying in of the company capital
  • The recording of the articles of association by a notary
  • The registration and publication of the articles of association
  • If applicable, the submission of a trade licence application to Luxembourg's Ministry of Small and Medium-sized Businesses (autorisation d ́établissement)
  • Value-added tax (VAT) registration with Luxembourg's Tax Authority for Direct and Indirect Taxation