LUXEMBOURG PRIVATE WEALTH MANAGEMENT COMPANY (SPF)
The SPF, defined
The form of the SPF, Luxembourg's private wealth management company, excludes all forms of partnerships. A Luxembourg SPF must be a SARL, SA, a cooperative or a corporate partnership limited by shares.
A Luxembourg SPF cannot have any commercial activity and must be purely a holding, meaning that its activities are limited to the acquisition, holding, management and execution of financial assets.
The shareholders of a Luxembourg SPF must be natural persons or patrimonial entities acting exclusively on one or more natural person’s interests. The articles of association of a Luxembourg SPF must subject the company to the SPF law.
Tax provisions for Luxembourg SPF (private wealth management)
The main provision (found in the statute of the Luxembourg Holding 29) is that the SPF is exempt from Luxembourg income tax, wealth tax and municipal income tax.
Luxembourg private wealth management holding companies are subject to an annual subscription tax of 0.25% on share capital and on debts in excess of 8 times the amount of paid up share capital and share premiums.
Additionally, the tax regime for parent and affiliate companies are not applicable to Luxembourg SPF. These private wealth management vehicles also cannot be subject to VAT.
Supervision and management
The Luxembourg Registry (known as the AED or Administration de l’Enregistrement et des Domaines) is in charge of controlling SPF. In this role, the administration is aided by a chartered accountant (or by an external auditor or an authorized agent) who certifies compliance in the following:
- Conditions for eligibility of investors
- Provisions relating to the taxation of savings
Until 2012, it was illegal for a Luxembourg SPF to collect more than 5% of their dividends from participations in non-resident and non-listed companies which are subject to a tax rate of less than 11% in a given financial year. A Luxembourg SPF discovered to have been found in this situation would temporarily lose its privileged tax status.
A chartered accountant (external auditor or authorized agent) responsible for supervising the Luxembourg SPF had to attest that this anti-abuse regulation is adhered to (non-receipt of more than 5% dividends from a tax haven).
