The Luxembourg SPF: a private wealth management company
What is an SPF?
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.
In December 2024, the Luxembourg Parliament enacted amendments affecting SPFs, effective from 1 January 2025:
- The minimum annual subscription tax for SPFs has been raised from EUR 100 to EUR 1,000.
- New provisions have introduced administrative fines of up to EUR 250,000 for specific violations of the SPF law.
- The procedure for withdrawing an entity's SPF status has been clarified.
The shareholders of a Luxembourg SPF must be natural individuals 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 exceeding 8 times the amount of paid up share capital and share premiums.
Additionally, the tax regime for parent and affiliate companies is not applicable to Luxembourg SPF.
VAT is not applicable to these private wealth management vehicles.
Supervision and management
The VAT Authorities (AED–Administration de l’Enregistrement, des Domaines et de la TVA) is in charge of controlling SPFs.
The AED is supported by a chartered accountant (or an external auditor or an authorized agent) who certifies compliance in the following areas.
- Conditions for eligibility of investors.
- Provisions relating to the taxation of savings.
SPFs must adhere to the general anti-abuse rules (GAAR)1 outlined in the Luxembourg Tax Adaptation Law2.
These rules target arrangements lacking valid commercial reasons that reflect economic reality and are primarily designed to obtain tax advantages contrary to the object or purpose of the tax law.
In cases of serious non-compliance, the AED Director may issue a compliance injunction, granting the SPF a six-month period to rectify the identified issues.
If the SPF fails to address the non-compliance within this timeframe, the AED can withdraw the SPF status, resulting in the entity becoming subject to standard corporate tax rules.
1. Included within the so-called EU Anti-Tax Avoidance Directive (ATAD).
2. §6 StAnpG.
