What really is the SOPARFI?
The soparfi: a financial holding and intellectual property holding
The SOPARFI, a Luxembourg financial holding and IP rights company, does not fall under any particular type of company such as Luxembourg's SA/PLC, SARL/LLC or SCA companies, but is rather a tax regime which applies to financial holdings and IP holdings. A Luxembourg SA or SARL (PLC or LLC) is eligible for SOPARFI status under the condition that it holds financial participations (of affiliates) and manages them in the medium and long term.
The tax regime for a SOPARFI exempts the income from dividends and capital gains from the sale of securities (Luxembourg or foreign).
Income from intellectual property rights (patents, brands, software) can be tax exempt up to 80%.
The conditions required to benefit from tax exemption on the income from dividends or capital gains are the following:
The participation must be at least 10% of the total share capital of the affiliate or the price of acquisition of the participation must be at least 6,000,000 EUR (or 1,200,000 EUR for dividend exemption only).
The participation must be held for at least one year.
The affiliate must be a fully taxable resident company, a non-Luxembourg company fully taxable at a tax which corresponds to the Luxembourg corporate income tax, or a company which is a resident of of the EU member states.
The parent company must be a resident company of Luxembourg.
The conditions required to benefit from the 80% exemption on income from IP (patents, brands, software) are the following;
The exempted income must have been generated by an IP right (such as software, a patent, trade name, design or model) recorded as an asset on the financial statements of a SOPARFI.
The intellectual property rights must have been acquired or constituted after January 1, 2008.
If they were acquired, the IP rights must not have been acquired through an associated company.
The SOPARFI is permitted in international tax treaties and European directives.
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