Luxembourg SPF
Private Asset Management Company
“La Société de gestion de Patrimoine Familial” (SPF)

Introduction

Luxembourg has gained recognition as a prominent European hub for wealth management. Drawing a considerable number of investors and high-net-worth individuals, the nation appeals to those seeking to safeguard their financial assets through diverse management strategies tailored to enhance the wealth of both local and international entities.

Functioning as a vital link between wealth management services and investment funds, Luxembourg serves as a crucial intermediary.

Our team of financial experts, specializing in wealth management in Luxembourg, offers an extensive array of services to global clients engaged in intricate business operations across multiple countries, managing substantial financial portfolios.

The SPF, established according to Luxembourg law on 11th May 2007, enables the registration of an investment corporate entity dedicated to managing the private estates of individuals. Its primary objective is the acquisition, holding, management, and sale of various financial assets, excluding commercial activities.

The SPF functions as an investment company, focusing on individuals managing their private assets. The term “family property” refers exclusively to the “private assets of individuals,” without implying any familial connection among SPF shareholders.

The minimum capital of an SPF, which must take the form of a corporation, is determined by the chosen legal structure. The SPF serves as a straightforward, adaptable wealth-management vehicle compliant with EU regulatory standards. It is suitable for managing assets for investor groups or acquiring shares in a company by its directors or employees.

SPF Luxembourg
Private Asset Management Company
Legal Structure

The SPF is established as a corporation, typically adopting the form of a Public Limited Company (PLC./Corp./SA) or a Limited Liability Company (LLC./Ltd./SARL). The company name must include the abbreviation “SPF,” and both registered and bearer shares may be issued. The articles of association must explicitly state compliance with Luxembourg’s law on Private Asset Management Companies.

SPF Luxembourg Formation

Formation involves recording the articles of association with a notary, subsequent publication in the Official Bulletin (Mémorial C), and filing with Luxembourg’s Trade and Companies Register. The minimum capital depends on the chosen legal form. Shareholders must be natural persons residing in or outside Luxembourg, actively managing private assets, or trustees, patrimonial entities, such as trusts or private foundations. Corporations, however, are ineligible as SPF shareholders.

Investment Policy and Corporate Object

The SPF’s activities are strictly confined to private wealth management.

Permitted Activities of the SPF

Prohibited Activities by the SPF

The following activities are expressly prohibited for the Private Asset Management Company (SPF) in Luxembourg:

• Any form of commercial or trading activity;
• Direct ownership of real estate;
• Holding of patents or rights;
• Management activities or financial services provided to third parties or affiliated companies;
• Receipt of more than 5% of total dividend revenues from companies taxed at a rate below 11%;
• Listing of SPF shares or offering them to the public.

However, the company is allowed to hold financial interests in other structures engaged in the aforementioned prohibited activities.

Eligible Investors in Luxembourg

Article 2 of the law defines the scope of eligible investors. SPF shares are exclusively reserved for:

• Natural persons/Trustees (whether resident or non-resident);
• Family groupings;
• Investor groups;
• Trusts;
• Private Foundations.

Corporations are not permitted as shareholders. The second category includes trusts, foundations, or “stichting administratie kantoor.” The draft project comments indicate that shares may also be owned by a group of individuals forming a restricted club of investors. SPF shares cannot be quoted on the stock market.

Company Name in Luxembourg

A Private Asset Management Company (SPF) in Luxembourg is required to include the abbreviation “SPF” in its company name.

Capital Requirement

Upon incorporation, an SA must have a minimum capital of EUR 31,000, with 7,250 fully paid up. An SARL must have a minimum capital of EUR 12,500, fully paid up at 100%. SPFs are obligated to create a legal reserve equal to 5% of the profit until it reaches 10% of the share capital.

Advantages of Registering a Private Asset Management Company (SPF) in Luxembourg

Tax Advantages:

• A one-time registration tax of EUR 75 payable during formation or when amending the articles of association;
• Annual subscription tax of 0.25% on deposited capital (+ issuing bonuses);
• No DBA authorization required;
• No VAT registration necessary;
• Full exemption from corporate income tax, excise tax, and assets tax;
• No withholding tax on interest payments (with restrictions for individuals);
• No withholding tax on dividend payments for non-residents;
• No taxation of capital profit from the sale of SPF shares for non-residents;
• No taxation of liquidation revenues from the SPF for non-residents.

Additional Advantages

The SPF in Luxembourg, designed for managing the private assets of wealthy individuals, benefits from its special tax status and wide range of applications. No official license is required before commencing activities, and shareholders enjoy the liability protection of the SPF as a legal entity, along with the ability to issue bearer and registered shares.

SPF Luxembourg
Private Asset Management Company
Tax Regime

A prevalent method of wealth management in Luxembourg involves the use of SPF (Société de Gestion de Patrimoine Familial), commonly referred to as a Family Wealth Management Company.

This entity operates under a distinctive tax regime specifically designed for companies established with the primary objective of overseeing the private wealth of individuals. The registration of SPF is exclusive to this specific purpose, allowing the company to legally acquire, possess, and administer financial instruments, currency, and assets.

Corporate Income Tax
The SPF is not liable for Corporate Income Tax.

Capital Duty
The subscription of share capital or transfers of shares incur no stamp duty. The minimum capital varies based on the legal form, with an S.A. / S.C.A. requiring EUR 31,000 and an SARL needing EUR 12,000.

General Tax Features
The SPF is not classified as a fully taxable company, making it ineligible for application of international double tax treaties or European directives.

Net Wealth Tax
The SPF is exempt from Net Wealth Tax and Minimum Tax.

Subscription Tax
The SPF is exclusively liable for an annual subscription tax amounting to 0.25%, computed based on a designated tax base. This subscription tax is payable quarterly, with a minimum annual amount set at EUR 100. However, it is important to note that the subscription tax cannot exceed EUR 125,000.

Value Added Tax
The SPF is not considered a taxable entity for VAT purposes.

Withholding Taxes – Dividends
Distributions to investors in the form of dividends are not subject to withholding tax.

Interest Payments
Interest payments are exempt from withholding tax.

Conclusion

The SPF serves as an attractive vehicle for individuals to manage and pool private assets in a tax-neutral manner within the confines of the SPF law.

Given the general tax exemption, it is crucial to consider Controlled Foreign Corporation (CFC) rules in the investor’s country of tax residency, as dividends and interest received by the SPF may be subject to withholding taxes based on the domestic tax laws of the source country.

Careful tax planning is necessary since the SPF lacks the benefits of double tax treaties and EU directives.

Despite the SPF’s tax-exempt status, the tax treatment of payments to its shareholders must be analyzed according to the tax laws of the recipient’s country of residence.