The Luxembourg law of May 14 2007 (the SPF Law) has
introduced a new tax-efficient vehicle for the management of
private assets: the société de gestion de
patrimoine familial (SPF). The SPF can somehow be considered as
the successor of the well-known Holding 29, the tax-exempt
company Luxembourg introduced in 1929.
The SPF takes the legal form of either a
société à responsabilité
limitée (private limited liability company), a
société anonyme (public limited liability
company), a société en commandite par actions
(corporate partnership limited by shares) or a
société coopérative organisée sous
forme d'une société anonyme (co-operative society
organised as a public limited liability company).
The articles of association of the SPF have to state
explicitly that the company is subject to the provisions of the
SPF Law, and after the legal form of the entity,
société de gestion de patrimoine familial, or in
short, SPF, is to be mentioned.
The corporate object of the SPF is exclusively the
acquisition, holding, management and disposal of :
i) Financial assets (as defined in the Luxembourg law of
August 5 2005 on financial collateral arrangements) that
is, securities in the broadest sense, including options,
derivatives and structured financial products,
ii) Cash (including foreign currencies), and for
iii) Other assets (for example, precious metals) held in an
account with a professional financial service provider.
An SPF is not allowed to perform commercial activities, such
as trading in financial instruments, or financial services (as
such, an SPF falls out of the scope of the EC state aid rules).
An SPF cannot directly hold real estate. Nevertheless, holding
real estate indirectly, through its subsidiaries, is allowed.
Although an SPF is allowed to hold shares in other companies
(even majority shareholdings), it should, however, limit its
involvement in any such companies to the exercise of its
shareholder rights (voting rights, right to receive dividends).
The SPF may not (i) be actively involved in the management of a
company or (ii) render services of whatever nature. An SPF is
not allowed to grant interest-bearing loans, even to
subsidiaries (to a limited extent it may grant interest free
advance payments to subsidiaries).
Shares in an SPF are reserved to individuals in the scope of
management of their own assets, estate entities acting for the
exclusive benefit of private assets of one or more individuals
(for example, trusts, foundations, and stichting
administratiekantoors), and intermediaries acting on behalf of
such individuals or estate entities (through for example, a
fiduciary agreement). Shares in an SPF may not be listed on a
stock exchange or offered to the public.
The main characteristics of the SPF from a tax perspective
are the following:
- The SPF is exempt from corporate income tax, municipal
tax and net wealth tax. However such an exemption will not
apply for the fiscal year during which the SPF receives more
than 5% of its total dividends from participations in
non-resident and non-listed companies that are not subject to
a tax equivalent to the Luxembourg corporate income tax (that
is, an effective corporate income tax rate of at least 11%
for a comparable taxable basis).
- The SPF is subject to a yearly capped subscription of
0.25%, levied with a minimum of e100 ($155) and a maximum of
e125,000 per year, computed on the amount of paid-up share
capital, share premiums and debts higher than eight times the
paid up share capital plus share premiums.
- Interest paid by the SPF is subject to a final
withholding tax of 10% (if paid to individuals resident in
Luxembourg). Interest paid to individuals resident in an EU
member state may be subject to the withholding tax under the
Council Directive 2003/48/EC on taxation of savings income in
the form of interests payments (the EC Savings Directive),
unless the name, address and the amount of interest is
disclosed to the Luxembourg tax authorities.
- Dividends paid by the SPF are not subject to withholding
tax. Non-residents will not be subject to capital gains
taxation in Luxembourg upon the sale of their interest in the
- Capital contributions to the SPF are subject to capital
duty (at a rate of 0.5%), unless an exemption applies. It is
however contemplated that the capital duty shall be abolished
effective as of 2009.
- However the SPF cannot benefit from double tax treaties
concluded by Luxembourg.
An SPF is subject to the control of the Administration de
l'Enregistrement et des Domaines (the administration for
registrations and state property). Each year, the domiciliation
agent, or, by default, the auditor or the chartered accountant
of the SPF, has to certify to the Administration de
l'Enregistrement et des Domaines:
- That the SPF has fulfilled its obligations as paying
agent under the EC Savings Directive,
- That the conditions pertaining to the capacity of the
investors in the SPF are fulfilled, and
- That the SPF did not receive more than 5% of its
dividends from non-qualifying participations.
About the firm
Loyens & Loeff Luxembourg is an integrated tax and
corporate law practice, which comprises more than 115
fee-earners and offers corporate and tax services on a fully
integrated basis. Loyens & Loeff Luxembourg handles all
matters relating to corporate and commercial law, real estate,
investment funds, private equity and venture capital, mergers
and acquisitions, banking and financial law, and tax law.
Loyens & Loeff Luxembourg is affiliated with Loyens
& Loeff, which has more than 800 fee-earners in 18 offices
in the Benelux and the main financial centres of the world.
Gérald Origer +352 466 230 425 email@example.com
|To download a full copy of IFLR's
Private equity and venture capital review, please click