What is an SPF company?
SPF (Société de Gestion de Patrimoine Familial) is a company under Luxembourg law dedicated to the management of the private assets of investors and families, used for the acquisition, holding, management and disposal of eligible investments.
Introduced by law in 2007, SPF was created with the aim of establishing a structured vehicle for the management and holding of financial assets.
SPF Luxembourg: What Activities Can They Do?
A Luxembourgish SPF may not engage in any commercial activity and its activities are limited to the acquisition, holding, management and execution of financial assets, including:
- Holding interests in other companies (without influencing their management or operations);
- Investments in stocks, bonds and financial instruments;
- Family Wealth Management;
- Holding bank accounts;
- Ownership of real estate through participation in real estate companies (but not directly).
SPF Luxembourg: Activities not permitted
SPFs may not engage in commercial or operational activities.
In particular, they can not:
- Offer financial services to third parties,
- To issue interest-bearing loans to companies controlled by it through shareholders,
- Carry out direct business management activities,
- Hold patents and trademarks because intellectual property rights are considered a business activity,
- Owning real estate directly. Indirect ownership is permitted.
SPF Luxembourg: setting up an SPF?
Creating an SPF is relatively simple and follows these steps:
- Choosing the corporate structure: An SPF can be incorporated as a SARL, SA, SCA or SCoSA,
- Minimum capital: It depends on the type of company chosen (for example, a SA requires a minimum capital of €30,000.00, an Sàrl €12,000.00),
- Statute and Articles of Association: They must be drawn up and approved by a Notary,
- Registration: The SPF must be registered with the Régistre de Commerce et des Sociétés (RCS) in Luxembourg.
- Opening a bank account: Essential to pay the initial capital.
SPF Luxembourg: Taxation
SPFs enjoy a preferential tax regime:
- Corporate Income Tax Exemption: They are not subject to taxation on dividends, capital gains or income from financial investments;
- Withholding tax exemption: There is no withholding tax on distributed dividends, without prejudice to the taxation of said income by the resident beneficiaries;
- Fixed annual feeSPFs pay an annual tax of 0.25% on paid-up capital and reserves (minimum €100.00, maximum €125,000.00);
- VAT exemption: SPFs are not subject to VAT in Luxembourg.
SPF Luxembourg: Tax Restrictions
Moreover, SPFs
- Are not eligible for double tax treaties.
- Can not deduct expenses or interest from their taxes.
- Can not benefit from EU Directive No. 2011/96/EU on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States.
Furthermore, it should be noted that SPFs are subject to VAT control (AED–Administration de l'Enregistrement, des Domaines et de la TVA).
Through its auditors, the AED certifies the compliance of SPFs in the following areas.
- Investor eligibility conditions;
- Provisions relating to the taxation of savings.
Any violation of the regulation committed by a SPF can be sanctioned. In particular, recently, new provisions have introduced administrative sanctions of up to 250,000 euros for specific violations of the SPF law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
