16 May 2007 |  Print this Article | Share on Facebook | Share on linkedin

A new private wealth management company (SPF) is born

The Law of 11 May 2007 has created a new investment vehicle interesting for private wealth management: the private asset management company – société de gestion de patrimoine familial, also referred to as “SPF”.

There is no major change but the text of the law slightly differs from the draft of the bill of 20 November 2006 (see our legal alert on 29 November 2006).

• The shareholders must not be part of a restricted gathering of investors: it seems that a single investor is admitted to create a SPF;
• An intermediary acting for investors is not required to declare doing so;
• A paragraph has been removed, which said that a Grand-ducal decree could specify application modalities and administrative procedures related to the supervision and control on SPFs;
• Few other precisions (as to the competent tribunal in case of dispute) and formal changes (turn of phrases rearranged) have been made.

Except for these minor adjustments of the text, all major features previously provided by the draft bill have been upheld:

• Legal form of the SPF (SA, SARL, partnership limited by shares, or a cooperative organized as a company limited by shares);
• Activity strictly limited to the acquisition, detention, management and disposal of its financial assets;
• No interference in the management of subsidiaries and no exercise of commercial activities;
• No granting of interest bearing loans to its subsidiaries;
• Eligible investors (natural persons acting in the scope of their private assets, private asset entities (trusts, private foundation, Dutch “Stichting Administratiekantoor”, etc.) or intermediaries (i.e. banks) acting for the account of investors);
• Approval by the CSSF is not requested;
• Obligation to issue an annual certificate (by the domiciliary agent, etc) and to publish annual accounts.

The tax features of the SPF are the same as discussed in our legal alert of 29 November 2006:

• No debt equity ratio to maintain but there is a subscription tax of 0,25% on the part of the debts that exceed eight times the paid-up capital increased by the issue premium;
• No corporate income tax;
• No VAT;
• A 15% withholding tax on interests paid to EU residents;
• No withholding tax on dividend distributions;
• No wealth tax;
• Exclusion from the parent-subsidiary directive 90/435 of 23 July 1990 (as amended) and from Luxembourg’s double tax treaty network.

For more details we refer to our article published in the legal week of 14 December 2006 on “investment opportunities in Luxembourg” and our legal alert of 29 November 2006.