Draft law regarding SPF

On 20 November 2006, the Luxembourg government lodged bill number 5637,  pertaining to the creation of a new investment vehicle,  the private asset management company (société de  gestion de patrimoine familial, also referred to as “SPF”.
A private asset management company (SPF) can either adopt one of the following forms (i) a company limited by shares (société anonyme),  (ii) a limited liability company (société à responsabilité limitée), (iii) a partnership limited by shares (société en commandite par actions) or (iv) a cooperative company organised as a  company limited by shares (société coopérative organisée comme société anonyme).
The shares issued by the SPF can  be bearer shares but can however not be publicly quoted.
The activity is stricly limited to the acquisition, detention, management and realisation of its financial assets (e.g. shares,  bonds, publicly quoted shares, shares of soparfis,  shares of a SICAR, etc.)
The shares in a SPF can only be subscribed by eligible investors who are:

  • natural persons acting in the scope of their management of their private assets,
  • “private asset entities” which act exclusively for the benefit of the private assets of one or more natural persons,  ( e.g. trusts, private foundations, “stichting administratiekantoor”, etc.; or
  • an intermediary acting for the accounts of the investors under  (ii) and (iii): e.g. a bank acting under a fiduciary agreement,  etc.

Regulation of SPF

There is no need to have the approval of the Supervisory Commission of the Financial Sector (“CSSF”). The competent authority to exercise the tax control is the “administration de l’enregistrement et des domaines“.
Every year the domiciliary agent (a lawyer, an accountant, an auditor, etc.) must issue a certificate mentioning that:
(a) tthe SPF is held by eligible investors (as defined here above);
(b) the SPF does not receive more than 5% of its dividends from non EU companies taxed at a rate below 11%; and
(c) the SPF has respected its obligations as paying agent in the scope of the Savings Directive .
The SPF must keep an accounting and must every year publish its annual accounts.

Key tax features

  • No debt equity ratio: There is no debt equity ratio that needs to be maintained for a SPF. However, a fixed tax of 0,25% (taxe d’abonnement) is due for the part of the debts that exceed 8 times the paid-up capital increased by the issue premium.
  • No corporate income tax
  • taxe d’abonnement“: a tax of 0,25% on  the (i) the amount of  the paid up capital increased with (ii)  the issue premium (if any).
  • Withholding tax on interests: interests paid to Luxembourg resident persons are taxed at 10% and at non resident natural persons at 15% under the regime of the Savings directive.
  • No withholding tax on dividends paid: There is no withholding tax due on dividends paid either to Luxembourg or foreign residents.
  • No wealth tax: SPF are exempt from the wealth tax. This is an important advantage as normal Luxembourg companies (soparfi) are subject to a wealth tax of 0,5% of the net assets of the company
  • Excluded from the mother/daughter directive, interest directive and Luxembourg’s double tax treaty network