Set up Private Asset Management Company (SPF)

A Private asset management company or Société de gestion de patrimoine familial (SPF) is established for the purpose of private wealth management. Investors looking for consolidating the management of their private assets under the responsibility of another company will be delighted by the prospect of setting up an SPF in Luxembourg. This legal framework is also favorable for investment groups, family businesses and representatives of trusts and private foundations. An SPF is strictly limited to the holding of shares, bonds, and funds among other financial assets. Its primary responsibility is to acquire, hold, manage and create financial assets. It cannot be engaged in any other commercial activities outside its function as a holding company and neither can it own patents and real estate.

SPFs can exist in a number of forms. They can be registered as public limited companies whereby they are subject to a minimum share capital set by the authorities or as a private limited company. As a private limited company, an SPF cannot be publicly traded. The Stock Exchange Listing is also not permitted. In addition to having a set minimum share capital, the capital should be fully deposited during incorporation. In Luxembourg, SPF can take any of the following forms: a partnership limited by shares, private limited company, limited partnership, public limited company or as a cooperative company. As a partnership, the SPF will require at least 2 partners, one of them should have unlimited liability if it is a partnership limited by shares (SCA). Shareholders must submit a declaration of eligibility upon registration of the company. In Luxembourg, SPFs are under the regulation of The Indirect Tax Administration. It’s requisite that the company submits annual reports to the regulating authorities. After the company is fully registered, there is no further licensing required therefore operations can be started immediately. The only prerequisite is that it publishes its bylaws in the Luxembourg Official Journal before getting on the local market.

Every SPF in Luxembourg is liable to what is known as a subscription tax—paid out quarterly. However, they are not liable to corporate and net wealth tax, not to mention that they do not have to pay any municipal taxes. Other tax exemptions applicable to SPFs include withholding tax on distributed dividends and on interest payments. It’s also worth mentioning that in case of liquidation, the SPF proceeds will not be taxed. The same applies to proceeds obtained from the shares issuing. Value Added Tax is not charged on SPFs and capital gains tax is not chargeable for investors residing outside the Luxembourg jurisdiction. Since SPFs already benefit from numerous tax exemptions, they are not covered by double taxation agreements.

Luxembourg offers a favorable business environment for private asset management companies. This explains why most investors feel comfortable to implement long term investment plans in Luxembourg—the Luxembourg jurisdiction allows them to easily reinvest their capital gains without the burden of high tax rates as other countries do. Foreign investors are not taxed on their income from the SPF and resident investors will be taxed at the source at much lower tax rates.

Setting up an SPF can be a daunting and taxing process. If you need any assistance, contact Luxstart. Our team of accountants, lawyers, and consultants stay au courant with the latest business trends and regulations in Luxembourg. Therefore, you can be confident that you will get relevant information and step by step guidance throughout the registration process.