Registering an SPF in Luxembourg: peculiarities of regulation in 2021

Registering an SPF in Luxembourg: peculiarities of regulation in 2021

By setting up an SPF in Luxembourg, individuals or families can easily hold and manage their financial assets (e.g. futures, options, bonds, derivatives & shares) and many other related instruments.

SPFs are exclusively designed for businessmen that want to attract investment and properly structure their property.

Interested in registering a private wealth management company in Luxembourg? Please consider contacting YB Case. Our experts will be happy to provide you with qualified advice on opening an SPF.

Those seeking to open a private asset management company in Luxembourg get the following advantages:

  • separate legal entity with limited liability;
  • flexibility of investment schemes;
  • reliable co-investors;
  • distribution of risks;
  • tax-friendly legislation;
  • fast and simple procedure for establishing an SPF in Luxembourg (minimal requirements for initial share capital).

Because a private asset management company is a separate legal entity its investors' liabilities depend on the amount of contributed share capital. Thus, the level of responsibility to third parties is significantly reduced, especially when it comes to lending operations involving property management.

SPF FINANCING

Establishing an SPF in Luxembourg can make sense for individuals considering:

  • family assets structuring;
  • matrimonial property administration;
  • inherited property administration.

There are different ways in which SPFs can be financed. For example, the required funds can be obtained from lending institutions, investors or SPFs’ shareholders.

Those looking to register an SPF in Luxembourg should keep in mind that they can hold, acquire and sell financial assets. However, they are prohibited from:

  • directly owning IP or real property; however, private wealth management companies can own IP or real estate through other organizations;
  • providing services (with certain exceptions);
  • conducting commercial activities; however, SPFs can have a stake in companies engaged in business activities;
  • concluding insurance contracts (related to life insurance);
  • managing companies in which SPFs hold a stake (excluding SPFs’ shareholders and investors).

SPF INVESTORS

According to Luxembourg legislation, SPFs’ investors can be:

  • intermediaries (third parties);
  • individuals managing their own property;
  • investors of other SPFs registered in Luxembourg or in any other country.

Registering a private asset management company in Luxembourg does not require having family ties. SPFs are used to provide the said investors with access to private individuals.

SPFs’ shares cannot be used for IPO or public offerings on stock exchanges.

TAXATION

Tax types

Tax rates

Corporate income tax

0%

Capital gains tax

0% (in some cases)

Income tax (for resident individuals)

under Luxembourg laws

Income tax (for non-resident individuals)

under tax system requirements of the country of residence

SPF Registration

Those wishing to establish an SPF in Luxembourg will have to:

  • open an SA (Public LC);
  • register a SARL (Private LC);
  • set up an SC (Cooperative);
  • open an SCA (Partnership).

Setting up a private wealth management company in Luxembourg provides its founders with a right to:

  • sign contracts with financial companies, investment and financial advisers and other service providers;
  • rent real estate;
  • hire staff.

Another advantage is the absence of requirements for obtaining additional licenses or permits.

Thinking about registering an SPF in Luxembourg? Need advice on SPF regulation in Luxembourg? Why not contact YB Case?

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