How to protect your family assets thanks to Luxembourg wealth management company

One of the most important and attractive Luxembourg vehicles is the SPF (“Société de Gestion de Patrimoine Familial”)  or family management company.

What is an SPF in Luxembourg? 

The SPF (Société de Gestion de Patrimoine Familial) was established to replace the 1929 Luxembourg Holding regime, which had been regarded as not being in line with European Community Treaty state aid measures. 

The family SPF depicts a suitably private asset management tool for ultra and high-net-worth individuals in their quest to build, protect and transfer their wealth. 

The Family Wealth Management company (Société de Gestion de Patrimoine Familial) has a single corporate purpose: the acquisition, holding, management, and realization of financial assets excluding any commercial activity, any explicit ownership of buildings, or intellectual property rights. 

Eligible investors 

According to the SPF Law, eligible investors are: either 

1. private individuals managing their wealth; or 
2. private wealth management entities acting solely for the estate of one or more individuals, which may be resident and non-resident entities; or 
3. intermediaries acting on behalf of the individuals listed under (1) and (2) above. 

Companies or commercial businesses should not be considered eligible investors. 

Also, the SPF is an excellent vehicle for both investment clubs and/or beginner and non-professional investors who want to test the functioning of their relationships with potential co-investors. 

The investment policy of an SPF 

The SPF itself signifies a passive investment vehicle developed for family asset and succession planning, matrimonial property management, and similar purposes. Its permitted activities are thus limited to the acquisition, holding, and sale of financial assets, cash, and other assets kept in an account with experienced financial service providers. 

Restricted activities 

Due to its particular status: 

• the SPF is not permitted to render services, including the granting of interest-bearing loans 
• the SPF may not be involved in the administration of the entities in which it holds participation, even if the percentage of capital held by the SPF would form a majority and provide it with certain management rights. 
• any type of commercial activity is restricted  
• the direct holding of real estate or intellectual property is not allowed 
• the SPF may not enter into any life insurance contracts. 

The law does not exact any direct limitation to financing and indebtedness, and the SPF financing may be executed through borrowing operations, whether from credit institutions, its shareholders, or other investors. Also, an SPF is permitted to hold equity stakes provided that it does not interfere in the management of the company in which such stakes are held by the SPF. 

Simplified taxation of the SPF 

According to the SPF Law, SPFs are in principle exempt from corporate income tax, municipal business tax, and net wealth tax. 

An annual subscription tax of 0,25%, limited to a yearly amount of EUR 125,000, applies to all SPFs. The tax base is calculated as a sum of the paid share capital and share premiums, and the part of the debt that surpasses eight times the aforementioned sum. 

As an effect of its fiscal neutrality, an SPF does not benefit from the conditions of Luxembourg’s bilateral double tax treaty network or the European Union Parent-Subsidiary Directive. Hence, an SPF may be subject to foreign withholding taxes in the country where its investments are situated. 

Dividends paid by an SPF are not subject to withholding tax.

Given the lack of any commercial activity, an SPF should not be a taxable person for Luxembourg value-added tax purposes. 

The management of the SPF for tax purposes is carried out by the indirect tax authorities who may inform the direct tax authorities in case the SPF no longer fulfills the requirements to benefit from the SPF regime. 

Under the current legislation, only a few classifications of investors can open SPFs in Luxembourg, and our team of experts at Damalion can offer assistance in the registration of an SPF in Luxembourg. Contact your Damalion expert now to register your SPF in Luxembourg. 

How to protect your family assets thanks to a Luxembourg wealth management company (SPF)

For private individuals, families, family offices and holding arrangements • This page explains what an SPF is, who can use it, what it can and cannot do, the main taxes, documents, and common controls. Acceptance by banks and service providers is always their decision.

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What is a Luxembourg wealth management company (SPF)?

The SPF (Société de gestion de patrimoine familial) is a private wealth holding company for natural persons and certain private wealth entities. It holds and manages financial assets. It does not run a business and does not manage subsidiaries.

Who may use an SPF?

• Private individuals managing their own wealth.
• Private wealth entities acting solely for one or more individuals (e.g., trusts, foundations, stichting), if they act only for private estate purposes.
• Intermediaries acting for the two groups above.

Commercial companies acting for themselves are not eligible shareholders.

Permitted assets and activities

• Holding and managing financial assets: shares, bonds, funds, cash, deposits, and similar instruments.
• Passive ownership of qualifying participations (no management of the underlying entity).
• Ancillary, non-remunerated guarantees or advances related to its holdings.

Restricted items

• No commercial activity. No services rendered to third parties.
• No management of companies in which it holds shares.
• No direct ownership of real estate or intellectual property.
• No life insurance contracts entered into by the SPF.
• No interest-bearing loans granted to third parties.

Tax outline

Tax	SPF position
Corporate income tax / Municipal business tax / Net wealth tax	Not applicable to SPF (exempt).
Subscription tax (taxe d’abonnement)	0.25% on the base set by law; minimum €1,000 per year (from 2025), maximum €125,000 per year; paid quarterly.
Double tax treaties / EU directives	SPF does not rely on treaty or PSD benefits.
Withholding on dividends distributed by an SPF	No Luxembourg withholding tax on SPF dividends (investor taxation depends on investor jurisdiction).
Withholding on interest paid to Luxembourg resident individuals	May be subject to a final 20% WHT when conditions are met.
VAT	SPF is outside the scope for typical holding activity; VAT rules may apply where relevant services are acquired.

Formation and governance

• Common legal forms: SA, Sàrl, SCA, SC (choose based on capital, control, and transfer rules).
• Shareholders are private investors or qualifying private wealth entities.
• Statutory audit depends on form and thresholds (e.g., SA/SCA require an approved auditor; Sàrl per thresholds).
• Tax supervision is by the Luxembourg Registration Duties, Estates and VAT Authority (AED). The SPF is not supervised by the CSSF.

Documents banks and providers usually request

• Shareholder and director IDs; recent proof of address.
• Source of funds and source of wealth with traceable documents.
• Company documents: draft statutes, incorporation deed, share register (post-incorporation), UBO chart.
• Expected activity: type of assets, counterparties (custodians, brokers), payment patterns, countries.
• Tax residency details (TIN); PE/PEP/sanctions screening where relevant.
• Certified translations or apostilles if requested.

SPF vs SOPARFI

Topic	SPF	SOPARFI
Purpose	Private wealth holding for individuals	General holding company for investments
Activities	Passive; no commercial activity	Holding; may render certain intra-group services
Tax	Exempt from CIT/MBT/NWT; subscription tax	Fully taxable with participation exemption where conditions are met
Treaty/PSD access	No	Yes, if conditions are met

Related reading

• Luxembourg SPF FAQs
• How to incorporate your SPF
• SOPARFI or SPF: how to choose
• SPF: permitted financial activities
• Holding company benefits for families

Frequently asked legal questions

1) Can non-resident individuals own an SPF?

Yes. Non-resident individuals may be shareholders. Eligibility is limited to private investors and qualifying private wealth entities acting only for private estate purposes.

2) May an SPF carry out commercial activities?

No. The SPF cannot perform commercial activities or render services. It is a passive holding vehicle for financial assets.

3) May an SPF manage its subsidiaries?

No. The SPF must not be involved in the management of the entities it holds. Shareholders may hold external roles, but the SPF itself remains passive.

4) Can an SPF directly own real estate or IP?

No. Direct ownership of real estate and intellectual property is not allowed. Indirect exposure via non-transparent vehicles is subject to limits and must stay within passive holding.

5) Who supervises an SPF?

The SPF is not supervised by the financial regulator (CSSF). Tax supervision is by the AED. Annual formalities and filings depend on legal form and thresholds.

6) What tax applies to an SPF in 2025?

No CIT, no municipal business tax, no net wealth tax. An annual subscription tax of 0.25% applies, with a €1,000 minimum (from 2025) and a €125,000 cap; paid quarterly.

7) Are dividends paid by an SPF subject to Luxembourg withholding?

No. Dividends distributed by an SPF are not subject to Luxembourg dividend withholding tax. Investor-level taxation follows the investor’s jurisdictional rules.

8) Are interest payments by an SPF subject to withholding?

Interest paid to Luxembourg resident individuals may fall under a final 20% withholding tax when conditions are met. Other cases depend on payee status and applicable law.

9) Does an SPF have access to double tax treaties or the Parent-Subsidiary Directive?

No. The SPF is excluded from treaty benefits and EU directive regimes for relief. Planning assumes no treaty/PSD access.

10) What legal forms are available?

Common forms are SA, Sàrl, SCA, or SC. Choice depends on capital needs, control, transferability, and audit requirements.

11) Is an audit required?

SA and SCA require an approved auditor. Sàrl audit depends on size thresholds. Separate engagement letters and auditor independence rules apply.

12) Can an SPF grant loans?

It cannot grant interest-bearing loans. Only ancillary, non-remunerated shareholder support (e.g., guarantees, cash advances) is allowed within the limits of the law.

13) How is the subscription tax base calculated?

Based on paid-in share capital plus share premium, and the portion of debt exceeding eight times that amount. Minimum and cap apply; quarterly payment to AED.

14) Can an SPF hold bankable assets worldwide?

Yes, it may hold diversified financial instruments with reputable custodians and brokers, subject to KYC/AML and sanctions rules.

15) How are AML/CFT and sanctions handled?

Banks and providers apply customer due diligence, ongoing monitoring, and sanctions screening. Clear source of funds and source of wealth evidence are required.

16) Can an SPF distribute interim dividends?

Yes, if permitted by its form and statutes and subject to company law requirements on distributable reserves and decision-making formalities.

17) Are there substance requirements?

As a passive holding vehicle, the SPF maintains appropriate governance and records. Economic substance expectations apply to directors’ decisions, record-keeping, and third-party contracts.

18) Can an SPF be converted to another vehicle later?

Yes. Conversions, mergers, or liquidations must follow Luxembourg company law, tax clearances, and any third-party consents.

19) How do banks view SPFs?

Assessment is case-by-case. Banks expect transparent ownership, clean funds, clear investment policy, and coherent payment flows. Acceptance is at the bank’s discretion.

20) What typical documents will a bank request?

Shareholder/UBO IDs and addresses, source of wealth/funds proofs, company statutes and registers, expected asset and payment profiles, and tax residency details (TIN). Certified translations or apostilles may be requested.