In the world of wealth management and private asset management, the Luxembourg Société de Gestion de Patrimoine Familial, or SPF (family wealth management company), holds a unique position. Established under Luxembourg law, specifically the modified Law of May 11, 2007, the SPF serves as a legal framework for managing private wealth. This comprehensive guide will delve into the key aspects of SPF, its general provisions, and its tax implications. We’ll also explore the recent changes that affect SPF operations.
General Provisions about the Luxembourg private wealth management company
Defining the SPF
The Société de Gestion de Patrimoine Familial, commonly referred to as SPF, is a legal entity created by the Law of May 11, 2007. Its primary purpose is to provide a legal framework for managing private wealth. The SPF is designed to be an investment vehicle exclusively for individuals, allowing them to manage their private assets effectively.
Legal Structure
An SPF can take on various legal forms, including a société à responsabilité limitée (SARL), société anonyme (SA), société en commandite par actions (SCA), or société coopérative organized as a société anonyme. However, it’s important to note that the SPF’s exclusive purpose must be the acquisition, holding, management, and realization of financial assets, with no involvement in commercial activities.
Limited Involvement
One crucial aspect of an SPF‘s operation is its limited involvement in the management of other companies in which it holds a stake. The SPF is not allowed to interfere with the management of such companies. Furthermore, it is prohibited from granting remunerated loans, even to the companies in which it holds an interest. However, the SPF may provide advances or guarantees to the companies as a subsidiary and purely gratuitous action.
Real Estate Holdings
As of July 1, 2021, the SPF is explicitly prohibited from directly acquiring real estate properties (unless indirectly through participations or shares). Additionally, it cannot hold real estate assets through entities defined in paragraph 11bis of the modified Law on Fiscal Adaptation of October 16, 1934 (Luxembourg or foreign partnership companies) or through one or more common investment funds (FCPs). This restriction applies to both Luxembourg FCPs and foreign entities with legal and tax regimes equivalent to Luxembourg FCPs. .
Tax Provisions
Exclusion from European Directive
One significant tax consideration for SPFs is their exclusion from the benefits of the European directive on parent and subsidiary companies. This exclusion sets the SPF apart from other corporate entities in terms of tax treatment.
Dividend Taxation
Dividends distributed by an SPF are not subject to withholding tax at the source. However, this exemption does not exempt the recipients from potential taxation on these dividends under the Luxembourg tax regime (Article 147, paragraph 3 L.I.R.). It’s important to note that the 50% gross dividend exemption provided by Article 115, paragraph 15a L.I.R. does not apply to SPF dividends.
Interest Payments
Interest payments made by an SPF to beneficial owners are subject to the Luxembourg withholding tax, known as RELIBI (retenue libératoire luxembourgeoise).
Non-Resident Tax Treatment
For non-resident individuals, income derived from the sale of a stake in an SPF is not considered domestic income (Article 156, paragraph 8, letter c L.I.R.). This can have significant implications for tax planning for non-resident investors.
Secrecy and Tax Authorities
The SPF is added to the list contained in paragraph 178 bis of the modified General Tax Law of May 22, 1931, establishing a professional secrecy privilege in relation to tax authorities.
Regulatory Oversight
Apart from specific verification related to payments made by an SPF using form 510bis, the tax authority responsible for overseeing SPF compliance is the Administration de l’Enregistrement, des Domaines et de la TVA (AED).
Recent Changes
Legislative Update
It’s crucial to stay up-to-date with changes in legislation that affect SPFs. For instance, Article 11 of the Law of December 19, 2020, regarding the State’s revenue and expenditure budget for 2021, introduced amendments that impact SPF operations. Understanding these updates is essential for compliant and effective wealth management.
The Société de Gestion de Patrimoine Familial (SPF) offers a specialized and advantageous structure for managing private wealth in Luxembourg. Its unique legal framework and tax provisions make it an attractive option for individuals seeking effective wealth management and asset protection. However, it is essential to navigate the specific rules and regulations governing SPFs, especially considering recent legislative changes. By doing so, individuals can make informed decisions about whether an SPF is the right vehicle to manage their private assets and investments.
To manage your wealth by using a Luxembourg SPF or family wealth management company, please contact your Damalion expert now.
What are the key features and benefits of a Luxembourg SPF?
Before you proceed, align your family objectives, governance, and banking expectations so the SPF remains simple and compliant.
- Purpose-built for private wealth. Holds financial assets for eligible investors without commercial activity.
- Tax simplicity. Exempt from corporate income tax, municipal business tax, and net wealth tax; subject to an annual subscription tax on net assets.
- Bankable governance. Straightforward board rules, clear signatories, and predictable reporting.
- Flexible holding of securities. Can hold shares, bonds, funds, and similar financial instruments.
- Privacy and continuity. Structured ownership and documented distributions aid intergenerational planning.
For background on holding structures see SOPARFI Luxembourg and for fund options review Luxembourg RAIF tax regime.
How do you set up and keep an SPF compliant?
Use this short sequence to move from decision to a working, bankable SPF.
- Define scope and investors. Confirm that all contributors are eligible investors and that assets are financial in nature.
- Choose the company form. Typically a société anonyme (SA) or société à responsabilité limitée (S.à r.l.) configured to qualify as an SPF.
- Draft articles and governance. Describe purpose, no commercial activity, share classes, decision rules, and distributions.
- Open banking and treasury. Prepare KYC, source-of-wealth evidence, payment limits, and signature matrix.
- Register and file. Complete notarial incorporation and trade register steps; enroll for the subscription tax.
- Operate within scope. Hold only eligible assets, document flows, and prepare an annual net asset base for the subscription tax.
For a step-by-step incorporation example of a Luxembourg company see how to register a Luxembourg S.à r.l..
Frequently asked questions about the Luxembourg SPF
These answers reflect the current framework, including the 2025 subscription tax changes.
What is a Luxembourg SPF in one sentence?
Who qualifies as an eligible investor?
Which assets can an SPF hold?
What is expressly not permitted?
How is the SPF taxed in 2025?
What changed for the subscription tax in 2025?
Does the SPF have access to double tax treaties?
Can an SPF own real estate directly?
How are dividends and gains treated at the SPF level?
Are distributions to shareholders taxed?
What substance and governance are expected?
How do banks evaluate an SPF file?
How long does incorporation take?
Can an SPF sit within a broader group structure?
Where does Damalion help in practice?
| Topic | SPF at a glance |
|---|---|
| Purpose | Private wealth holding of financial assets for eligible investors |
| Taxes | Annual subscription tax on net assets; generally no CIT, MBT, NWT |
| Treaties | No treaty access |
| Assets | Shares, bonds, fund units, deposits, and similar instruments |
| Not permitted | Commercial activity or services to third parties |
Explore related topics: family trusts, Luxembourg hedge funds, and Luxembourg holding companies.
