How to Optimize Your Liquid Asset Preservation Thanks to the Luxembourg Family Wealth Management Company

Preserving and growing wealth across generations is a primary concern for high-net-worth individuals and families. Luxembourg offers a robust and efficient solution through the Family Wealth Management Company (Société de gestion de patrimoine familial or SPF). This corporate vehicle is specifically designed to manage private wealth and optimize asset preservation. Many international fmailies understand the key benefits of the Luxembourg SPF and how it can serve as a strategic tool for safeguarding liquid assets.

1. Understanding the Luxembourg SPF

The Luxembourg SPF is a dedicated investment vehicle that provides a flexible and tax-efficient structure for managing private wealth. It was introduced by the Luxembourg law of 11 May 2007 and is available exclusively for individuals or wealth-holding structures acting on behalf of private investors. It is restricted to holding and managing financial assets without engaging in commercial activities.

2. Asset Preservation through Tax Efficiency

One of the primary advantages of the Luxembourg family holding SPF is its favorable tax regime:

• No corporate income tax – The SPF is exempt from corporate income tax, municipal business tax, and net wealth tax.
• Annual subscription tax – Instead of income tax, the SPF pays an annual subscription tax of 0.25% on its net assets, capped at €125,000.
• Dividend and interest income benefits – While the SPF cannot benefit from Luxembourg’s double tax treaties, dividends, and capital gains earned from eligible financial assets are generally tax-exempt.

These tax benefits make the SPF an efficient vehicle for preserving and growing liquid assets over time.

3. Confidentiality and Asset Protection

The Luxembourg SPF offers a high degree of confidentiality, which is crucial for asset preservation. Moreover, the SPF can be structured to provide robust asset protection mechanisms, shielding assets from potential risks such as creditor claims or political instability.

4. Flexibility in Investment Management

The SPF allows for broad investment options, including:

• Stocks, bonds, and securities
• Investment funds and structured products
• Bank deposits and cash equivalents

While the SPF is not permitted to conduct commercial activities, it can actively manage and diversify liquid assets to optimize returns while maintaining risk control.

5. Succession Planning and Wealth Transfer

The Luxembourg SPF is an excellent tool for intergenerational wealth transfer. It can be structured to facilitate smooth inheritance planning while minimizing estate taxes. Through mechanisms such as trusts, foundations, or family agreements, assets can be transferred efficiently to heirs, ensuring long-term preservation of family wealth.

The Luxembourg Family Wealth Management Company (SPF) is a powerful vehicle for optimizing liquid asset preservation. With its tax-efficient structure, confidentiality, investment flexibility, and succession planning benefits, it is an ideal solution for high-net-worth individuals seeking to protect and grow their wealth. By leveraging the SPF, families can ensure that their financial legacy remains secure for generations to come.

Damalion supports entrepreneurs, investment groups and families who register their Luxembourg holding company. We provide local resident directors. Please contact your Damalion expert now.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Luxembourg SPF (Société de gestion de patrimoine familial) — who can use it, what it may hold, 2025 tax rules (0.25% subscription tax, €1,000–€125,000), name requirement, AML points, and a clear path from idea to bank account.

For private investors, families, family offices and their holding structures • Damalion helps you prepare documents, align with banks, and keep the file consistent. Acceptance is always the bank’s decision.

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What is an SPF?

An SPF is a simple Luxembourg company used to hold and manage private financial assets for individuals and their qualifying wealth vehicles. It does not run a business, provide services to third parties, or use tax treaties. It focuses on passive wealth holding with light reporting.

Who may invest:

• Individuals investing their private wealth
• Wealth vehicles acting for individuals (e.g., trusts, private foundations, similar)
• Intermediaries acting exclusively on behalf of the above

What it may hold (examples):

• Shares, bonds, fund units, deposits, structured products
• Cash and equivalents
• Non-controlling private investments via financial instruments

Permitted vs. prohibited activities

Topic	Allowed	Not allowed
Activities	Passive holding of financial assets for private wealth	Commercial activity, services to third parties
Loans	Interest-free or ancillary loans within the private wealth context	Professional lending; interest-bearing loans as a business line
Assets	Securities, fund units, deposits, similar instruments	Direct real estate; active trading as a business
Treaties	—	SPF does not access double tax treaties

Current tax position

• No corporate income tax, municipal business tax, or net wealth tax.
• Subscription tax 0.25% (taxe d’abonnement), minimum €1,000, cap €125,000 per year (as from 1 January 2025).
• Base commonly includes paid-up share capital, share premium, and the portion of shareholder debt exceeding 8× equity (typical anti-thin-cap element applied to SPFs).
• Quarterly filing and payment to the AED (Luxembourg registration duties authority); pro-rata in first/last year.

From 2025, the minimum subscription tax increased to €1,000 while the cap remains €125,000. The SPF name must include “société de gestion de patrimoine familial” or “SPF”.

Governance and oversight

• Forms: SA, Sàrl, SCA, etc. Keep articles and share register aligned with SPF rules.
• Shareholders: only eligible investors as defined above.
• Monitoring: the AED oversees compliance with SPF conditions and subscription tax.
• Accounting: maintain clear records to evidence passive holding and eligibility of investors.
• Naming: include “SPF” or the full French wording in the company name (2025 rule).

Opening a bank account for an SPF

Banks will review KYC/AML points. Be ready with:

• Company documents (incorporation, articles, UBO chart, signatory rules)
• Identification and proof of address for UBOs and directors
• Tax residency information for UBOs and the company
• Clear description of assets to be held, origin of funds, expected movements

Answer follow-ups quickly and keep one consistent document trail. Bank acceptance is case-by-case.

From idea to active SPF — a simple path

1. Confirm that your use is private wealth holding and you meet investor eligibility.
2. Choose legal form and draft articles compliant with the SPF Law.
3. Set the name with “SPF” or the full French wording.
4. Arrange share capital and, if any, shareholder loans respecting the 8× equity point.
5. Incorporate before a Luxembourg notary and register.
6. Prepare the bank file and open the account.
7. File and pay the subscription tax to the AED every quarter.

Related reading on Damalion

• Modernisation of the Luxembourg SPF tax regime
• SPF — permitted financial activities
• SOPARFI or SPF?
• Understanding the Luxembourg SPF

Frequently asked legal questions

1) Who is an “eligible investor” for an SPF?

Individuals investing their private wealth; wealth vehicles acting for such individuals (e.g., trusts, private foundations with private beneficiaries); and intermediaries acting solely on behalf of those investors. Legal entities carrying on commercial activity for their own account are not eligible.

2) Can an SPF carry out commercial activities?

No. An SPF must only hold and manage private financial assets on a passive basis. It cannot provide services to third parties or run a business.

3) Does an SPF benefit from Luxembourg’s double tax treaties?

No. The SPF regime does not grant access to Luxembourg’s treaty network.

4) What taxes apply to an SPF in 2025?

No corporate income tax, no municipal business tax, no net wealth tax. Instead, it pays a 0.25% subscription tax each year with a €1,000 minimum and a €125,000 cap. The tax is declared and paid quarterly to the AED.

5) How is the subscription tax base computed?

In practice, it covers paid-up share capital and share premium, and includes the portion of shareholder debt exceeding eight times equity. The result is then multiplied by 0.25%, subject to the annual minimum and cap.

6) Is there a naming rule in 2025?

Yes. The company’s name must include “société de gestion de patrimoine familial” or “SPF”.

7) Who oversees the SPF regime?

The Administration de l’Enregistrement, des Domaines et de la TVA (AED) monitors compliance with the SPF rules and collects the subscription tax.

8) Can an SPF hold real estate?

Direct ownership of real estate is not permitted. Exposure via certain financial instruments may be possible if it remains passive and within the SPF scope.

9) Are interest-bearing loans permitted?

Professional lending is not allowed. Ancillary, non-professional financing in a private wealth context may be possible when aligned with SPF rules and without turning lending into a business.

10) How often is the subscription tax paid?

Quarterly, to the AED. The first and last year are pro-rated for the relevant quarter.

11) What happens if eligibility conditions are breached?

The SPF may lose its status and become fully taxable under the general corporate tax regime. Rectification and penalties may apply.

12) What documents do banks typically require?

Company incorporation documents; UBO chart; board/signatory powers; IDs and proof of address for UBOs and managers; tax residency information; clear origin of funds; and a short description of expected asset types and cash flows.

13) Are dividends and capital gains taxed at the SPF level?

Generally, no Luxembourg income taxes at the SPF level. The SPF is not subject to CIT/MBT/NWT; only the 0.25% subscription tax applies. Investor taxation follows their personal rules in their country(ies) of tax residence.

14) Can the SPF hire staff?

Having employees is atypical and may raise a question about economic activity. The model is passive holding with lean administration.

15) Is transfer pricing relevant?

Because the SPF does not carry on a business and is not fully taxable, classic transfer pricing frameworks are generally not in focus. However, any intra-group financing must remain ancillary and non-professional.

16) How should shareholder loans be sized?

Monitor the 8× equity reference: debt exceeding eight times equity is included in the subscription tax base. Keep customary documentation for any shareholder financing.

17) Are audited financial statements mandatory?

Audit depends on size thresholds and legal form. Many SPFs keep simplified accounts; larger SPFs or certain forms may trigger audit requirements under general company law.

18) What AML/CFT points should be expected in 2025?

Expect stricter identification and verification, clear UBO information, and consistent source-of-funds evidence. Keep documentation up to date and respond quickly to requests from banks and service providers.

19) How long does it take to set up an SPF and open a bank account?

With a complete file and responsive stakeholders, incorporation can be quick. Bank onboarding varies by profile and can take from several days to a few weeks.

20) When is an SPF not the right tool?

When you need commercial activity, treaty access, or active asset management as a business. In such cases, consider other Luxembourg options (e.g., SOPARFI or fund vehicles).