1. Introduction to the Luxembourg SPF

The Luxembourg SPF (Société de Gestion de Patrimoine Familial) is a private-wealth vehicle regulated under the law of 11 May 2007 (as amended).

  • It is designed for private wealth management, not for commercial operating activities.
  • Eligible investors include individuals managing their own wealth, private-wealth management entities, and intermediaries acting for such persons.
  • Permitted activities cover the acquisition, holding, management, and disposal of financial assets (e.g., shares and bonds). Direct commercial activity, IP holding, and direct real estate are not allowed.
  • The SPF enjoys favourable tax treatment. It is generally exempt from Luxembourg corporate income tax, municipal business tax, net wealth tax, and VAT. Its only recurring Luxembourg tax is the annual “subscription tax” (taxe d’abonnement).

For investors—entrepreneurs, family offices, PE / VC—who plan to contribute company shares (operating or holding) into a Luxembourg SPF, the vehicle can fit well. However, strict compliance with the SPF rules is essential.

Below, we explain how to contribute shares, highlight the 2025 changes, provide a worked example with numbers, and share a step-by-step checklist.

2. 2025 Changes to the SPF Regime: What You Need to Know

As of 1 January 2025, in Luxembourg, several important amendments to the SPF law apply.

Key changes

  • The minimum annual subscription tax (taxe d’abonnement) increased from EUR 100 to EUR 1,000.
  • The tax base now references debts existing on the first day of the financial year (or the incorporation date) of the SPF for that year.
  • The company name must include “société de gestion de patrimoine familial” or “SPF”.
  • Administrative fines were reinforced: up to EUR 10,000 for formal breaches and up to EUR 250,000 for serious breaches (unauthorised activities, non-eligible investors, and so on).
  • A formal withdrawal procedure exists. If non-compliance continues after a remedy period, SPF status may be withdrawn and the entity taxed under the ordinary regime (potentially with retroactive effect).

Why this matters for a share contribution transaction:

  • Your SPF must remain within permitted activities and investor eligibility rules after the contribution.
  • Fixed costs increased due to the higher minimum subscription tax; plan cash flow accordingly.
  • Debt timing affects the tax base. Therefore, align funding and contribution dates with the financial year start.
  • Finally, get the naming and filings right to avoid fines or a status withdrawal.

3. How to Contribute Shares in a Company to a Luxembourg SPF

Use the following steps to structure a contribution in kind.

Step A: Set up or use an existing Luxembourg SPF

  • Incorporate under a permitted legal form (SA, Sàrl, SCA, or a cooperative organised as a public limited company).
  • Draft articles that reference the 11 May 2007 law and restrict the corporate object to passive holding of financial assets.
  • Ensure shareholders are eligible investors and avoid any public placement or listing of SPF shares.

Step B: The target company and the shares

  • Identify the company whose shares will be contributed (operating or investment company).
  • Keep the SPF’s role passive; do not assume active management of the target.
  • Choose the path: direct contribution in kind into the SPF, or a sale followed by contribution of proceeds (less common).

Step C: Valuation and contribution mechanics

  • Value the shares and record them as an in-kind contribution to the SPF’s share capital and/or share premium.
  • Issue SPF shares to the contributor in exchange for the contributed shares.
  • Remember: the subscription tax base includes paid-up capital, share premium, and any debt that exceeds 8× equity.

Step D: Subscription tax calculation and payment

  • Start from the paid-up share capital after the contribution.
  • Add any share premium.
  • Include debt existing on the first day of the financial year that exceeds eight times equity.
  • Apply the 0.25% rate to the base (minimum EUR 1,000 from 2025; maximum EUR 125,000).
  • Plan quarterly instalments and calendar reminders.

Step E: Ongoing compliance

  • Limit activities to passive holding of financial assets. No commercial trading, no direct real estate, and no intra-group lending beyond ancillary guarantees.
  • Use the correct name and file required compliance certificates electronically.
  • Monitor compliance continuously to avoid penalties and status withdrawal.

4. Concrete Example with Calculation

Scenario: A family office contributes shares of “OperatingCo” into a newly formed Luxembourg SPF.

  • Fair market value contributed: EUR 10,000,000.
  • No debt at the target level.
  • SPF books EUR 10,000,000 as paid-up share capital; no share premium.
  • No other debt at the SPF level.
  • Financial year end: 31 December.

Step 1 — Contribution mechanics. The contributor transfers shares worth EUR 10,000,000. The SPF issues new shares for the same amount. Paid-up capital becomes EUR 10,000,000.

Step 2 — Subscription tax base. Paid-up capital EUR 10,000,000; share premium EUR 0; excess debt above 8× equity EUR 0. Base = EUR 10,000,000.

Step 3 — Subscription tax payable. 0.25% × 10,000,000 = EUR 25,000. This amount is above the minimum and below the cap, so the SPF pays EUR 25,000.

Step 4 — Instalments. The SPF pays the tax in quarterly instalments according to the standard deadlines.

Variant — leverage. If the SPF had EUR 100,000,000 of debt on day one and equity of EUR 10,000,000, excess debt would equal 20,000,000 (100,000,000 − 8 × 10,000,000). The base would then be 30,000,000 and the tax would equal EUR 75,000.

5. Key Practical Considerations and Pitfalls

  • Eligible investors only. Ineligible shareholders can jeopardise SPF status.
  • No active management. Keep the SPF passive to avoid reclassification.
  • Real estate. Avoid direct property; only indirect exposure through non-transparent entities is acceptable.
  • Debt levels. High leverage can increase the tax base; monitor ratios.
  • Naming and filings. Missing “SPF” or late filings can trigger fines.
  • Treaty access. The SPF does not benefit from Luxembourg’s double tax treaties or EU directives.
  • Valuation and timing. Use a defendable fair-value report and align dates with the financial year.
  • Status withdrawal. Persistent breaches can lead to withdrawal and ordinary taxation.

6. Frequently Asked Questions

Can I contribute operating-company shares into an SPF that then actively manages the company?
No. The SPF must remain a passive holder.

Does the contribution trigger Luxembourg tax for the contributor?
The SPF is exempt from corporate tax. The contributor should check home-country rules on in-kind transfers.

When is the subscription tax due?
Annually, with quarterly instalments. The base is assessed on the first day of the financial year (or the incorporation date for that year).

Can the SPF benefit from double tax treaties after the contribution?
No. The SPF does not have access to Luxembourg treaties or certain EU directives.

What happens if the SPF breaches the rules?
The authority may impose fines and, after a remedy period, withdraw SPF status. Ordinary corporate taxation would then apply.

7. Key Takeaways for Investors

  • SPFs remain attractive for private wealth, provided the structure stays within the legal perimeter.
  • From 2025, the minimum subscription tax is EUR 1,000; plan for the higher fixed cost.
  • For contributions in kind, manage valuation, capital increase, and tax base computation with precision.
  • A simple model: EUR 10,000,000 base at 0.25% results in EUR 25,000 of tax.
  • Maintain ongoing compliance and document decisions to reduce risk.

8. Related links to go further

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.

10 banks in Luxembourg