Luxembourg’s Budget Law of 19 December 2020, or the Budget Law of 2021, enacted several changes to the country’s tax regime. Under the Budget Law of 2021, Article 11 or the SPF Law was modified and confirms that a Private Wealth Management Company is not allowed to hold real estate, either directly or indirectly by way of a tax transparent entity or a mutual fund.
The 2021 Budget Law emphasizes that a Private Wealth Management Company (SPF or “Société de gestion de patrimoine familial) is an attractive asset management vehicle for ultra-high-net-worth individuals in their mission to create, safeguard, and transfer their wealth. This Luxembourg investment vehicle was first introduced towards the end of Luxembourg’s Holding regime in 1929.
By rule, a Private Wealth Management Company is solely dedicated to the acquisition, holding, management, and disposal of qualified investments that come in various forms. To avoid the abuse of a Private Wealth Management Company by domestic and foreign investors alike, strict monitoring from involved authorities is a must.
What is a Private Wealth Management Company in Luxembourg?
The SPF or Private Wealth Management Company is a dedicated vehicle for holding and managing financial aspects of a private individual or family, which may include bonds, shares, equities, savings, derivatives, precious metals, futures, warrants, and other financial tools. ‘
By nature, a Private Wealth Management Company is an unregulated vehicle that does not require any business license to successfully operate. It is specially designed for investors who wish to manage their private wealth. Keeping this in mind, the shares within a Private Wealth Management Company may not be used for public placement, cannot be offered to the public, nor quoted on any stock exchange.
Eligible Investors of a Private Wealth Management Company in Luxembourg
- Individuals solely managing their private wealth
- Private wealth management outfits serving one or more individuals, such as in the case of family trusts or offices
- Intermediaries acting on behalf of private investors and private wealth management companies
Private Wealth Management Company Prohibited Activities
A Private Wealth Management Company (unlike the Soparfi) is prohibiting from executing these activities:
Loan Granting Activity
A Private Wealth Management Company is restricted to render any kind of service, including the granting of interest bearing loans. This also prohibits a Private Wealth Management Company to grant loans to companies in which it holds participation shares. Alternatively, it can issue cash advances or guarantee the liabilities of a company from which it holds participations on an ancillary basis and without any renumeration.
Holding Intellectual Property
A Private Wealth Management Company in Luxembourg is not allowed to hold any type of intellectual property directly.
Holding Real Estate
A Private Wealth Management Company (you may see SPF Vs Soparfi) is not allowed to invest in real estate, although it may acquire holdings in corporations or other non-transparent legal entities that hold real estate.
Luxembourg Private Wealth Management Company Legal Forms
A Private Wealth Management Company in Luxembourg may be set up in various legal forms. Depending on the specific needs of an investor, in terms of capital shares, management control, and share transferability, a Private Wealth Management Company may be structured in one of the many legal forms:
- Public liability company (SA)
- Private limited liability company (SARL)
- Partnership limited by shares (SCA)
- Cooperative in the form of a public company
Luxembourg Private Wealth Management Company Eligible Assets
A Private Wealth Management Company in Luxembourg is given free reins to invest in any type of financial instruments in Luxembourg and overseas:
- Derivatives, options, warrants, futures
- Shares, bonds, real estate, cash, funds, securities
- Commodities, currencies, distressed assets, precious metals, loans
- Funds, SICAR (Investment Company in Risk Capital), Specialized Investment Fund, SICAV (Investment Company in Variable Capital), securitization funds
- Hedge funds
Private Wealth Management Company Equity and Liabilities
A Private Wealth Management Company in Luxembourg may issue shares of different classes, nominative, and bearer shares. All shareholders of a Private Wealth Management Company may be a resident or non-resident.
- Private individuals
- Family offices
- Investment clubs or groups of individuals managing their own wealth
- Trusts, foundations, stichting, patrimonial entities, administrative kantor
- Other wealth management companies
By rule, this excludes corporate shareholders unless they act on behalf of the listed shareholder types. Examples include Soparfis, holding entities, fund, and nominees.
- The minimum share capital for a public limited liability company and partnership by limited shares is EUR 31,000, with a minimum of 1/4 paid in during incorporation.
- The minimum share capital for a private limited liability is EUR 12,500 that should be fully paid at the time of incorporation.
- The minimum share capital may be paid in the equivalent value in another currency.
In a Private Wealth Management Company, investors may establish the company by contribution either in cash or in kind. There are no capital duties to be made upon incorporation, except for fixed registration payment of EUR 75. It is required to have an external auditor perform valuation for public limited liability companies and partnership by limited shares, but not for private limited liability company. Lastly, capital premium may be used, while contributions does not have to represented by an increase in capital or issuance of shares.
Luxembourg Private Wealth Management Company Taxation Regime
- A Private Wealth Management Company is fully exempt from corporate and municipal business tax.
- A Private Wealth Management Company is assessed with registration tax which is calculated at a rate of 0.25% of its paid-in capital.
- A Private Wealth Management Company’s registration tax is not due on profit carried forward.
- A Private Wealth Management Company ’s registration tax will be due on any debts in excess of eight times its paid-in capital.
The Private Wealth Management Company structure enjoys a wide range of benefits except for double tax treaties and EU Directives. A Private Wealth Management Company may be transformed into another legal form over time.
Damalion excels in providing professional consulting to help private investors in the formation and management of Luxembourg investment vehicles, including Private Wealth Management Company structure. We also assist you for bank account opening. Apart from expert consulting, we utilize our network of connections with seasoned accountants, lawyers, and other professionals to streamline and expedite the company formation process. To learn more about Private Wealth Management Company in Luxembourg or assistance in the incorporation of a Private Wealth Management Company, reach out to a Damalion expert today.
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.
Last updated: 10 September 2025
This page explains how to set up a Luxembourg SPF in 2025 and keep it bankable, compliant, and easy to run for investors and entrepreneurs.
What is a Luxembourg SPF and who is it for?
The Private Wealth Management Company (SPF) is a Luxembourg company designed to hold financial assets for private investors and family structures, not to carry out commercial activities.
Who can set up an SPF and what are the eligibility rules?
Before drafting documents, confirm that investors are individuals or their qualifying wealth vehicles, and that planned activities remain strictly within passive asset holding.
- Eligible investors include private individuals, family offices, trusts, and foundations acting for private wealth.
- Ineligible use cases include operating businesses and services provided to third parties for consideration.
Which assets can an SPF hold in practice?
To avoid governance drift later, list each asset class and confirm it fits within the SPF perimeter from day one.
- Allowed: shares, bonds, fund units, deposits, and comparable financial instruments.
- Not allowed: direct or transparent real estate ownership and commercial operations within the SPF.
How is the SPF taxed in 2025 and what changed?
The SPF does not pay corporate income tax, municipal business tax, or net wealth tax; instead, it is subject to an annual subscription tax with clear filing obligations.
- Rate: 0.25% on paid-up capital plus share premium plus the portion of debt that exceeds 8× (capital + share premium).
- Minimum: €1,000 per year. Maximum cap: €125,000 per year.
- Measurement point: base assessed at the first day of the financial year for the annual calculation.
- Payment and filing: quarterly via MyGuichet.lu, with the annual amount split into four installments.
- Compliance certificate: file electronically with the AED by 31 July each year.
- Naming rule and fines: company name must include “SPF”; administrative fines can apply if obligations are not met.
How do you incorporate a Luxembourg SPF step by step?
Follow the sequence below to reduce bank delays and keep governance consistent across documents and meetings.
- Clarify objective and eligible holdings. Write a one-page purpose and list of instruments to be held.
- Pick legal form and share classes. Choose S.à r.l. or S.A. and define voting versus economic rights.
- Prepare governance. Set signing powers, meeting cadence, conflict rules, and a distribution policy.
- Open banking and deposit capital. Provide UBO files and narratives on funds and expected flows; obtain a blocking certificate.
- Notarial incorporation. Execute the deed and ensure the company name includes “SPF”.
- Register and file. Submit to the Luxembourg Trade and Companies Register and set up quarterly subscription-tax filings.
- Operate and review annually. Keep minutes and registers in Luxembourg, update KYC, and refresh the treasury policy.
What governance and banking documents do banks expect?
Align wording across statutes, minutes, and bank forms so that signatories and limits remain consistent over time.
Bank onboarding checklist
- Ownership chart, UBO identification, and source-of-funds/source-of-wealth narratives.
- Articles of association, signing matrix, and board minute templates.
- Treasury policy with payment limits and dual-approval rules.
Ongoing records
- Board minutes and shareholder registers kept in Luxembourg.
- Quarterly subscription tax filings and annual certificate by 31 July.
- Distribution approvals and bank mandate maintenance.
When is an SPF not the right tool?
If you plan any operating business, charging for services, or holding property directly, consider other vehicles such as a Luxembourg holding company or a dedicated SPV under a different regime.
Related reading to plan your structure
Use the guides below to compare alternatives and build a robust group chart around your SPF.
- SOPARFI Luxembourg: holding and financing platform
- Luxembourg holding company: main benefits
- Luxembourg taxation: key pointers
- Family trusts: benefits and drawbacks
- SOPARFI FAQs
Frequently Asked Questions about SPFs
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