The Luxembourg private wealth management company (hereafter: SPF – société de gestion de patrimoine familial), guided by
the Law of 11 May 2007, is a private wealth management vehicle that
helps users to structure their estate in a simplified, agile, unregulated, and tax-efficient manner and for a wide range
of purposes, making it appealing to a large number of investors.

What is an SPF in Luxembourg?

The Luxembourg SPF Law enables foreign businessmen to establish an investment company to manage the estates of private
individuals. SPFs in Luxembourg can buy, hold, manage, or sell any sort of financial asset, but they cannot engage in
commercial activities.

Who is eligible?

The SPF is offered to:

1. private persons maintaining their own wealth.
2. private wealth management entities operating solely for the estate of one or more individuals, which can be both
   resident and non-resident entities, like foundation or trust.
3. Intermediaries (including fiduciaries) operating on behalf of the individuals specified in (i) and (ii) above.

Although its title implies that it is exclusively available to families and their members, the SPF only helps to
denominate investors’ access to private persons, and no family ties are required.

Furthermore, the SPF is an investment vehicle for both investing clubs and/or amateur and non-professional investors who
would like to put their connections with possible co-investors to the test. If the SPF is properly constructed, it is
also possible to obtain a high level of discretion and anonymity.

Finally, listing of securities issued by an SPF on a stock market or offering such securities for public placement are
strictly prohibited.

Who should set up an SPF in Luxembourg?

Only a few types of investors can open SPFs in Luxembourg under current regulation. Individuals who would like to manage
their own estate (in accordance with the company’s characteristics) are among these.

Private companies can also establish private wealth management companies.

Their functions, however, will be limited to the administration of the estates of one or more private people. Typically,
such companies will administer the estates of foundations, trusts, or organizations. Furthermore, there are no
limitations on the citizenship of the individuals entrusting the estate for management.

Intermediaries providing management solutions can also establish SPFs in Luxembourg to provide fiduciary services.

The SPF is also a viable option for non-professional investors who are interested in providing asset management
services. The SPF may appoint a domiciliation agent based in Luxembourg to undertake the registration process.

Flexible investment structuring

The SPF is a passive investment vehicle designed for family wealth and long term planning, matrimonial property
handling, and other related purposes. As a result, its permitted activities are confined to the acquisition, holding,
and selling of financial assets. Because of its unique status:

1. The SPF is not permitted to render services, including the granting of interest-bearing loans; however, it may
   make cash advances or guarantee the liabilities of an entity where it holds a participation, but only
   incidentally and without charge.
2. The SPF is not permitted to be engaged in the management of entities in which it holds a participation, even if
   the percentage of capital.
3. Any sort of commercial activity is forbidden (but entities in which the SPF holds participation and involvement
   may freely engage in commercial activities subject to their own corporate purpose)
4. Direct holding of real estate or intellectual property is forbidden (but indirect confinement through other
   fiscally opaque entities is allowed)
5. The SPF is also not permitted to enter into life insurance arrangements.

The law sets no direct limits on financing or debts. The SPF financing may be conducted through borrowing operations,
whether it be from credit institutions, its stockholders or other investors. Contributions in cash or in kind, in euros
or not, are accepted.

Tax regime/Fiscal advantages

1. The SPF is not subject to corporate income tax, municipal business tax, wealth tax, or VAT reporting
   requirements.
2. It is only subject to a one-time registration fee of EUR 75.- and an annual subscription tax (taxe d ‘abonnement)
   of 0.25 percent, based on the sum of:
   • paid-up share capital,
   • share premium, and
   • indebtedness exceeding 8 times the share capital plus share premium (the thin capitalization rule is
     therefore 1 equity to 8 debt).

3. The registration duty is levied at a minimum of EUR 100.- and a maximum of EUR 125,000. – each year.
4. Due to the lack of commercial activity, an SPF should not be considered a taxable person for Luxembourg value
   added tax reasons.
5. The yearly subscription tax must be declared annually and paid to the registrar’s office for succession estates
   and subscription taxes every three months.
6. Moreover, the SPF does not impose a tax on capital gains derived from the sale of the SPF’s shares, nor does it
   impose a tax on the vehicle’s liquidation earnings. These regulations are only relevant to non-resident
   investors.
7. Simplified incorporation — low initial share capital and procedural requirements.

• No double tax treaties benefit for SPF

Since SPFs are not “fully taxable” entities, they cannot benefit from any Luxembourg double tax treaties, the European
Union Parent-Subsidiary Directive, or the Luxembourg participation exemption regime. As a result, an SPF may face
unrecoverable foreign withholding taxes in the country where its investments are located.

Administration

The SPF can be established as a private limited company (SARL), a public limited company (S.A.), a partnership limited
by shares (S.C.A.), or a cooperative company (S.C.) incorporated as a S.A.

According to the Law of 10 August 1915 on commercial companies, requirements relating incorporation, least share
capital, representation, annual general meetings, annual accounts, and so on shall be applicable according to the
specificities of the selected corporate form, but with essential structuring options in order to give tailor-made
vehicles to investors.

If all of the documentation are properly prepared, the SPF registration procedure in Luxembourg normally takes no more
than a week.

If you require more information on the SPF in Luxembourg, please contact our financial consultants, who can assist you in establishing a
company based on your business interests.

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