Luxembourg’s Société de gestion de patrimoine familial (SPF) offers a distinctive framework for private wealth management, enabling individuals to structure their estates in a flexible and tax-efficient manner. This non-regulated entity is particularly appealing to international clients, including those from Japan and China, seeking effective solutions for wealth preservation and growth.
Understanding the Luxembourg SPF
Established under the Law of 11 May 2007, the SPF serves as a private wealth management company that allows individuals to manage their assets without engaging in commercial activities. Its primary functions include the acquisition, holding, management, and disposal of financial assets. Notably, the SPF benefits from a broad tax exemption regime, being generally exempt from Luxembourg taxation on income and net wealth tax. However, it is subject to a yearly subscription tax of 0.25% based on paid-up capital, share premium, and excessive debts, with a minimum amount of EUR 1,000 and a cap at EUR 125,000.
Attractiveness to Japanese Clients
Japanese investors are often drawn to the SPF’s tax-efficient structure, especially considering Japan‘s progressive income tax system. As of 2025, Japan‘s national income tax rates for individuals range from 5% to 45%, with an additional 2.1% surtax applied to the national income tax. Local inhabitant taxes impose a flat rate of 10%, bringing the top marginal rate to approximately 55.95%.
By utilizing an SPF, Japanese clients can potentially defer or reduce their tax liabilities. The SPF‘s tax-exempt status in Luxembourg allows for the accumulation of wealth without immediate taxation, and dividends distributed by the SPF are not subject to withholding tax. This structure enables investors to manage the timing of income receipts, aligning with their tax planning strategies.
Attractiveness to Chinese Clients
Chinese investors also find the SPF appealing due to its favorable tax treatment and alignment with China‘s individual income tax system. In China, residents are taxed on their worldwide income, while non-residents are taxed only on China-source income. The individual income tax (IIT) law classifies income into nine categories, each with specific tax rates and brackets.
By establishing a Luxemvbourg SPF, Chinese clients can benefit from Luxembourg’s tax exemptions, potentially mitigating the impact of China’s IIT (China Individual Income Tax (IIT)) on their global income. However, it’s crucial to consider China’s global tax scheme, which requires residents to report and pay taxes on overseas income. This was highlighted by recent developments where companies like ByteDance advised their Chinese staff abroad to report income to Chinese tax authorities.
Strategic Considerations
While the SPF offers significant advantages, investors must navigate both Luxembourg’s and their home countries’ tax regulations. Luxembourg’s updated guidance on SPF residence certificates, as released by the Luxembourg Tax Authorities in June 2024, clarifies the conditions under which an SPF is recognized as a Luxembourg resident for tax purposes. This recognition is essential for investors seeking to leverage the SPF’s benefits fully.
Moreover, investors should be mindful of the prohibition against SPFs holding real estate assets directly.
The Luxembourg SPF presents a compelling option for Japanese and Chinese investors aiming to optimize their wealth management strategies. Its tax-efficient structure, flexibility, and alignment with international asset management practices make it an attractive vehicle for those seeking to preserve and grow their wealth across borders. However, careful consideration of both Luxembourg’s regulations and the investors’ home country tax obligations is essential to fully harness the benefits of the SPF.
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.
Manage your family wealth with the Luxembourg SPF: eligibility, permitted assets, 2025 subscription tax, governance, and banking onboarding — written in clear legal language.
For investors, entrepreneurs, family offices, and family businesses
Last updated: 12 September 2025
Who can use a Luxembourg SPF?
The SPF is reserved for private individuals and their qualifying wealth vehicles acting on their behalf. It is not intended for institutional investors or trading businesses. Confirm each investor’s status and keep clear evidence in your onboarding file and board minutes.
What can an SPF hold without legal friction?
An SPF acquires, holds, manages, and disposes of financial assets. It does not run a commercial activity, invoice third parties, or hold real estate directly or transparently. List the intended instruments on day one and check they fit the SPF perimeter.
- Allowed: shares, bonds, fund units, deposits, and comparable financial instruments.
- Not allowed: operating businesses, fee-based services, interest-bearing lending to third parties, and direct or transparent real estate.
How is the SPF taxed in 2025?
The SPF is exempt from corporate income tax, municipal business tax, and net wealth tax. Instead, it pays an annual subscription tax with simple, predictable filings.
- Rate: 0.25% on paid-up capital plus share premium plus the portion of debt that exceeds 8× equity (capital plus premium).
- Minimum: €1,000 per year. Cap: €125,000 per year.
- Measurement date: the base is assessed on the first day of the financial year.
- Payment and filing: quarterly through MyGuichet.lu; the annual amount is split into four instalments.
- Annual certificate: file the compliance certificate with the AED by 31 July.
- Naming rule: include “SPF” in the legal name to avoid administrative fines.
What are the key features and benefits of an SPF?
Use the SPF when your objective is private wealth holding with clean records and low operational noise. The points below summarize why it works for families and long-term investors.
- Clear object: a single purpose focused on financial assets, which reduces compliance ambiguity.
- Predictable taxation: subscription tax replaces corporate income and municipal business taxes under defined rules.
- Simple governance: short minutes, a signature matrix, and tidy registers meet ordinary expectations.
- Bank familiarity: onboarding is straightforward when UBOs, sources of wealth, and payment limits are documented.
- Flexible holding: suitable for listed and private instruments, subject to the non-commercial perimeter.
How do you incorporate an SPF step by step?
Follow this legal sequence to move from decision to a working, compliant entity.
- Confirm eligibility and scope. Identify each investor and the instruments to be held. Keep a short note on purpose.
- Choose the legal form. S.à r.l. or S.A.; draft articles stating the private-wealth object and investment perimeter.
- Prepare documents. Articles, shareholder register, and—if useful—a concise shareholders’ agreement.
- Open the bank account. Provide UBO identification, source-of-wealth and source-of-funds narratives, signatories, and payment limits.
- Incorporate before the notary. Deposit capital where required, sign the deed, and appoint directors or managers.
- Register and set filings. File with the RCS and set up quarterly subscription-tax payments.
- Operate and review annually. Keep minutes and registers in Luxembourg, refresh KYC, and verify that assets remain within scope.
Which governance and banking documents do banks expect?
Banks rely on consistency. Align wording across statutes, minutes, and forms so signatories and limits never conflict.
- Ownership chart with UBOs and short narratives on wealth and funds.
- Articles, a clear signature matrix, and board minute templates.
- A short treasury policy with payment caps and dual approval where appropriate.
When is another vehicle a better fit than an SPF?
If you plan to run operations, invoice third parties, or finance other entities, the SPF will be too narrow. Pick the form for the job and keep roles tidy across the group chart.
Use a SOPARFI holding company for corporate cash flows and debt, choose an SCSp for general-partner and limited-partner structures, or consider a RAIF for a fast-to-market fund wrapper.
What is the quick snapshot investors ask for?
Share this at-a-glance table with co-investors and bankers when you need a two-minute explanation.
| Topic | Answer |
|---|---|
| Purpose | Hold financial assets for private wealth, not to run a business |
| Eligible investors | Individuals and qualifying family wealth vehicles |
| Taxes | Subscription tax replaces corporate and municipal business taxes |
| Treaties and VAT | No access to double-tax treaties and no VAT registration under the private-wealth object |
| Governance | Minutes and registers kept in Luxembourg, with clear signature rules |
Frequently asked questions
Direct answers in plain legal language.
