SPFs are intended primarily for family wealth management through investments in financial instruments. A distinctive feature of this form of legal entity is the tax regime. SPFs are exempt from paying any taxes and fees, except for the registration tax (taxe d’abonnement) – 0.25% of the authorized and additional capital, as well as from the amount of debt financing exceeding eight times the amount of the authorized and additional capital.In case you’re intending to know more about operational features and benefits of Luxembourg SPF, this article will be useful for your professional development.
SPFs may create, acquire, manage and sell a portfolio of financial instruments in accordance with Luxembourg law, such as securities and precious metals. They are also allowed to hold cash in bank accounts and take loans from banks or shareholders. Under the ban for SPF commercial activities and direct ownership of real estate and some other assets (for example, intellectual property rights), and there are also restrictions on the issuance of interest-bearing loans. SPF shares cannot be publicly listed on an exchange.
Criteria of This Structure
- A handy tool for organizing ownership and protection of foreign assets, including can be used as a family trust or fund for the distribution of assets among family members. Flexible corporate legislation makes it possible to prescribe convenient mechanisms for managing a company and distributing its property in the charter. Any changes in the structure of the company and its assets (change of managers, change of shareholders, introduction of additional capital contribution), as well as, if necessary, the liquidation of the company can be carried out in a very short time (up to 2 weeks).
- High tax efficiency for residents. Tax at the rate of 13% is levied on the financial result for the year.
- Full data protection. It is extremely important for all foreign residents, since mitigating amendments to the legislation have not yet come into force, when using personal accounts in foreign banks, any credits to such accounts from third parties are prohibited, with the exception of certain exceptions (penalty for violation: from 75% to 100 % payment).
What Does It Take to Create SPF?
Quite a bit: a open bank account in Luxembourg and a package of documents from the main beneficiary. An account for a new company can be opened with East-West United Bank, subject to successful completion of the compliance check. Moreover, with the preparation of documents, as a rule, legal and consulting firms help. There are many of them in Luxembourg, but EWUB cooperates exclusively with specialists who have proven themselves in the market and is ready to recommend their partners if a client needs qualified legal assistance.
Whom is SPF for?
When choosing the form of organization for managing capital and investments, it is worth calculating all the benefits and costs, as well as carefully analyzing the restrictions on the types of activities of the company and assets. If you are planning to invest in securities, SPF may be a suitable solution. If you want to be able to invest in real estate, ventures, derivatives, this option will not work and you should look at other forms of ownership in Luxembourg – thanks to modern regulation, there are plenty to choose from.
Purpose and Internal Organization of the Structure
Typically, the purpose of establishing an SPF is to manage and dispose of assets for the benefit of one or more beneficiaries. The organization can own any movable and immovable property, act as a founder and be a shareholder of legal entities, be a founder of other funds, with the exception of direct management of those companies in which the fund owns a share in the capital. SPF has no right to engage in commercial activities. Professional trading in the property of the fund (for example, shares and securities) is also prohibited.
The founder can be both an individual and a legal entity. After registration, the management of the fund passes to the board of directors or the sole director. A supervisory board may be appointed separately during registration. This advice becomes mandatory if the fund has more than 5 beneficiaries or the amount of the fund’s assets exceeds 20 million euros. The founder can simultaneously act as a director and beneficiary of the SPF, but cannot be a member of the supervisory board.
How Can SPF in Luxembourg Be Useful?
Such a structure is aimed at combining all assets under one legal shell. With the help of a firm of this nature, one can successfully separate business assets from personal ones or, conversely, combine them. If the founder does not have children, then he can appoint a chain of succession to manage the business, transferring shares in favor of the foundation. If the founder has a large family, then the organization can serve to maintain the financial condition of the family with the conditions and restrictions that the founder himself/herself establishes.