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Private Asset Management
Société de Gestion de Patrimoine Financier
The SPF was created by Luxembourg law issued on 11th May 2007 to allow the registration of an investment corporate vehicle dedicated to the management of the estate of private individuals.
Purpose of an SPF is: purchasing, holding, managing, and selling of any kind of financial assets, albeit excluding commercial activities.
The SPF is designed as an investment-company targeted to individuals in so far as acting under the management of their private assets.
The term “family property” shall be heard exclusively in the sense of “private assets of individuals”, and does not imply or require any family relationship between shareholders of a SPF.
The minimum capital of a SPF is based on the legal form chosen, that must mandatory be in the form of a corporation.
The SPF is a wealth-management corporate-vehicle simple, flexible and consistent with the EU regulatory requirements. It can be used for instance, both for management of assets for a club of investors, or to acquire shares of a company by its own directors or employees.
The SPF is not subject to any type of financial-market oversight. The so-called “Administration de l’Enregistrement et des Domaines” (Administration for Domain Registration) – not the tax administration in Luxembourg – has jurisdiction over such companies;
The domicile agent must submit a report once annually to verify that the company’s activity remains within the legal framework;
The SPF is protected by the Luxembourgian bank-confidentiality regulations.
SPF Luxembourg Private Asset Management Company
The SPF is formed as a corporation. In practice, the SPF is formed in the form of the Public Limited Company (PLC., Corp./SA) or that of the Limited Liability Company (LLC., Ltd./SARL).
The company name must contain the abbreviation “SPF”;
Registered as well as bearer shares may be issued;
It is required that the articles of association expressly state that the company is subject to the provisions of Luxembourg’s law on Private Asset Management Companies.
A Private Asset Management Company (SPF) in Luxembourg is formed through the recording of its articles of association by a notary. The articles of association will subsequently be published in the Official Bulletin (Mémorial C) and lodged with Luxembourg’s Trade and Companies Register. It is required that the articles of association expressly regulate that the company is subject to the provisions of Luxembourg’s law on Private Asset Management Companies. The minimum capital of a SPF in Luxembourg is dependent upon which legal form is chosen.
The shareholders of a SPF in Luxembourg, whose number must remain restricted, must be natural persons who are resident or not resident in Luxembourg who will be active in the management of the private assets. Furthermore, trustees or patrimonial entities with or without legal personality, such as Trusts or private Foundations managing the private assets of natural persons, may be used. In contrast thereto, other corporations are not permitted to hold the position of shareholder in a Private Asset Management Company (SPF) in Luxembourg.
SPF Investment Policy and Corporate Object
The activities of the SPF are strictly limited to management of the private wealth.
Permitted activities of the Private Asset management Company (SPF)
The activity is limited to the acquisition, holding, management and the realisation of investments in financial instruments in the broadest sense. This includes derivatives such as, for example, shares, investments; Funds; futures; bonds; options; precious metals as well as bank accounts.
Under the condition that the following are granted gratuitously, the company may grant guarantees, collateral and loans to affiliated companies;
Advance payments of dividends are permitted;
The unlimited taking out of loans from shareholders or third parties as well as the issuing of securities is permitted.
Prohibited activities of the Private Asset Management Company (SPF)
Any type of commercial activity/trading activity;
The direct ownership of real estate;
The holding of patents or rights;
Management activities or financial services to third parties or affiliated companies;
The receipt of more than 5% of the total dividend revenues from companies liable to taxation at a rate below 11%;
The listing of the SPF shares or the offering thereof to the public.
Notwithstanding this, the company may have financial interests in other structures which carry on the afore-mentioned prohibited activities.
Eligible Investors in Luxembourg
The scope of eligible investors is defined in article 2 of the law. The shares of the SPF are strictly reserved to:
Natural persons/Trustees (resident or non-resident);
It is not permitted that corporations be shareholders.
The second category refers to trust, foundation or “stichting administratie kantoor”. The comments on the initial draft project mention that shares can also be owned by a group of individuals forming a restricted club of investors. The shares of the SPF may further not be quoted on a stock market.
Company Name in Luxembourg
It is required that the company name of a Private Asset Management Company (SPF) contains the abbreviation “SPF”.
Upon incorporation, the SA must have a minimum capital of EUR 31,000 where 7,250 need to be fully paid up the SARL must have a minimum capital of EUR 12,500 where 100% must be fully paid up SPFs are obliged to create a legal reserve which is equal to 5% of the profit until the legal reserve reaches 10% of the share capital.
Advantages to Register a Private Asset Management Company (SPF) in Luxembourg
- A one-off registration tax of 75 EUR which is payable at the formation of a SPF and when the articles of association are amended;
- Subscription tax of 0.25% annually on the deposited capital (+ issuing bonuses);
- No DBA authorisation;
- No VAT registration;
- Complete exemption from corporate income tax, excise tax and assets tax;
- No withholding tax on interest payments (restrictions apply to individuals);
- No withholding tax on dividend payments (non-residents);
- No taxation of capital profit arising from the sale of SPF shares (non-residents);
- No taxation of liquidation revenues from the SPF (non-residents).
The Private Asset Management Company (SPF) in Luxembourg is an attractive vehicle for managing the private assets of wealthy natural persons. This is particularly so due to its special tax status as well as its wide spectrum of application.
A SPF in Luxembourg does not require an official licence prior to commencing its activities.
Moreover, the shareholders of a SPF benefit from the liability of it as a legal person as well as from its ability to issue bearer and registered shares.
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