SPF - Family Wealth Management Company

DEFINITION

The Luxembourg SPF (Société de gestion de patrimoine familial) refers to a special tax regime applicable to companies whose sole purpose is management of private wealth of individuals. An SPF is the most widely used personal wealth management tool in Luxembourg.

OBJECTIVE, PURPOSE

The corporate purpose of an SPF is limited to acquisition, holding, management and disposal of financial instruments, cash and other types of assets. An SPF may not perform any type of commercial activity. The name of the company should include a designation "SPF".

An SPF is available only for investors managing their private wealth. Shares of an SPF cannot be used for public placement and cannot be quoted on a stock exchange. Benefits of the SPF regime are not available to corporate investors and they cannot be used within a corporate group.

Eligible investors within the meaning of the SPF law are:

individuals managing their private wealth, or private wealth management entities acting for one or several individuals (trust etc.), or intermediaries acting on behalf of either of the above; or intermediaries holding shares in the SPF on a fiduciary basis or in a similar capacity, on behalf of investors who are themselves eligible. Private wealth management entities usually (but not exclusively),

An SPF may create, acquire, manage and sell a portfolio of securities (shares, bonds, warrants, stock options, etc.) issued by public or private organizations in Luxembourg or abroad.

An SPF may borrow from a banking institution or a shareholder. There is no maximum debt ratio. However, if debts exceed eight times the amount of the paid-up capital, an additional registry tax (taxe d'abonnement) will be payable.

NOT PERMITTED ACTIVITIES

An SPF is not allowed to conduct any commercial activity of any kind.

An SPF cannot acquire immovable property since direct investments are deemed equivalent to an exercising of commercial activity. However, an SPF is allowed to acquire immovable property indirectly through a subsidiary, provided it is not fiscally transparent (i.e. not through a partnership).

The granting of remunerated loans and advances is not allowed, even to a company in which the SPF holds an equity stake. However, the SPF may, on an ancillary basis and strictly without remuneration, make an advance or stand guarantee for the commitments of the company in which it holds an investment.

LEGAL BASIS

The Law of 11 May 2007 on Creation of a Private Wealth Management...