The “Société de Gestion de Patrimoine Familial” also known as the SPF or the Family Wealth Management Company, is an entity designed for managing private wealth. It was introduced by the Luxembourg government in 2007.
The SPF is a tax-neutral investment company that specializes in managing the private assets of individuals. It acts as an extension of the individual’s assets but with a separate legal identity which means that the liability of investors/shareholders is limited to the assets contributed to the company. The SPF is considered a passive investment company and is authorized to engage in activities such as holding financial assets like shares, bonds, structured products, derivatives, and options on securities. It can also hold equity interests as long as it is not involved in managing these companies, but the SPF is prohibited from engaging in activities like granting loans and owning intellectual property and real estate.
What are the benefits (including tax advantages)?
The SPF is subject to an annual subscription tax of 0.25%. This tax is levied on the following items:
The SPF is exempt from Luxembourg’s corporate income tax, municipal business tax, and net wealth tax, as are commercial companies. However, the SPF is not eligible to benefit from Luxembourg’s double taxation treaties or the European directive on subsidiaries of parent companies.
There is no Luxembourg withholding tax on profit distributions made by an SPF to its shareholders. Furthermore, SPFs, due to their limited scope of activity, are not considered taxable persons for VAT purposes by the Luxembourg authorities.
How is an SPF administered?
The manner of administration is dependent on the corporate structure selected.
A public limited company (Société Anonyme – S.A.) has two distinct models of governance: the classic model and the dualist model. The classic model comprises at least three directors and nothing else, while the dualist model comprises both a management board, which is responsible for managing the company and a supervisory board, which oversees the management.
In the case of a private limited company (Société à responsabilité limitée – S.à r.l.) or partnership limited by shares (S.C.A. – Société en commandite par actions), there is the option of a sole manager or a management board.
Navigating the Future of Family Wealth Management: Trends and Outlook
Emerging trends, technological advancements, and changes in client preferences are constantly driving the evolution of the wealth management landscape. The preservation and growth of high-net-worth families’ legacies for future generations is assisted by family wealth management firms in this dynamic environment.
Rise of Impact Investing
Impact investing has become a significant trend in the industry. As affluent families seek to align their investments with their values, the demand for strategies that generate positive social and environmental impacts is growing. Family wealth management firms are meeting this demand by integrating impact investing into their portfolios to allocate capital to companies, organizations and funds that are driving meaningful change in the areas of sustainability, social justice and community development.
Integration of ESG factors
The incorporation of environmental, social, and governance (ESG) factors is becoming more prevalent in the investment decision-making process. The evaluation of companies’ performance in areas like climate change mitigation, diversity and inclusion, and corporate governance is crucial for family wealth managers. By including equities and sustainability in their investment analysis and portfolio construction process, asset managers can improve risk management and long-term returns, and also meet evolving client and regulatory expectations.
What makes Luxembourg an ideal choice for your business?
Luxembourg is a member of the European Union and benefits from a highly attractive business and political environment. It is home to 12 European institutions and the stable legislative framework makes Luxembourg a competitive financial center, encouraging investment. In addition, Luxembourg is a multilingual country with a central location and a relatively small surface area. These characteristics make it easy to get around and facilitate business operations. Luxembourg also has high quality infrastructure, including a 4% share of gross domestic product (GDP) which is allocated to public investment. In addition, ithas a strong historical presence in the financial sector, with over 120 banks contributing to the country’s economy, making it a leading financial center in Europe.
How can we help you set it up?
We, as CCG, have been providing assistance to SPFs in Luxembourg since their formation. The services we can help with are as follows:
Provisions of incorporation services:
Provision of corporate services:
Provision of accounting services:
Provision of tax services:
Mirko CAZZETTA
Managing Partner at TGS Luxembourg