SPF Luxembourg: The Family Wealth Management Company Explained
Mickaël LOC
Private Wealth Expert ·
SPF Luxembourg: The Family Wealth Management Company Explained
The Société de Gestion de Patrimoine Familial (SPF), Luxembourg's Family Wealth Management Company, created by the law of 11 May 2007, is a Luxembourg vehicle reserved exclusively for the passive management of financial assets held by natural persons. Benefiting from an ultra-simplified flat-rate tax regime (0.25% subscription tax), the SPF is the go-to tool to organize private wealth, prepare a transfer to the next generation or ring-fence family investments from operating activities.
Who can own an SPF?
The SPF is strictly reserved for natural persons (directly or via non-commercial intermediaries such as a trust or a private wealth fund). Commercial companies cannot be SPF shareholders. This restriction is intended to prevent its use as a group holding company and to confine it to the private wealth sphere. In practice, the SPF is held by an individual, a family, a family investment club, or via an eligible intermediary vehicle.
Eligible and prohibited assets
| Permitted assets | Prohibited assets |
|---|---|
| Listed shares and bonds | Direct real estate |
| Fund units (UCITS, AIFs) | Shareholdings in operating companies (>10%) |
| Cash and deposits | Patents, trademarks, exploited IP rights |
| Precious metals (investment) | Commercial, industrial, craft activity |
| Derivatives (for wealth purposes) | Loans to third parties (commercial activity) |
| Receivables, coupons, options | Securities trading (active professional trading) |
Taxation of the SPF
The SPF benefits from an ultra-simplified flat-rate tax regime. It is exempt from corporate income tax (IRC), municipal business tax (ICC) and net wealth tax. In exchange, it is subject to an annual subscription tax of 0.25% on the value of its paid-up capital and issue premiums, with a minimum of €100 and a maximum of €125,000 per year. Dividends distributed to shareholders are subject to a Luxembourg 15% withholding tax, unless a treaty exemption applies abroad. Crucially: the SPF does not have access to the tax treaties signed by Luxembourg, nor to the European parent-subsidiary directive.
Legal form and capital
The SPF can take the form of a SARL, SA, SCA or cooperative company. The minimum capital depends on the form chosen: €12,000 for an SARL, €30,000 for an SA (of which €7,500 paid up). The company name must include "Société de Gestion de Patrimoine Familial" or the acronym "SPF". The corporate purpose is strictly limited to the passive management of financial assets. Any commercial activity triggers the loss of the status and reversion to ordinary tax law (retroactive tax reclassification possible).
When to use an SPF?
- 1. Family wealth organization Pool a portfolio of shares, funds, cash and precious metals in a single structure, to facilitate transmission and family governance.
- 2. Succession planning Gradually distribute SPF shares to heirs via split gifts, while retaining control through the position of manager or majority shareholder.
- 3. Investment of proceeds from a disposal After the sale of a business, placing the proceeds in an SPF enables tax-neutral management until the final distribution to heirs.
- 4. Family investment club Several family members pool their savings to invest in equities or funds, with governance rules codified in the articles.
Limits to know before setting up an SPF
- No tax treaty: incoming dividends from foreign companies suffer ordinary local withholding tax.
- Prohibition on holding more than 10% of an unlisted company without reclassification as a SOPARFI.
- No commercial activity, even ancillary. The furnished rental landlord, the real estate investor living on rent, the active trader are excluded.
- Indirect holding via a commercial company is prohibited: a SOPARFI cannot hold an SPF.
- Simplified but rigorous annual return: audits possible by the Registration Duties Administration.
Going further
- If you need an operational holding, see SOPARFI : Le véhicule de holding luxembourgeois expliqué.
- Structure a full holding: Créer une Holding au Luxembourg : Optimisation patrimoniale et fiscale.
Turnkey SPF Bookkeeper.lu sets up your SPF, drafts articles tailored to your wealth, handles annual returns and the subscription tax.
Frequently Asked Questions
Who can incorporate a SPF in Luxembourg?
The SPF is reserved exclusively to individuals acting in the context of their private wealth management, to wealth entities (trusts, foundations) or to intermediaries acting on behalf of individuals. Operating companies cannot be shareholders of a SPF.
Can a SPF hold real estate?
No, the SPF cannot directly hold real estate assets. Its object is strictly limited to managing private movable wealth: shares, bonds, investment funds, cash. To hold real estate, other structures (SOPARFI, SCS) must be used.
What tax does a SPF pay?
The SPF is exempt from corporate income tax, municipal business tax and net wealth tax. It is only subject to an annual subscription tax of 0.25%, calculated on paid-up capital plus share premiums and debts owed to shareholders.
Can a SPF benefit from Luxembourg tax treaties?
No, the SPF is not considered a tax resident within the meaning of Luxembourg double tax treaties. It therefore cannot benefit from the reductions of withholding tax provided for in these treaties, unlike the SOPARFI.
What is the main difference between a SPF and a SOPARFI?
The SPF is reserved to individuals for pure wealth management, with no access to tax treaties. The SOPARFI can have corporate shareholders, benefits from tax treaties and can carry out ancillary commercial activities. Each has its own advantages depending on the investor's profile.
