SOPARFI: Participation Exemption in Luxembourg
The most widely used Luxembourg holding vehicle in Europe
The SOPARFI (Financial Participations Company) benefits from the parent-subsidiary regime: full exemption of dividends and capital gains from qualifying participations. A powerful tool to structure international holdings in compliance with the EU directive and tax treaties.
Key metrics
Our tax experts help you structure your optimization in strict compliance with Luxembourg law and OECD/BEPS standards.
Talk to a tax expertKey advantages
- Full exemption of qualifying dividends
- Full exemption of capital gains on participations
- Access to over 80 bilateral tax treaties
- Benefit from the EU parent-subsidiary directive (2011/96/EU)
- No withholding tax on outbound dividends (under conditions)
- Compatible with fiscal unity (Organschaft)
Qualifying conditions
- Minimum participation of 10% of capital or EUR 1.2M acquisition cost
- Continuous holding for at least 12 months
- Fully taxable subsidiary (or equivalent)
- Subsidiary resident in an EU member state or treaty state
- Compliance with anti-abuse rules (ATAD, Luxembourg GAAR)
- Real economic substance in Luxembourg (office, staff, governance)
Who this regime is for
International group receiving EUR 10M in dividends
A European holding owns 15% of a French operating subsidiary for 3 years. It receives EUR 10M in annual dividends.
24.94% corporate tax + MBT
0% CIT on dividends
EUR 2.49M
By structuring ownership through a Luxembourg SOPARFI, the group fully exempts its dividends. The SOPARFI can then redistribute to its shareholders, relying on bilateral tax treaties to limit withholding tax.
Legal basis and OECD compliance
OECD and EU compliance
SOPARFI complies with all international standards: economic substance (BEPS Action 5), CFC rules (ATAD 1), interest deductibility limitation (ATAD), hybrid rules (ATAD 2) and general anti-abuse clause. Setup requires careful substance analysis to secure tax benefits.
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The faces behind
Bookkeeper.lu
A Luxembourg-based team dedicated to the success of your entrepreneurial project.
Mickaël LOC
17 years at the heart of Luxembourg structures.
Managing Director of Financial Services Luxembourg, Mickaël supports entrepreneurs, SMEs and family offices in structuring, creating and managing their Luxembourg entities. Recognized expert, cited in Le Figaro.
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Lux. corporate law
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Antoine MARCHI
Technology at the service of fiduciary.
Architect and developer of the Bookkeeper.lu platform, Antoine designs the automation, AI and cloud infrastructure tools that enable Financial Services to deliver a fast and reliable digital service.
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Thanks to artificial intelligence, we accelerate every step, from drafting articles of association to full accounting management.
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Other optimization regimes
Explore the other Luxembourg tax mechanisms available.
IP Box
Art. 50ter LIREffective rate of about 5% on intellectual property income
Fiscal unity
Art. 164bis LIRConsolidate a group fiscally and offset losses between entities
Tax treaties
OECD model and bilateral agreementsOver 80 treaties to avoid double taxation
RAIF
Law of 23 July 2016Fast and flexible structuring for well-informed investors
Tax ruling
§ 29a AO (procedure)Fully secure the tax treatment of your operations
Frequently asked questions
What minimum substance is required to benefit from the regime?
The SOPARFI must have real economic substance: registered office in Luxembourg, local governance (resident directors), accounting kept locally, strategic decisions made in Luxembourg. The Luxembourg tax authority assesses substance case by case.
Can SOPARFI be combined with operating activity?
Yes. A SOPARFI may combine holding and commercial activities. Only income from qualifying participations benefits from the exemption. Operating income is taxed at the standard rate.
What is the impact of OECD Pillar 2 (15% minimum tax)?
Pillar 2 applies to groups with consolidated revenue above EUR 750M. For these groups, a top-up tax may apply if the effective rate is below 15%. SOPARFI remains relevant but requires a detailed GloBE analysis.
What does it cost to set up a SOPARFI?
Setting up a SOPARFI as a SARL or SA costs between EUR 4,000 and EUR 8,000 (notary fees, RCS, advisory). Annual recurring costs are around EUR 8,000 to EUR 15,000 (accounting, governance, tax advisory).
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