The Société de Gestion de Patrimoine Familial (« SPF ») : A comprehensive guide
The Société de Gestion de Patrimoine Familial (« SPF ») : A comprehensive guide
The SPF is a well-established vehicle for managing private wealth. Its activities are governed by the law of May 11, 2007, as amended from time to time (the “SPF Law”).
The SPF offers flexible asset management, combining adaptability with operational efficiency to meet diverse wealth management needs.
Criterias
Activities
An SPF's activities are restricted to managing the personal assets of eligible investors, focusing on the acquisition, holding, management, and disposal of private financial assets, while strictly excluding any commercial or industrial operations.
Authorized activities
The SPF can engage in the following activities :
Holding and disposing of financial assets: the SPF may acquire, hold and sell various financial assets, including shares, securities equivalent to shares, company participations, collective investment undertakings, bonds and other debt, instruments. It may also hold cash and assets in bank accounts, including investments in structured products, derivatives, options, indexes and currencies.
Financing: The SPF is permitted to conduct financing activities such as issuing bonds.
Prohibited activities
The SPF is strictly prohibited from engaging in the following activities:
Granting interest-bearing loans, even to its subsidiaries, except for the ancillary provision of interest-free loans to its subsidiaries;
Interfering in the management of companies in which it holds participation;
Holding real estate assets, whether directly or indirectly, unless through a non-tax-transparent participation;
Engaging in commercial activities of any kind. However, the SPF may hold participation in companies conducting commercial activities;
Listing its shares on a stock exchange or publicly offering its issued securities.
Eligible investors
Only eligible investors may be shareholders of an SPF, including:
Natural persons managing their private assets, or,
Patrimonial entities acting exclusively in the interest of the private assets of one ore more natural persons, or
Intermediaries acting on behalf of investors qualifying as eligible investors.
Incorporation process
The SPF can be incorporated using various legal forms, including:
Private limited liability company (société à responsabilité limitée),
Public limited liability company (société anonyme),
Partnership limited by shares (société en commandite par actions) or
Cooperative company organized as a public limited company (société cooperative organisée sous forme de société anonyme).
In all cases, the incorporation of an SPF requires the assistance of a Luxembourgish Notary.
The SPF is governed by the SPF Law as well as the law of 10 August 1915 on commercial companies, as amended (the “Companies Act”). Matters such as share capital requirements, annual general meetings and share transfers are subject to the provisions of the Companies Act.
Tax considerations
An SPF that fully complies with the SPF Law requirements is exempt from most tax obligations, including income tax, municipal business tax, VAT, and net wealth tax.
However, it is subject to an annual subscription tax, calculated based on:
The amount of its paid-up share capital,
Increased, where applicable, by (i) share premiums and (ii) the portion of debts, in any form whatsoever, which exceeds eight times the paid-up share capital and share premiums existing on the first day of the financial year or, for the year of incorporation, existing on the date of incorporation.
The minimum subscription tax has recently been amended and cannot be less than 1,000 EUR, while the tax amount is capped at 125,000 EUR.
The subscription tax must be declared and paid quarterly.
Compliance considerations
The SPF’s domiciliary company or, otherwise, a statutory auditor or chartered accountant shall notably certify that each shareholder is an eligible investor.
Additional compliance certifications may be required depending on the SPF’s activities.
Sanctions
Non-compliance with the above regulations may result in various sanctions, ranging from fines of 10,000 EUR to 250,000 EUR to the potential loss of SPF status.
If you are considering incorporating an SPF in the Grand Duchy of Luxembourg, we invite you to contact us for further guidance.