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Private Wealth Management Company (SPF)
I. Introduction :
The Law of 11 May 2007 responded to the abolition of the regime for 1929 Holding Companies by creating a new vehicle for managing the private assets of natural persons: a Private Wealth Management Company (SPF). This is an investment company intended exclusively for physical persons involved in the management of their private assets. This law has been partially amended on February 1st, 2012 in order to be compliant the SPF regime with the European Union and European Economic Area Treaties & Agreements by cancelling the fact that SPFs could not benefit from the tax friendly regime if, for any given year, more than 5% of their total incoming dividends stemmed from non-resident/non listed participations that were not subject to a local Corporate Income Tax (CIT) level equivalent to Luxembourg CIT’s.
II. Legal regime applicable to the SPF:
1. Incorporation :
• The SPF must adopt the form of a corporation (SA / SARL / SCA).
• No prospectus is required.
• No approval is required.
• The SPF is accessible to eligible investors who are natural persons acting in relation to their private assets or to undertakings acting exclusively in the interests of the private assets of natural persons (trusts, private foundations, excluding commercial companies or undertakings).
• The notion of family assets ("patrimoine familial") is understood here exclusively in the sense of the private assets of natural persons without the need for any family relationship between the various shareholders.
2. Company objects :
An SPF’s activity is strictly limited to the acquisition, holding, management and realisation of financial assets such as shares / bonds / securitisation funds / Sicavs / FCPs / structured products / to guarantee or make advance to its subsidiaries free of charge. It can hold investments on the sole condition that it is not involved in their management.
An SPF cannot carry on, perform any commercial activity (cannot be subject to VAT), trading of financial assets, financial services or others. Nor can it hold properties directly or intellectual rights or manage other companies.
III. TAX regime applicableto the SPF:
• IRC, ICC, IF :
An SPF is exempt from corporation tax (IRC), communal trade tax (ICC) and from wealth tax (IF) on all of its income and capital gains.

As from the 1st of January 2012, a SPF is allowed to receive incoming dividends from a non resident/non listed participation, without any restrictions whatsoever.

Furthermore, an SPF does not benefit from the Parent-Subsidiary regime.
• Withholding tax on dividends distributed by the SPF:

The dividends distributed by the SPF are not subject to the 15% withholding tax.

• No taxation of capital gains in Luxembourg in relation to non-residents.

• Withholding tax on interest paid by the SPF:
In principle, the interest paid by the SPF is not subject to a withholding tax in Luxembourg.
However, interest paid by Luxembourg paying agents to beneficial owners who are individuals resident in Luxembourg, without being tax residents of another State, is subject to a 10% withholding tax.
Furthermore, in accordance with Directive 2003/48/EC (which entered into force on 1 July 2005) on the taxation of savings income in the form of interest payments, Member States of the EU (paying agent) are required to notify the other Member State (beneficial owner of the interest payment) of the details of the above payment ("Information Exchange Method").
However, during a transitional period, certain Member States, including Luxembourg, apply a system of withholding tax on interest payments unless the beneficial owners opt for the Information Exchange Method. The rate of withholding tax is 15% during the first three years of the entry into force of the Savings Directive (i.e. 1 July 2005), rising to 20% for the following three years and 35% thereafter.
=> Savings Directive
Salaries and directors’ fees paid by the SPF are subject to withholding taxes under ordinary law.
• Subscription tax ("taxe d’abonnement"):
An SPF is subject to subscription tax ("taxe d’abonnement") at a rate of 0.25% but the proceeds of this tax cannot be lower than the annual amount of EUR 100.00 and the cap is set at EUR 125,000.00 per year.
The tax base for this subscription tax consists of the paid-up share capital plus any (i) issue premiums and (ii) any part of debts exceeding eight times the paid-up share capital and issue premiums, existing on 1 January.
The information and comments expressed in this document in no way constitute any fiscal opinion binding on Centuria Capital Luxembourg S.A.
Therefore, this document is not a contractual document.