What is a Family Wealth Management Company?
he Luxembourg Family Wealth Management (Société de gestion de patrimoine familial) refers to a special tax regime applicable to companies whose sole purpose is management of private wealth of individuals. An SPF is the most widely used personal wealth management tool in Luxembourg.
The corporate purpose of an Family Wealth Management Luxembourg is limited to acquisition, holding, management and disposal of financial
instruments, cash and other types of assets. An SPF may not perform any type of commercial activity. The name of the company should include a designation “SPF”.
An SPF is available only for investors managing their private wealth. Shares of an SPF cannot be used for public placement and cannot be quoted on a stock exchange. Benefits of the SPF regime are not available to corporate investors and they cannot be used within a corporate group.
The Legal Framework
THE LAW OF 11TH MAY 2007
ESTABLISHING THE FAMILY WEALTH MANAGEMENT COMPANY,
as amended by the Act of 18th February 2012.
Eligible investors within the meaning of the SPF law are :
Individuals managing their private wealth;
Private wealth management entities acting for one or several individuals (trust etc.);
Intermediaries acting on behalf of either of the above;
Intermediaries holding shares in the SPF on a fiduciary basis or in a similar capacity, on behalf of investors who are themselves eligible.
Private Wealth Management
Private wealth management entities usually (but not exclusively), include entities such as trusts, foundations or any
other types of entities. Their purpose is management of private wealth of one or more individuals.
Tax Treatment for SPFs in Luxembourg
An SPF is exempt from corporate income tax, municipal business tax and wealth tax.
An SPF is subject to an annual registration tax (taxe d’abonnement) at the rate of 0.25%, subject to a minimum of 100 EUR and a maximum of 125,000 EUR. The tax base is the amount of the paid-up capital plus any existing share premiums. The portion of debts that exceeds eight times the amount of the paid-up capital and the share premium is also included in the tax base for the registration tax.
SPF Tax Supervision
The tax supervision of the SPF is carried out by the Administration de l’Enregistrement et des Domaines of GD Luxembourg. This audit is limited to checking facts and data concerning the company’s tax status.
If an SPF is found to be in breach of any of the rules on eligible investors and/or
investments and/or activities, its special tax status may be suspended.