SOPARFI / holding Table
|Practical use||The SOPARFI is frequently used as a vehicle for managing holdings in a group of businesses. As a holding company it offers, under certain well-defined conditions, the opportunity to mitigate or eliminate corporate tax in Luxembourg and Luxembourg withholding tax on dividends paid to EU and non-EU corporate shareholders, as well as to mitigate or eliminate foreign withholding tax on incoming dividends from EU and non-EU corporate subsidiaries (where a relevant DTT is in place).
The main benefits are :
• Attractive participation exemption regime
• Luxembourg’s extensive network of Double Tax Treaties
• EU directives transposed into Luxembourg law (e.g. the EU/parent/subsidiary directive and the EU interest Royalty directive).
|Applicable legislation||Law of 10 August 1915 (“1915 Law”)|
|Risk diversification requirements||No risk diversification requirements.|
|Legal Form||- SA, Sàrl, SCA
-SCSp (special limited partnership)
-SCS (common limited partnership)
|Capital requirements||Depends of the form:
- SA / SCA: EUR 31,000
- Sàrl: EUR 12,500
|Net asset value (NAV) calculation and redemption policy||Not required.|
|Corporate income tax||General aggregate rate: 24.94% (but dividends received and capital gains realised are exempt from income tax in case the conditions of the participation exemption regime are fulfilled)|
|Subscription tax||No subscription tax.|
|Wealth tax||Rate: 0.5% of the NAV.|
|Withholding tax on dividends / interests and capital gains||Dividends distributed by a
Luxembourg company are in
principle subject to withholding tax at
a rate of 15%, unless a domestic law
exemption or a lower tax treaty rate
|Benefit from double tax treaty network||Yes|
|Benefit from the EU Parent Subsidiary Directive||Yes|
|Authorisation and supervision by the CSSF||No|
|Possibility of listing||Yes|
|European passport||No, unless it falls under the scope of the full AIFMD regime.|
|Thin capitalization rules (debt-to-equity ratio)||No provision in Luxembourg law.
However the Luxembourg authorities use a 85/15 debt-to-equity ratio. If this ratio is not respected and an interest is paid on the excess debt on a loan, this may be considered as a hidden dividend
distribution subject to a withholding tax of 15% (such interest is then not deductible).
|Required Luxembourg service providers||Independent auditor (depending on
the form of the company).