SOPARFI / holding Table

Practical useThe 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 legislationLaw of 10 August 1915 (“1915 Law”)
Eligible investorsUnrestricted.
Eligible assetsUnrestricted.
Risk diversification requirementsNo risk diversification requirements.
Legal Form- SA, Sàrl, SCA
-SCSp (special limited partnership)
-SCS (common limited partnership)
Segregated compartmentsNo
Capital requirementsDepends of the form:
- SA / SCA: EUR 31,000
- Sàrl: EUR 12,500
Net asset value (NAV) calculation and redemption policyNot required.
Corporate income taxGeneral 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 taxNo subscription tax.
Wealth taxRate: 0.5% of the NAV.
Withholding tax on dividends / interests and capital gainsDividends 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 networkYes
Benefit from the EU Parent Subsidiary DirectiveYes
Authorisation and supervision by the CSSFNo
Possibility of listingYes
European passportNo, 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 providersIndependent auditor (depending on
the form of the company).