SOPARFI / holding Table
| SOPARFI | |
|---|---|
| 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”) |
| Eligible investors | Unrestricted. |
| Eligible assets | Unrestricted. |
| Risk diversification requirements | No risk diversification requirements. |
| Legal Form | - SA, Sàrl, SCA -SCSp (special limited partnership) -SCS (common limited partnership) -SCoSA |
| Segregated compartments | No |
| 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 applies. |
| 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). |
