SOPARFI / holding Table
SOPARFI | |
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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). |