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Setting Up your Soparfi: The Luxembourg Holding and Financing Company

If you are looking to set-up a holding company in the European Union, Luxembourg is inarguably the perfect jurisdiction for this business endeavour.

Protect your assets

Preserve your wealth

Help your business grow in Europe and Internationally

Incorporate a Luxembourg Holding company to structure your investments

icon The Benefits of Setting up a Luxembourg holding and finance company in Luxembourg

  • Excellent image due to the country’s outstanding economic condition
  • Modern and highly transparent legislations
  • Excellent fiscal certainty
  • Low corporate tax rate
  • No withholding tax assessed on interests and royalties

icon Full integrated services to have your SOPARFI incorporated under 15 days !

iconWe simplify the process to match your needs

As an independent consulting firm with vast expertise in Luxembourg holding company incorporation, Damalion offers assistance to fulfill the following activities: Directorship

  • Comprehensive tax advice during the planning and registration process
  • Efficient incorporation of your Luxembourg holding company and prompt publication in the Trade and Companies Register
  • If needed, a manager will be provided
  • Liaise to ensure the payment of government fees
  • Facilitate in the application of EU VAT number
  • Representative for registered office and virtual office in Luxembourg
  • Continuous tax support, as calculated based on expenditure
  • Develop a bespoke Articles of Association for your company
  • Completion of incorporation documents
  • Facilitate opening a bank account
  • Gathering the necessary compliance and due diligence documents
  • Assistance in securing a business permit for holding companies that will operate as a commercial business
  • Accredited domiciliation services provided by industry-leading accredited partners
  • Assistance in accounting, tax returns, and compliance tasks
  • Accounting services by a duly certified chartered accountant, when needed
  • Round-the-clock dedicated support from Monday to Sunday, irrespective of your location

icon Why Luxembourg?

luxembourg soparfi europeThe number of registered incorporation of Luxembourg companies has been rapidly growing at a rapid rate. The Grand Duchy of Luxembourg has been proactive in developing initiatives that make it an appealing jurisdiction for foreign investors, both private and institutional.

When it comes to Luxembourg has a AAA rating from reputable financial organizations, including S&P and Moody & Fitch. It has consistently ranked 3rd in the world due to its political safety and stability according to the World Economic Forum . Luxembourg is also known for its extremely competitive corporate tax rates and its wide range of tax incentives offered to domestic and international businesses. Lastly, the Grand Duchy features a top VAT rate of 17%, considered to be the lowest among European Union member nations.

It boasts scores of talents and workforce unlike any in the world based on Global Talent Competitive Index and IMD World Talent Ranking, providing the best quality of life to expatriates. Luxembourg is world renowned for its innovative economy, thanks to its attractive research systems. Due to its forward-thinking values, Luxembourg is now home to almost 40% of all Tier IV data centers in Europe.

The quality of life in Luxembourg is fantastic, to say the least. It has made all modes of public transportation free since 1 March 2020, has excellent connectivity, reliable electricity, and first-class infrastructure throughout the country.

 

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Repatriation of profits

They could be structured efficiently for tax purposes.

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Intra-group financing

The Soparfi is often used for borrowing and on-lending activities.

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15 days!

Full integrated services to have your SOPARFI incorporated under 15 days!

The Advantages of Incorporating the Luxembourg Holding and Financing Company

Luxembourg Soparfi is categorized as a holding and financial company that offers a wide range of tax advantages, making it one of the most popular investment vehicles on a global scale. The strategically advantageous legal framework in Luxembourg provides an appealing setting for any-sized entrepreneurial initiative.

icon Some of the main features of a Soparfi

  • Dividends and capital gains

No taxation on dividend income derived from qualified participations

No withholding taxes on qualified distribution of dividends

No taxation on capital gain tax on the sale of qualified participations.

They are exempt from being subject to Luxembourg corporate income tax, provided all requirements are met.

  • Repatriation of profits

They could be structured efficiently for tax purposes.

  • Intra-group financing

The Soparfi is often used for borrowing and on-lending activities.

  • Optimization of investments in Europe

A Soparfi is highly flexible and versatile as it can be used by any type of investor to hold all types of assets, including real estate, Intellectual Property, shareholdings, and many more.

  • Light process of incorporation

A Luxembourg holding and financing company does not require any preliminary or formal approval by any Luxembourg regulatory authority.

  • Compliance with the latest regulations

A Soparfi is subject to anti-money laundering laws.

  • Repatriation of profits

They could be structured efficiently for tax purposes.

  • Intra-group financing

The Soparfi is often used for borrowing and on-lending activities.

  • Optimization of investments in Europe

A Soparfi is highly flexible and versatile as it can be used by any type of investor to hold all types of assets, including real estate, Intellectual Property, shareholdings, and many more.

  • Light process of incorporation

A Luxembourg holding and financing company does not require any preliminary or formal approval by any Luxembourg regulatory authority.

  • Compliance with the latest regulations

A Soparfi is subject to anti-money laundering laws.

  • Easy transformation into new types of companies

The Luxembourg holding and finance company may be converted into various investment vehicles, including a Securitization Company (SV), venture capital investment fund (SICAR), Specialized Investment Fund (SIF), and European union (EU) or non-EU passporting collective investment company (UCI)

Different types of eligible legal forms to choose for your Soparfi

A Luxembourg Soparfi may be structured in any of the following legal forms:

  • Public Limited Company (SA)
  • Private Liability Company (SARL)
  • Partnership Limited by Shares (SCA)
  • Cooperative Company (SC)

Attractive tax regime for the Intellectual property

In case a Soparfi owns a qualifying Intellectual Property asset, they may fully benefit from 80% tax exemption on capital gains and royalties under the Luxembourg intellectual (IP) tax regime.

Other Soparfi-Related Services

icon  Detailed Tax Advice throughout the Start-Up Phase

In the formation stage, you may want to ask questions such as international tax law and profit optimization to structure the best legal form for your Soparfi company. After thoroughly discussing the formation process, we will also provide you with in-depth information about the ideal legal form that best suits your investment initiatives. While you can always find information online, the expert advice and recommendations from a seasoned consultant is key to gaining complete understanding about starting a business in Luxembourg.

icon Setting a Solid Foundation of your Luxembourg Soparfi

Company formation involves developing of incorporation documents, which will be prepared and designed by our consulting team. If you are located overseas, we will send all the necessary documents via a trusted courier service. All shareholders and managing directors sign the incorporation documents in order for the company formation process to be valid under Luxembourg law. After receiving all the incorporation documents, we will hand in the documents to the Registration Office based in Luxembourg. A Soparfi will be registered within a few days.

icon  Payment of All Government Fees

Our consulting services for company formation will include all fees charged by Luxembourg authorities during the incorporation and registration process.

icon  Establishment of Registered Office and substance services in Luxembourg

If you are setting up a Soparfi, you will be deemed to domicile your office in Luxembourg. You are required to register a Luxembourg address where meetings can be held, and day-to-day operations are held.

We will facilitate directorship and office space for you so you may focus on your business grow in your own country.

icon  Mail Forwarding via Email

Our expert team will forward all pertinent mail via email. If you are deemed consultation with involved authorities, we will act as your liaison keeping your decisions in mind. Important original documents, including contracts and certificates will be forwarded via courier on a regular basis. Parcels will be acknowledged and forwarded under prior agreements between our firm and clients.

icon Administration and Submission of Commercial Register Documents and Reports

A Soparfi company’s documents, including the partnership agreement, Articles of Association, and the list of shareholders will be managed electronically by our team, updated, and submitted to the Trade and Companies Register. We will make it a point to personally manage any appointments, directors’ dismissal, and other issues that commonly occur in new companies.

icon Timeline Management

Most official channels strictly comply to deadlines. This is applicable to the submission of annual reports, balance sheets, and submission of VAT returns. We will provide you with a reminder ahead of time when it comes to deadlines, so we can rest assured for a timely submission of necessary documents.

icon  Bank Account Opening for your Company

Opening an account under your company’s name is one of the most crucial and complex aspects of managing a Soparfi in Luxembourg. Our Damalion experts will provide you with thorough guidance, from choosing a bank and completing all requirements to be submitted in order to furnish and open a bank account efficiently and speedily.

Luxembourg Tax Regime Applicable to Soparfi

icon  Company Formation

The process of Soparfi formation, as well as any modifications to a company’s Articles of Association, will be subject to registration tax at a fixed amount of EUR75.

icon  Income Taxes

A Soparfi will be assessed with Luxembourg income tax, municipal business tax, and unemployment fund contributions. The total tax amounts to 24.94%.

icon  Net Wealth Tax

A Soparfi will be assessed with Net Wealth Tax at a rate of 0.05% based on a company’s net asset every 1st of January.

  • A net worth over EUR500 million will be subject to net wealth tax of 0.05%. Additionally, all participations that are exemption from the participation regime will be exempt from net wealth tax.
  • Liabilities financing investments are exempt from net wealth tax are non-deductible.
  • Net worth tax at EUR 4,815 per year is applicable to Soparfis in the following conditions
    • Company’s assets consist of at least 90% of financial assets, including shares, inter-company accounts receivables, securities, and cash.
    • Company’s total assets of at least EUR 350,000. In other cases, the minimum net wealth tax will depend on the total balance sheet and may vary between EUR 535 and EUR 32,100.

icon  International Tax Treaties

A Luxembourg Soparfi is entitled to the following:

  • Use of Luxembourg’s extensive tax treaty network, which includes a total of 83 tax treaties.
  • Take advantage of the EU-Parent Subsidiary Directive, the EU Interest and Royalty Directive, the EU Merger Directive, and Participation Exemption.

icon  Participation Exemption Regime

Dividends, capital gains, and liquidation proceeds accruing to a Soparfi from its participations can benefit from participation deductions, providing 100% exemption from Luxembourg income taxes.

To qualify under this regime, a Soparfi must meet the following requirements:

  • At least 10% of shares, or alternatively an interest with a purchase price of at least EUR 1.2 million, for dividend exemption and up to EUR 6 million for capital gains exemption.
  • Qualifying subsidiary, which refers to a Luxembourg taxable company, a company under the EU Parent-Subsidiary Directive, or a company subject to a tax burden similar to that enforced in Luxembourg.
  • Must have an intention to hold or undertake for a period of at least 12 consecutive months.
  • For participation exemption purposes, a foreign rate will be considered comparable to Luxembourg if the foreign tax rate is at least 8.5%.

icon  Withholding Tax Rate

Dividends distributed by a Soparfi will be subject to 15% withholding tax. The withholding tax may be further reduced under the provisions of an applicable tax treaty or exempted under domestic withholding tax exemption, Withholding tax may be avoided in other cases with proper structuring of a Soparfi. The distribution or pre-liquidation proceeds will not be subject to Luxembourg withholding tax by Luxembourg tax authority.

 

Tax Liabilities in Luxembourg on Disposal

A non-resident Soparfi shareholder will not be assessed with capital gains tax on the disposal of shares unless:

  • Non-resident shareholder holds a significant stake, in case of 10% share capital).
  • Sale must take place within six months of acquisition of stakes.
  • Anyone holding Soparfi shares for at least six months will no longer have to pay tax on their sale in Luxembourg.
  • In cases where capital gains are applicable, tax treaties contracted by Luxembourg with other countries will prevent the country from levying capital gains tax.

We help private and corporate clients, family entrepreneurs with asset protection, wealth preservation and business growth.

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About Damalion

Damalion is an independent consulting firm with offices in USA, Europe and Asia.

We serve on a daily basis family entrepreneurs and corporate clientele for asset protection, wealth preservation and business growth. We nurture our local and international expertise, knowledge, and our vast network of experienced and accredited professionals to create a seamless company formation experience to satisfy your needs.
 

Future

Company Formation

Soparfi-Company Formation

Tax Planning Solutions

Luxembourg-Tax Planning Solutions

Asset Protection

Luxembourg-holding-Asset Protection

Wealth Management

Wealth Management

Bank Account Opening

Bank Account Opening

Director & Shareholder

Director & Shareholder

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Let’s talk about your needs:

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Address

8-10 rue Mathias Hardt
L – 1717 Luxembourg
Luxembourg
T: +352 28 80 66 94

Email

contact@damalion.com