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Company Formation Luxembourg
Start-up
Luxembourg
Public Limited Company (PLC., Corp./SA); Limited Liability Company (LLC.,
LTD./SARL); Partnership Limited by Shares (SCA); Limited Partnership (LP./
SCS); General Partnership (GP./SNC); European Company, (SE); Branch Office;
SOPARFI-Financial Holding Company; Trading and Service Company; Private
Asset Management Company (SPF); Securitisation Vehicle (SPV); Company for
Intellectual Property Rights (IP-Box); SICAV/SICAF Investment Funds; SICAR
Investemnt Company; Specialised Investment Funds (SIF); Real Estate Company;
E-Commerce Company
The Tax and Legal Aspects of the Formation of a Corporate Structure
in Luxembourg
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Company Formation Luxembourg
This publication is provided for information purposes only and should not be
treated as a substitute for a tax or legal consultation or for the reading of
Luxembourg‘s legislation or public statements.
The reader should not act on the basis of the information contained in this
publication without having obtained individual, expert advice. In particular,
individual advice from tax consultants or lawyers should be sought with regard
to the information on the tax treatment of foreign investments.
International Advokat Trust Management G.E.I.E accept no liability or responsi-
bility for any damage or loss resulting from the reader‘s decision made on the
basis of the information contained in this publication.
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Company Formation LuxembourgLegal forms
Table of ContentsLegal forms
Which legal form of company best suits your project?
Formation of a Public Limited Company (PLC., Corp./SA) in Luxembourg 11
I. Legal Structure of a Public Limited Company (PLC., Corp./SA) 11
1. Concept 11
2. Formation 11
3. Minimum Capital 11
4. Shares and the Transfer of Shares 12
5. Organisation 12
6. Annual Accounts 13
7. Liquidation 13
II. Tax Structure of a Public Limited Company (PLC., Corp./SA) 13
1. Corporate Taxation 13
2. Net Wealth Tax 14
III. Advantages of forming a Public Limited Company (PLC., Corp./SA) 14
Formation of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg 15
I. Legal Structure of a Limited Liability Company (LLC., Ltd./SARL) 15
1. Concept 15
2. Formation 15
3. Minimum Capital 15
4. Share Transfer 16
5. Organisation 16
6. Annual Accounts 16
7. Dissolution 17
II. Tax Structure of a Limited Liability Company (LLC., Ltd./SARL) 17
1. Corporate Taxation 17
2. Net Wealth Tax 17
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Company Formation LuxembourgLegal forms
III. Advantages of forming a Limited Liability Company
(LLC., Ltd./SARL) 18
Formation of a Partnership Limited by Shares (SCA) in Luxembourg 19
I. Legal Structure of a Partnership Limited by Shares (SCA) 19
1. Concept 19
2. Formation 19
3. Minimum Capital 19
4. Company Name 20
5. Organisation 20
II. Tax Structure of a Partnership Limited by Shares (SCA) 20
Formation of a Limited Partnership (LP./SCS); in Luxembourg 21
I. Legal Structure of a Limited partnership (LP./SCS) 21
1. Concept 21
2. Formation 21
3. Minimum Capital 21
4. Company Name 22
II. Tax Structure of a Limited Partnership (LP./SCS) 22
Formation of a General Partnership (GP./SNC) in Luxembourg 23
I. Legal Structure of a General Partnership (GP./Société en
nom collectif, SNC) 23
1. Concept 23
2. Formation 23
3. Minimum Capital 23
4. Company Name 23
II. Tax Structure of a General Partnership (GP./SNC) 24
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Company Formation LuxembourgBusiness forms
Formation of a European Company (SE) in Luxembourg 25
I. Legal Structure of a European Company (SE) 25
1. Concept 25
2. Formation 25
3. Minimum Capital 26
4. Company Name 26
5. Organisation 26
6. Accounting 26
II. Tax Structure of a European Company (SE) 26
Formation of the Branch Office of Foreign Companies in Luxembourg 27
I. LegalStructureofaBranchOfficeinLuxembourg 27
1. Concept 27
2. Formation 27
3. Name 28
4. Representation 28
II. TaxStructureofaBranchOfficeinLuxembourg 28
Business formsWhich tax advantages will your business benefit from?
Formation of a SOPARFI-Financial Holding Company in Luxembourg 30
I. Legal Structure of a SOPARFI in Luxembourg 30
1. Concept 30
2. Formation 30
II. Tax Advantages of a SOPARFI in Luxembourg 31
1. Exemption from Tax of Dividends and Sale and Liquidation
Proceeds from Investments 31
2. Deduction of Investment-related Expenses 32
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Company Formation LuxembourgBusiness forms
3. Exemption from Net Wealth Tax 32
4. Exemption from Withholding Tax 32
5. Double Taxation Agreements (DTA) 33
6. Value-added Tax (VAT) 33
Formation of a Trading and Service Company in Luxembourg 34
I. Trading and Service Company: Concept 34
II. Formation 34
III. Tax Structure of a Trading and Service Company 35
1. Corporation Tax 35
2. Net Wealth Tax 35
3. Value-Added Tax (VAT) 35
IV. Advantages of forming a Trading and Service Company
in Luxembourg 36
Formation of a Private Asset Management Company (SPF) in Luxembourg 37
I. Private Asset Management Company (SPF): Concept 37
II. Legal Structure of a Private Asset Management Company (SPF) 37
1. Legal Form 37
2. Formation 37
3. Activity 38
4. Supervision 39
III. Tax Advantages of a Private Asset Management Company (SPF) 39
1. Taxation 39
2. Tax Exemptions 39
Formation of a Securitisation Vehicle (SPV) in Luxembourg 40
I. Securitisation: Concept 40
II. Legal Structure of a Securitisation Vehicle (SPV) in Luxembourg 40
1. Formation 40
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Company Formation LuxembourgBusiness forms
2. Securitisation Structure 41
3. Asset Classes (Securitisation Objects) 41
4. Supervision 42
III. Tax Structure of a Securitisation Vehicle (SPV) in Luxembourg 42
1. Securitisation Company 42
2. Securitisation Funds 43
Formation of a Company for Intellectual Property Rights (IP-Box) in Luxembourg 44
I. Luxembourg‘s Tax Regime (IP-Box) 44
II. Intellectual Property Rights (IP) in Luxembourg 44
III. IP-Companies in Luxembourg: Tax Optimisation Instrument 45
IV. Further Tax Advantages in Luxembourg 45
1. Tax Exemptions 45
2. Further Advantages 46
Formation of a SICAV/SICAF Investment Fund in Luxembourg 47
I. Legal Structure of a SICAV/SICAF Investment Fund in Luxembourg 47
1. Concept 47
2. Investment Policy 47
3. Investors 48
4. Formation 48
5. Investment and Distribution Policy 48
6. Supervision 49
II. Tax Structure of a SICAV/SICAF Investment Fund in Luxembourg 49
1. Corporate Taxation 49
2. Tax Exemptions 49
Formation of a SICAR Investment Company in Luxembourg 50
I. Legal Structure of a SICAR Investment Company in Luxembourg 50
1. Concept 50
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Company Formation LuxembourgBusiness forms
2. Investment Policy 50
3. Investors 50
4. Formation 51
5. Issuance and Distributions Policy 51
6. Supervision 52
II. Tax Structure of a SICAR Investment Company in Luxembourg 52
1. Corporate Taxation 52
2. Tax Exemptions 53
Formation of Specialised Investment Funds (SIF) in Luxembourg 54
I. Legal Structure of a Specialised Investment Fund (SIF)
in Luxembourg 54
1. Concept 54
2. Investment Policy 54
3. Investor 54
4. Formation 55
5. Issuance and Distributions Policy 56
6. Supervision 56
II. Tax Structure of a Specialised Investment Fund (SIF)
in Luxembourg 57
1. Corporate Taxation 57
2. Tax Exemptions 57
Formation of a Real Estate Company in Luxembourg 58
I. Real Estate Company in Luxembourg: Concept 58
II. Tax Aspects 58
1. The Taxation of Income from the Sale of Real Estate 58
2. The Taxation of Gains on the Sale of Shares 58
3. Two-tier Company Structure 59
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Company Formation LuxembourgBusiness forms
Formation of a E-Commerce Company in Luxembourg 60
I. E-Commerce Luxembourg: Concept 60
II. Tax Aspects of Direct E-Commerce 61
1. The Taxation of Direct E-Commerce Services 61
2. Taxation of Direct E-Commerce Services in Luxembourg 63
Questions on Company Formation in Luxembourg? 64
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Company Formation LuxembourgLegal forms
Legal forms
Which
legal form of company best suits your project?
Public Limited Company (PLC., Corp./SA)
Limited Liability Company (LLC., Ltd./SARL)
Partnership Limited by Shares (SCA)
Limited Partnership (LP./SCS)
General Partnership (GP./SNC)
European Company, (SE)
Branch Office
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Company Formation LuxembourgLegal form: Public Limited Company (PLC., Corp.)
Formation of a Public Limited Company (PLC., Corp./SA) in Luxembourg
I. Legal Structure of a Public Limited Company (PLC., Corp./SA)
1. Concept
The Public Limited Company (PLC., Corp./SA) in Luxembourg is a legal person
whose capital is determined in advance and segmented into shares. The assets
of a Public Limited Company (PLC., Corp./SA) are wholly liable for the company‘s
liabilities. A Public Limited Company (PLC., Corp./SA) in Luxembourg may be
formed for the carrying on of commercial or non-commercial purposes. More-
over, registered shares as well as bearer shares may be issued.
2. Formation
A Public Limited Company (PLC., Corp./SA) in Luxembourg is formed through
the recording of the articles of association by a notary. Its articles of association
will subsequently be published in the Official Bulletin (Mémorial C) and lodged
with Luxembourg‘s Trade and Companies Register. At least one natural or legal
person is required for the said formation. The person may be of any nationality
and is not required to be resident in Luxembourg.
3. Minimum Capital
The minimum capital of a Public Limited Company (PLC., Corp./SA) in Luxem-
bourg is 31,000 EUR. This requires to be contributed in full in the form of a cash
or non-cash contribution. Non-cash contributions are independently valued by
an auditor. When a Public Limited company (PLC., Corp./SA) is formed, at least
25% of the nominal value of every share requires to be paid up. Notwithstan-
ding this, bearer shares will only be issued once the complete capital contribu-
tion is made.
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Company Formation LuxembourgLegal form: Public Limited Company (PLC., Corp.)
4. Shares and the Transfer of Shares
Bearer shares in a Public Limited Company (PLC., Corp./SA) are transferred
through the agreement and transfer of the bearer securities. However, the trans-
fer of registered shares is only effective on a Public Limited Company (PLC.,
Corp./SA) in Luxembourg if either a transfer statement dated and signed by
both the transferor and the transferee is present in the Register of Registered
Shares or if the Public Limited Company (PLC., Corp./SA) has been notified
of the transfer or if the said transfer has been accepted by the Public Limited
Company (PLC., Corp./SA) in the form of a notarial deed.
5. Organisation
5.1. General Meeting
The general meeting of the shareholders is the supreme authority of a Public
Limited Company (PLC., Corp./SA) in Luxembourg. It is authorised to make all
decisions relating to the Public Limited Company (PLC., Corp./SA) including the
appointment of the board of directors. The ordinary general meeting must be
convened annually at the date prescribed in the articles of association. Further-
more, the board of directors as well as the auditor of a Public Limited Company
(PLC., Corp./SA) in Luxembourg can convene an extraordinary general meeting.
The said meeting shall appoint the board of directors of the Public Limited
Company (PLC., Corp./SA).
5.2. Board of Directors
The board of directors is responsible for the management and representation
of a Public Limited Company (PLC., Corp./SA). It must consist of at least one
member (director). However, if a Public Limited Company (PLC., Corp./SA) has
more than one shareholder, the board of directors must consist of at least three
members (directors). The said members (directors) may be natural or legal
persons resident in or outwith Luxembourg. Moreover, it is not required that
the members of the board of directors be shareholders of the Public Limited
Company (PLC., Corp./SA).
5.3. Appointment of an Auditor
A Public Limited Company may appoint one or more commissaire to super-
vise the Public Limited Company (PLC., Corp./SA), who may be shareholders or
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Company Formation LuxembourgLegal form: Public Limited Company (PLC., Corp.)
non-shareholders, if the following upper limits are not exceeded: a balance
sheet total of 6.25 million EUR, net turnover of 6.25 million EUR as well as
having an average number of 50 full-time posts. Where these upper limits are
exceeded, an independent auditor must be appointed to inspect the books.
6. Annual Accounts
The annual accounts of a Public Limited Company in Luxembourg (PLC., Corp./
SA) consist of the balance sheet, the profit and loss account and the notes
thereto. Following their approval, the annual accounts will be lodged with
Luxembourg‘s Trade and Companies Register and published in the Official
Bulletin (Mémorial C).
7. Liquidation
If 75% of the share capital of a Public Limited Company (PLC., Corp./SA) in
Luxembourg has been lost and 25% of the votes cast at the general meeting are
in favour of liquidation, the company shall enter into liquidation.
II. Tax Structure of a Public Limited Company (PLC., Corp./SA)
1. Corporate Taxation
Since January 1st, 2013, all Public Limited Companies (PLC., Corp./SA) in
Luxembourg have been subject to corporate taxation at a rate of 29.22%. This
said rate consists of the following components: corporate income tax at a rate of
21% on income exceeding 15,000 EUR (or a rate of 20% for income not excee-
ding 15,000 EUR); the solidarity surtax at a rate of 7% as well as the municipal
business tax at a rate of 6.75%. All Public Limited Companies (PLC., Corp./SA)
resident in Luxembourg which do not require a trade licence and whose assets,
securities and bank balance together exceed 90% of its balance sheet total are
required to pay only the minimum corporate taxation of 3,210 EUR (3,000 EUR
plus the 7% solidarity surtax).
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Company Formation LuxembourgLegal form: Public Limited Company (PLC., Corp.)
Furthermore, Public Limited Companies (PLC., Corp./SA) in Luxembourg are
liable to withholding tax at a rate of 15% on their dividend distributions. In con-
trast thereto, royalty and interest payments as well as proceeds from liquidation
or partial liquidation are tax-free.
2. Net Wealth Tax
Public Limited Companies (PLC., Corp./SA) in Luxembourg are further subject to
a net wealth tax at a rate of 0.5%. Public Limited Companies (PLC., Corp./SA)
resident in Luxembourg are therefore subject to a net wealth tax on their total
assets (assets in and outwith Luxembourg). However, Public Limited Companies
(PLC., Corp./SA) not resident in Luxembourg are subject to the said tax on their
assets in Luxembourg only.
III. Advantages of forming a Public Limited Company (PLC., Corp./SA)
In Luxembourg, the legal structure of the Public Limited Company (PLC., Corp./
SA) is used by large- as well as small and medium-sized companies, particularly
due to the possibility to issue easily transferable bearer shares. Furthermore,
the Public Limited Company (PLC., Corp./SA) is suitable for numerous Luxem-
bourg business forms. This includes, but is not limited to, the SOPARFI-, the
Financial Holding, the Trading Company, the Private Asset Management Company
and the Securitisation Company (SPV).
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Company Formation LuxembourgLegal form: Limited Liability Company (LLC., LTD./SARL)
Formation of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg
I. Legal Structure of a Limited Liability Company (LLC., Ltd./SARL)
1. Concept
A Limited Liability Company (LLC., Ltd./Société à responsabilité limitée, SARL)
in Luxembourg is a corporation whose assets are wholly liable for the company‘s
liabilities. It may be formed for the carrying on of any type of commercial or
non-commercial purposes.
2. Formation
A Limited Liability Company (LLC., Ltd./SARL) in Luxembourg is formed through
the recording of its articles of association by a notary. Its articles of association
will subsequently be published in the Official Bulletin (Mémorial C) and lodged
with Luxembourg‘s Trade and Companies Register. Moreover, the shareholders
of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg must be regis-
tered in the Trade and Companies Register of which there must be at least two
and no more than 40. The shareholders may be natural or legal persons. It is
also possible to form a single-person Limited Liability Company in Luxembourg
(LLC., Ltd./Société à Responsabilité limitée unipersonelle).
3. Minimum Capital
The minimum capital of a Limited Liability Company (LLC., Ltd./SARL) in
Luxembourg is 12,500 EUR. This requires to be contributed in full in the form of
a cash or non-cash contribution. The company‘s capital is divided into registered
shares. Each share is of the same value and each share will have a minimum
value of 25 EUR.
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Company Formation LuxembourgLegal form: Limited Liability Company (LLC., LTD./SARL)
4. Share Transfer
The shares of a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg may
be transferred to non-shareholders only with the consent of the general meeting
at which at least 75% of the company‘s capital must be represented. The said
transfer is required in notarised form. Such consent is not required when the
transfer is to a fellow shareholder.
5. Organisation
5.1. General Meeting
The general meeting is the supreme authority of a Limited Liability Company
(LLC., Ltd./SARL) in Luxembourg. The general meeting consists of all share-
holders of the company and must be convened if the number of shareholders
exceeds 25.
5.2. Managing Director
A Limited Liability Company (LLC., Ltd./SARL) in Luxembourg has one or more
managing directors who are not required to be company shareholders. Further-
more, the managing director(s) can be of any nationality and is not required to
be resident in Luxembourg.
5.3. Supervision
A Limited Liability Company in Luxembourg (LLC., Ltd./SARL) is subject to au-
diting obligations if it has more than 25 shareholders. The supervision is carried
out by one or more commissaire who may be shareholders or non-sharehol-
ders. However, if a Limited Liability Company (LLC., Ltd./SARL) in Luxembourg
exceeds two of the following upper limits, an independent auditor must be
appointed to inspect the books: a balance sheet total of 6.25 million EUR, net
turnover of 6.25 million EUR as well as having an average number of 50 full-
time posts.
6. Annual Accounts
The annual accounts of a Limited Limited Company in Luxembourg (LLC., Ltd./
SA) consist of the balance sheet, the profit and loss account and the notes
thereto. Following their approval, the annual accounts will be lodged with
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Company Formation LuxembourgLegal form: Limited Liability Company (LLC., LTD./SARL)
Luxembourg‘s Trade and Companies Register and published in the Official
Bulletin (Mémorial C).
7. Dissolution
A Limited Liability Company (LLC., Ltd./SARL) in Luxembourg can be dissolved
either through a decision of the general meeting at which 75% of the company
capital must be represented or through a court order.
II. Tax Structure of a Limited Liability Company (LLC., Ltd./SARL)
1. Corporate Taxation
Since January 1st, 2013, all Limited Liability Companies (LLC., Ltd./SARL) in
Luxembourg have been subject to corporate taxation at a rate of 29.22%. This
said rate consists of the following components: corporate income tax at a rate of
21% on income exceeding 15,000 EUR (or a rate of 20% for income not excee-
ding 15,000 EUR), the solidarity surtax at a rate of 7% as well as the municipal
business tax at a rate of 6.75%.
All Limited Liability Companies (LLC., Ltd./SARL) resident in Luxembourg which
do not require a trade licence and whose assets, securities and bank balance
together exceed 90% of its balance sheet total are required to pay only the
minimum corporate taxation of 3,210 EUR (3,000 EUR plus the 7% solidarity
surtax).
Furthermore, Limited Liability Companies (LLC., Ltd./SARL) in Luxembourg are
subject to withholding tax at a rate of 15% on their dividend distributions. In
contrast thereto, royalty and interest payments as well as proceeds from liqui-
dation or partial liquidation are tax-free in Luxembourg.
2. Net Wealth Tax
Limited Liability Companies (LLC., Ltd./SARL) in Luxembourg are further subject
to a net wealth tax at a rate of 0.5%. Limited Liability Companies (LLC., Ltd./
18http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgLegal form: Limited Liability Company (LLC., LTD./SARL)
SARL) resident in Luxembourg are therefore subject to a net wealth tax on
their total assets (assets in and outwith Luxembourg). However, Limited Liability
Companies (LLC., Ltd./SARL) not resident in Luxembourg are subject to the said
tax on their assets in Luxembourg only.
III. Advantages of forming a Limited Liability Company (LLC., Ltd./SARL)
In Luxembourg, the legal structure of the Limited Liability Company (LLC., Ltd./
SARL) is predominantly suited to medium-sized companies due to its many ad-
vantages including, for example, it suiting all commercial purposes – from the
trading of goods to asset management.
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Company Formation LuxembourgLegal form: SCA
Formation of a Partnership Limited by Shares (SCA) in Luxembourg
I. Legal Structure of a Partnership Limited by Shares (SCA)
1. Concept
The Partnership Limited by Shares (Société en commandite par actions, SCA) is
a corporation which, at the same time, shows the characteristics of a partner-
ship. A Partnership Limited by Shares (SCA) consists of at least one shareholder
subject to unlimited liability (general partner) as well as a natural or legal person
who has contributed to the share capital with a particular contribution (limited
partner). The latter is liable for the Partnership Limited by Share’s (SCA) liabili-
ties only for a sum matching his contribution. Insofar as not otherwise provided,
the provisions on Public Limited Companies (PLC., Corp./SA) in Luxembourg
apply to Partnerships Limited by Shares (SNC) in Luxembourg.
2. Formation
A Partnership Limited by Shares (SNC) in Luxembourg is formed through the
recording of its articles of association (Link Info-Seite) by a notary as well as its
registration in the Trade and Companies Register (Link Info-Seite). At least one
personally liable shareholder (general partner) is required to be mentioned by
name in the said articles of association.
3. Minimum Capital
The provisions on Public Limited Companies (PLC., Corp./SA) in Luxembourg
apply in respect of the minimum capital of the shareholders of a Partnership
Limited by Shares (SCA). According to that, the minimum capital of a Part-
nership Limited by Shares (SCA) in Luxembourg is 31,000 EUR. The Partner-
ship Law provisions, which contain no minimum capital requirements, apply in
respect of the capital contributions of the general partners.
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Company Formation LuxembourgLegal form: SCA
4. Company Name
The company name of a Partnership Limited by Shares (SCA) is permitted only
to contain the name of one or more than one of its personally liable sharehol-
ders (general partners).
5. Organisation
5.1. General Meeting
The general meeting of a Partnership Limited by Shares (SCA) in Luxembourg
has significantly less competences than those of a Public Limited Company (PLC.,
Corp./SA) in Luxembourg. In particular, its resolutions on the amendment of the
articles of association require the consent of the Partnership Limited by Share’s
(SCA) managing director.
5.2. Board of Directors
The board of directors of a Partnership Limited by Shares (SCA) in Luxembourg
is not elected. Instead, it mandatorily consists of those shareholders subject to
unlimited liability (general partners). The said shareholders are responsible for
the management of and representation of the Partnership Limited by Shares
(SCA).
5.3. Commissaire
At least three commissaire are required to carry out the supervision of a Part-
nership Limited by Shares (SCA) in Luxembourg.
II. Tax Structure of a Partnership Limited by Shares (SCA)
In respect of taxation, a distinction is made between the general partners as
well as the Partnership Limited by Shares (SCA) itself together with the limited
partners of a Partnership Limited by Shares (SCA) due to its hybrid structure.
The general partners and their capital contributions are taxed in accordance
with the Partnership Law provisions whilst the Partnership Limited by Shares
(SCA) and its limited partners are treated as a corporation and/or shareholders
for corporate taxation purposes.
21http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgLegal form: Limited Partnership
Formation of a Limited Partnership (LP./SCS) in Luxembourg
I. Legal Structure of a Limited partnership (LP./SCS)
1. Concept
A Limited Partnership in Luxembourg (LP./Société en commandite simple) is a
partnership having at least two shareholders, namely a ‘general’ partner who
is subject to unlimited liability and a ‘limited’ partner subject to limited liability.
The general partner is responsible for the management of a Limited Partner-
ship (LP./SCS) in Luxembourg. Moreover, the liability of the said partner for the
liabilities of the Limited Partnership (LP./SCS) is secondary, joint and several
and unlimited.
In contrast thereto, the limited partners are liable for the liabilities of a Limited
Partnership (LP./SCS) only to the extent of that amount that they have contri-
buted (the limited liability sum). Such partners are consequently not permitted
to carry out the management of the business and have restricted controlling
rights.
2. Formation
A Limited Partnership (LP./SCS) is formed through the conclusion of a partner-
ship agreement between at least two persons and will subsequently be registe-
red in the Trade and Companies Register (Link Info-Seite). The registration in
the Trade and Companies Register is accordingly of declaratory effect only.
3. Minimum Capital
There is no minimum capital requirement for a Limited Partnership (LP./SCS) in
Luxembourg.
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Company Formation LuxembourgLegal form: Limited Partnership
4. Company Name
The company name of a Limited Partnership (LP./SCS) in Luxembourg must
contain the surname of at least one of the partners subject to unlimited tax
liability (general partners). The using of the names of other persons, particularly
the names of the limited partners, is not permitted.
II. Tax Structure of a Limited Partnership (LP./SCS)
A Limited Partnership (LP./SCS) in Luxembourg is not subject to taxation as
such. Instead, every shareholder of a Limited Partnership (LP./SCS) is liable to
taxation in Luxembourg on their share of the income and assets of the company
as well as on their private income and assets.
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Company Formation LuxembourgLegal form: General Partnership
Formation of a General Partnership (GP./SNC) in Luxembourg
I. Legal Structure of a General Partnership (GP./Société en nom collectif, SNC)
1. Concept
The General Partnership (GP./Société en nom collectif, SNC) in Luxembourg is
a partnership in which two or more natural and/or legal persons come together
in order to carry on business under a single trading name. The liability of all
shareholders of a General Partnership (GP./SNC) in Luxembourg for its liabilities
is unlimited and joint and several.
2. Formation
A General Partnership (GP./SNC) in Luxembourg is formed through the con-
clusion of a partnership agreement between at least two natural and/or legal
persons. Moreover, a General Partnership (GP./SNC) is required to obtain a
trading licence (Link Info-Seite) from the Ministry of the Middle Classes, Tourism
and Housing as well as registering in the Trade and Companies Register (Link
Info-Seite) in Luxembourg in order to carry on business.
3. Minimum Capital
There is no prescribed minimum capital for the formation of a General Partner-
ship (GP./SNC) in Luxembourg.
4. Company Name
The company name of a General Partnership (LGP./SNC) in Luxembourg is only
permitted to contain the names of its shareholders.
24http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgLegal form: General Partnership
II. Tax Structure of a General Partnership (GP./SNC)
A General Partnership (GP./SNC) is not taxed as such. Instead, its shareholders
are subject to the standard taxation in Luxembourg.
25http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgLegal form: European Company
Formation of a European Company (SE) in Luxembourg
I. Legal Structure of a European Company (SE)
1. Concept
The legal form of the European Company (Societas Europaea, SE; European
Public Limited Company (PLC.,Corp.)) was introduced in 2001 as part of the EU
Directive 2157/2001 on the Statute for a European Company (SE). The Euro-
pean Company (SE) is a Public Limited Company (PLC., Corp.) having its own
legal personality and whose capital is divided into shares and which has branch
offices in at least two other European Union Member States.
The aim of the introduction of this new legal form was a uniform European
company law. In particular, that businesses active in different Member States of
the European Union or those wanting to become active in other Member States
of the European Union being able to form companies in accordance with exten-
sive uniform legal principles. And therefore not being required to be formed as
subsidiaries in different countries accordance with different laws in each case.
Instead, such businesses, insofar as they are active as a European Company
(SE), subject to
2. Formation
A European Company (SE) is formed independently of domestic law. Only legal
persons are permitted to form a European company. This includes, for example,
already existing companies such as Public Limited Companies (PLC., Corp.),
European Companies (SE) and – under certain restrictions- Limited Liability
Companies (LLC., Ltd.). Furthermore, the registered office as well as the main
place of central management and control of the founding companies must be
located within the European Union (EU) or the European Economic Area (EEA).
The newly formed European Company (SE) will be registered in the Commer-
cial Register of the country in which its registered office is located. A Luxem-
26http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgLegal form: European Company
bourg European Company (SE) will, for example, accordingly be registered in
Luxembourg’s Commercial Register. The said registration will subsequently be
published in the Official Journal of the European Union.
3. Minimum Capital
The minimum capital of a European Company (SE) is 120,000 EUR.
4. Company Name
The company name of a European Company (SE) is required to contain the
abbreviation “SE”.
5. Organisation
Due to the different provisions among the Member States on the forms of
company organisation, the Articles of Association of a European Company (SE)
may provide for, in addition to the General Meeting, either a Board of Direc-
tors (monistic system, compare the Public Limited Company (PLC., Corp./SA) in
Luxembourg) or a management and supervisory body (dualistic system, compare
the Public Limited Company (PLC., Corp.) in Germany).
6. Accounting
In respect of the obligation of a European Company (SE) to keep accounts, the
law of the country in which its registered office is located applies.
II. Tax Structure of a European Company (SE)
No special provisions exist on the current taxation of the business activities of
a European Company (SE). Instead, a European Company (SE) is subject to
unlimited tax liability in the country in which its registered office is located. In
respect of permanent establishments in other countries, a European Company
(SE) is required to comply with its tax obligations in force in the respective
countries. The distribution of profits (e.g. dividend payments) to the sharehol-
ders is likewise subject to the particular domestic provisions thereon.
27http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgLegal form: Branch Offices of Foreign Companies
Formation of the Branch Offices of Foreign Companies in Luxembourg
I. Legal Structure of a Branch Office in Luxembourg
1. Concept
A Branch Office in Luxembourg is a permanent establishment which is geo-
graphically separated from the main business in a domestic or non-domestic
Trading Company. From a business management point of view, it is a indepen-
dent company carrying on commercial activities in Luxembourg which is fully
authorised to conclude sales contracts. Legally, the Branch Office is seen as part
of the Head Office due to it not having its own legal personality. The liability of
the Branch Office for the liabilities of the Branch Office in Luxembourg is conse-
quently unlimited. If the Head Office is a foreign company, the internal consti-
tution of a Branch Office should be in accordance with the articles of association
of the Head Office of the business and the particular foreign law.
2. Formation
A Branch Office in Luxembourg is formed (Link Info-Seite) through the resolution
of the management of the Head Office and through registration in Luxembourg’s
Trade and Companies Register (link Info-Seite). Therein, the said registration is
of declaratory effect only. It is not required that a Branch Office in Luxembourg
have an articles of association and the articles of association of the principal
place of business shall be published in the Official Bulletin (Mémorial C). Moreo-
ver, the furnishing of the Branch Office with capital can be freely organised. A
Trade Licence is required to be obtained by a Branch Office from Luxembourg’s
Ministry of the Middle Classes, Tourism and Housing for the carrying on of com-
mercial activities.
28http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgLegal form: Branch Offices of Foreign Companies
3. Name
The name of a Branch Office in Luxembourg must contain at least a description
of the Head Office as well as the corresponding legal abbreviation in unaltered
form.
4. Representation
A Branch Office in Luxembourg is independently represented by the Branch
Office manager vis-à-vis third parties. Notwithstanding this, the appointment
of a Branch Office manager is not mandatory. An authorised signatory of the
company, registered in Luxembourg”s Trade and Companies Register, can accor-
dingly be appointed to represent the Branch Office.
II. Tax Structure of a Branch Office in Luxembourg
A Branch Office in Luxembourg is liable as a permanent establishment to the stan-
dard tax for profits made there and consequently benefits from Luxembourg’s
preferential taxation. Moreover, the Branch Office may repatriate the said profits
to the country in which its Head Office is located free from tax.
29http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusines forms
Business forms
Which
tax advantages will your business benefit from?
SOPARFI-Financial Holding Company
Trading and Service Company
Private Asset Management Company (SPF)
Securitisation Vehicle (SPV)
Company for Intellectual Property Rights (IP-Box)
Investment Funds SICAV/SICAF
Investment Company SICAR
Specialised Investment Funds (SIF)
Real Estate Company
E-Commerce
30http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: SOPARFI-Financial Holding Company
Formation of a SOPARFI-Financial Holding Company in Luxembourg
I. Legal Structure of a SOPARFI in Luxembourg
1. Concept
A SOPARFI-Financial Holding Company (Société de participations financières) in
Luxembourg is a non-regulated Trading Company in Luxembourg which is fully
liable to tax. It benefits from the “inter-corporate privilege” of the parent subsi-
diary Directive and is able to carry on Holding activities in addition to its finan-
cial activities. A “Holding” describes a parent organisation which can take the
following forms: Operational Holding; Management Holding; Finance Holding
and Organisational Holding.
The purpose of a SOPARFI in Luxembourg is predominantly the acquisition,
management and realisation of investments in companies in or outwith Luxem-
bourg. A SOPARFI is permitted to carry on all types of commercial activities
insofar as they are consistent with the articles of association or Luxembourg’s
statutory provisions.
2. Formation
A SOPARFI in Luxembourg is formed through the recording of its articles of
association by a notary. The articles of association will subsequently be published
in the Official Bulletin (Mémorial C) and lodged with Luxembourg‘s Trade and
Companies Register. A natural or legal person of any nationality, regardless of
where they are resident, is required and authorised for the formation.
A SOPARFI in Luxembourg is formed as a corporation as, for example, a Public
Limited Company (PLC., Corp./SA.), a Limited Liability Company (LLC., Ltd./
SARL) or a Partnership Limited by Shares (SCA). In practice in Luxembourg, the
legal form of the Public Limited Company (PLC., Corp./SA) is the preferred form
for the formation of a SOPARFI. This is particularly so due to it being possible to
issue bearer shares which can be easily transferred.
31http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: SOPARFI-Financial Holding Company
It is a mandatory requirement that a SOPARFI in Luxembourg carrying on
commercial activities as its primary or secondary activity obtains prior written
consent (a trade licence, autorisation d établissement) from Luxembourg‘s
Ministry of Small and Medium-Sized Businesses.
II. Tax Advantages of a SOPARFI in Luxembourg
1. Exemption from Tax of Dividends and Sale and Liquidation Proceeds from Investments
Since January 1st, 2013, the rate of corporate taxation on the distribution of
dividends and sale and liquidation proceeds to a SOPARFI in Luxembourg has
been 29.22% (21% or 20% corporation tax, plus the Solidarity Surtax at a rate
of 7% as well as the Municipal Business tax at a rate of 6.75%). All corporations
resident in Luxembourg which do not require a trade licence and whose assets,
securities and bank balance together exceed 90% of its total balance sheet are
required to pay only the minimum corporate taxation of 3,210 EUR (3,000 EUR
plus the 7% Solidarity Surtax).
Notwithstanding this, in the context of the application of the „inter-corporate
privilege“, the dividends and sale and liquidation proceeds distributed to a
SOPARFI in Luxembourg are exempt from tax upon satisfaction of the following
requirements:
1.1. Requirements for the Parent Company
The parent company (SOPARFI) must be either a corporation resident in Luxem-
bourg with unlimited tax liability or the permanent establishment in Luxem-
bourg of an EU Company within the meaning of the parent subsidiary Direc-
tive or must be a corporation resident in a country which has agreed a double
taxation agreement (DTA) with Luxembourg. Furthermore, the parent company
is required to hold at least 10% of the capital of the subsidiary company or to
have acquired the said investment for at least 1.2 million EUR (or 6 million EUR
for sale profits) and at the time of the making available of the dividends, the in-
vestment must have been held for an uninterrupted period of at least 12 months
or a commitment existed to do so.
32http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: SOPARFI-Financial Holding Company
1.2. Requirements for the Subsidiary Company
The subsidiary company must either be a corporation which has its registered
office in Luxembourg with unlimited tax liability or a foreign corporation with
unlimited tax liability which is liable to a tax comparable to Luxembourg‘s cor-
poration tax or be an EU-subsidiary company fully liable to corporate taxation
(congruity with Luxembourg‘s rate of corporation tax is not mandatory) within
the meaning of the parent subsidiary Directive.
If these requirements are not met, dividends can be at least 50% tax exempt if
they are distributed by a corporation which is resident in Luxembourg with un-
limited tax liability or a foreign corporation which is liable to corporate taxation
(corresponding with Luxembourg’s rate of corporation tax) and which has its
registered office in a country which has agreed a DTA with Luxembourg or an
EU-Subsidiary Company within the meaning of the parent subsidiary Directive.
2. Deduction of Investment-related Expenses
Investment-related expenses are deductible to the extent they exceed the tax-
free income generated from investment in the respective year. This also applies
to value adjustments as well as losses suffered from the sale of investments.
3. Exemption from Net Wealth Tax
The net wealth tax in Luxembourg applies, in principle, at a rate of 0.5%. Not-
withstanding this and in accordance with the following requirements, the value
of an investment remains exempt from the net wealth tax. For the application of
the parent subsidiary privilege herein, no minimum holding period is prescribed:
The parent company (SOPARFI) in Luxembourg must hold at least 10% of the
capital of the subsidiary company or must have acquired the investment for a
sum amounting to at least 1.2 million EUR and the subsidiary company must
have been a resident or non-resident corporation with unlimited tax liability.
4. Exemption from Withholding Tax
4.1. Withholding Tax on Dividend Distributions
In principle, the dividend distributions of a SOPARFI in Luxembourg are subject
33http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: SOPARFI-Financial Holding Company
to withholding tax at a rate of 15%. However, the said tax will not be levied if
the following requirements are satisfied:
Firstly, the company distributing the dividends must be a resident legal person
with unlimited tax liability. The benefiting company must also be a resident cor-
poration with unlimited tax liability or a corporation resident in an EU member
state within the meaning of the parent subsidiary Directive or the resident per-
manent establishment of a parent company with its registered office in a country
which has agreed a DTA with Luxembourg. In addition, the benefiting company
is required to have an investment in the SOPARFI in Luxembourg amounting to
at least 10% of the company‘s share capital or of a purchase price amounting to
at least 1.2 million EUR and which has been held for a period of 12 months or a
commitment existed to do so.
In the case of the dividends of a SOPARFI in Luxembourg being distributed to
companies from countries outwith the EU yet which have agreed a DTA with
Luxembourg, there exists a reduced rate of withholding tax of 5%.
4.2 Withholding Tax on Royalty Payments, Interest and Liquidation
Proceeds
Royalty payments, interest payments as well as the distribution of liquidation
proceeds are also exempt from withholding tax in Luxembourg.
5. Double Taxation Agreements (DTA)
Moreover, a SOPARFI in Luxembourg can benefit from Luxembourg‘s multiple
double taxation agreements (DTA‘s) due to the use of the tax exemptions arising
from the „inter-corporate privilege“ not affecting the general tax liability of a
SOPARFI.
6. Value-added Tax (VAT)
If the business activity of a SOPARFI in Luxembourg is not exclusively limited
to the holding of investments, it will be liable to value-added tax (VAT) and is
consequently required to register for value-added tax (VAT). Luxembourg‘s rate
of value-added tax (VAT) is 15%. A reduced rate applies to certain goods and
services (e.g 3% on e-books).
34http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Trading and Service Comapany
Formation of a Trading and Service Company in Luxembourg
I. Trading and Service Company: Concept
If a company carries on a skilled trade, industrial or other commercial activi-
ties, such company is a Trading and Service Company. In this regard, there is
a distinction made in Luxembourg between Trading Companies, in the strictest
sense, which possess legal personality and Commercial Associations which do
not.
Trading Companies in the strictest sense include Public Limited Companies (PLC.,
Corp./SA); Limited Liability Companies (LLC., Ltd./SARL); Partnerships Limited
by Shares (SCA); Limited Partnerships (LP./SCS); General Partnerships (SNC);
Co-operative Societies (SC) as well as European Companies (SE). In contrast
thereto, Commercial Associations are subdivided into Temporary Commercial
Associations and Commercial Associations by Participation.
II. Formation
How a Trading and Service Company in Luxembourg is formed is determined by
the particular legal form chosen. Irrespective of nationality or residence, any
person may form a Trading and Service Company in Luxembourg.
Furthermore, it is required that all companies in Luxembourg carrying on com-
mercial activities obtain prior written consent (a trade licence, autorisation d‘
établissement) from Luxembourg‘s Ministry of Small and Medium-sized Busi-
nesses. The requirements therefor are, firstly, that the manager of a Trading
and Service Company in Luxembourg possesses certain professional qualifica-
tions and, secondly, that the company has a physical presence in Luxembourg.
Moreover, a Trading and Service Company is required to register the busi-
ness and to apply to the competent tax authority for a value-added tax (VAT)
ID. number in Luxembourg.
35http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Trading and Service Comapany
III. Tax Structure of a Trading and Service Company
The following information on the tax structure exclusively addresses corpora-
tions in Luxembourg due to Trading and Service Companies in Luxembourg
being predominantly formed as Public Limited Companies (PLC., Corp./SA) or as
Limited Liability Companies (LLC., Ltd./SARL):
1. Corporation Tax
Since January 1st, 2013, all corporations in Luxembourg have been subject
to corporate taxation at a rate of 29.22%. This said rate consists of the fol-
lowing components: corporate income tax at a rate of 21% on income excee-
ding 15,000 EUR (or a rate of 20% for income not exceeding 15,000 EUR), the
solidarity surtax at a rate of 7% as well as the municipal business tax at a rate
of 6.75%.
All corporations resident in Luxembourg which do not require a trade licence and
whose assets, securities and bank balance together exceed 90% of its balance
sheet total are required to pay only the minimum corporate taxation of 3,210
EUR (3,000 EUR plus the 7% solidarity surtax).
Furthermore, corporations in Luxembourg are subject to withholding tax at a
rate of 15% on their dividend distributions. In contrast thereto, royalties and
interest payments as well as proceeds from liquidation or partial liquidation are
tax-free in Luxembourg.
2. Net Wealth Tax
Corporations in Luxembourg are further subject to a net wealth tax at a rate
of 0.5%. Corporations resident in Luxembourg are therefore subject to a net
wealth tax on their total assets (assets in and outwith Luxembourg). However,
corporations not resident in Luxembourg are subject to the said tax on their
assets in Luxembourg only.
3. Value-Added Tax (VAT)
Trading and Service Companies in Luxembourg are liable to value-added tax
(VAT) at a rate of 15% on their activities. Notwithstanding this, certain supplies
36http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Trading and Service Comapany
and services are subject to the reduced rate of value-added tax (VAT) in Luxem-
bourg. For example, e-books are subject to a rate of 3%.
IV. Advantages of forming a Trading and Service Company in Luxembourg
There is very little red tape surrounding the formation and management of
a Trading and Service Company in Luxembourg. Moreover, Luxembourg‘s tax
assessment framework in the form of the so-called “tax rulings” is flexibly admi-
nistered. Questions on the scope of tax liability and undertakings relating to the
taxation can be sought from Luxembourg‘s tax authority prior to the tax being
due. In principle, these can be relied upon by both sides. In Luxembourg, such
tax ruling procedures can be completed within weeks.
Luxembourg is a signatory to several double taxation agreements (DTA‘s) which
prevent the double taxation of Trading and Service Companies.
37http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Private Asset Management Company (SPF)
Formation of a Private Asset Management Company (SPF) in Luxembourg
I. Private Asset Management Company (SPF): Concept
The Private Asset Management Company in Luxembourg (Société de gestion de
patrimoine familial, SPF) is not a new business form. Instead, it is a suitable in-
vestment vehicle for the management and planning of family assets, of a system
for matrimonial property and of the succession of natural persons. The Private
Asset Management Company (SPF) has been in existence in Luxembourg since
2007 and is the successor to the abolished Luxembourg Holding 1929.
II. Legal Structure of a Private Asset Management Company (SPF)
1. Legal Form
A Private Asset Management Company (SPF) in Luxembourg is only permitted to
be formed as a corporation (Public Limited Company (PLC., Corp./SA); Limited
Liability Company (LLC., Ltd./SARL); Partnership Limited by Shares (SCA) or
Co-operative in the form of a Public Limited Company (SCOSA)). In practice in
Luxembourg, the SPF is however predominantly formed in the legal forms of
the Public Limited Company (PLC., Corp./SA) and the Limited Liability Company
(LLC., Ltd./SARL).
2. Formation
A Private Asset Management Company (SPF) in Luxembourg is formed through
the recording of its articles of association by a notary. The articles of association
will subsequently be published in the Official Bulletin (Mémorial C) and lodged
with Luxembourg‘s Trade and Companies Register. It is required that the articles
of association expressly regulate that the company is subject to the provisions
of Luxembourg‘s law on Private Asset Management Companies. The minimum
capital of a SPF in Luxembourg is dependent upon which legal form is chosen.
38http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Private Asset Management Company (SPF)
The shareholders of a SPF in Luxembourg, whose number must remain
restricted, must be natural persons who are resident or not resident in Luxem-
bourg who will be active in the management of the private assets. Furthermore,
trustees or patrimonial entities with or without legal personality, such as Trusts
or private Foundations managing the private assets of natural persons, may
be used. In contrast thereto, other corporations are not permitted to hold
the position of shareholder in a Private Asset Management Company (SPF) in
Luxembourg.
3. Activity
3.1. Permitted Activity
The permitted activities of a Private Asset Management Company (SPF) in Luxem-
bourg are as follows: the acquisition, possession, management and realisation
of investments in financial instruments, in the broadest sense, including deri-
vatives; shares; investments; Funds; futures; bonds; options; precious metals
as well as bank accounts. Furthermore, as long as a SPF is not involved in the
management of the individual companies, a SPF in Luxembourg is permitted
to hold majority or 100% company shareholdings. The unlimited taking out of
loans from shareholders or from external third parties as well as the issuing of
securities are also permitted.
3.2. Prohibited Activity
A SPF in Luxembourg is prohibited from carrying on any type of commercial
activity including the provision of management activity or financial services to
third parties or shareholders. Furthermore, the guaranteeing of loans is not per-
mitted even where a SPF has an interest in the respective company. The excep-
tion thereto is where the guaranteeing involves a gratuitous deposit or surety.
A Private Asset Management Company in Luxembourg is likewise not permit-
ted to hold patents or rights, to directly possess real estate, to receive more
than 5% of the complete dividend income of the shareholders which is liable to
taxation of less than 11% as well as the stock market flotation of SPF shares or
their public offering. Notwithstanding this, a SPF can have a financial interest in
structures carrying on the prohibited activities listed.
39http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Private Asset Management Company (SPF)
4. Supervision
A Private Asset Management Company (SPF) in Luxembourg is subject to the
supervision of Luxembourg‘s Indirect Tax Administration (Administration de
l’Enregistrement et des Domaines, AED) and to no further supervision.
III. Tax Advantages of a Private Asset Management Company (SPF)
1. Taxation
In Luxembourg, a SPF is liable to the so-called „subscription tax“ annually at a
rate of 0.25% on its paid-up share capital, the share premium plus on a pro-
portion of its debts exceeding 8 times the paid-up share capital and the share
premium.
2. Tax Exemptions
The income and gains of a Private Asset Management Company (SPF) in Luxem-
bourg are exempt from corporation tax, municipal business tax as well as from
the net wealth tax. Furthermore, gains from the transfer or sale of shares in a
SPF in Luxembourg by a non-resident shareholder as well as a SPF‘s liquida-
tion proceeds are exempt from taxation. The afore-mentioned tax exemptions
consequently mean that a SPF is not permitted to benefit from Luxembourg‘s
multiple double taxation agreements (DTA‘s).
Moreover, the distributions of a SPF in Luxembourg in the form of dividends to
non-resident investors as well as interest are exempt from withholding tax.
In the absence of commercial transactions, a SPF in Luxembourg is not liable to
value-added tax (VAT) and is consequently not required to register for value-
added tax (VAT).
40http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Securitisation Vehicle (SPV)
Formation of a Securitisation Vehicle (SPV) in Luxembourg
I. Securitisation: Concept
Luxembourg‘s Securitisation Law of March 22nd, 2004, defines the concept of
securitisation as follows: a business transaction in which a Securitisation Struc-
ture or Securitisation Vehicle (Special Purpose Vehicle, SPV) acquires or assumes
direct or indirect risks from receivables, from other assets, assumed from third
parties or from all or some obligations inherent in the business activities of third
parties. The securitisation is wholly performed by such a Securitisation Vehicle
(SPV) or a SPV is involved in such a transaction through the complete or partial
assumption of the securitised risks or through the issuing of securities. A Secu-
ritisation Vehicle (SPV) finances itself from the issuing of securities whose value
or the proceeds from which are dependant upon the assumed risks. A distinc-
tion requires to be made regarding Securitisation Vehicles (SPV) in Luxembourg
between non-regulated Securitisation Companies and Securitisation Funds.
II. Legal Structure of a Securitisation Vehicle (SPV) in Luxembourg
1. Formation
1.1. Securitisation Company
A Securitisation Company in Luxembourg can only be formed as a corporation
and subsequently as a Public Limited Company (PLC., Corp./SA); a Limited Lia-
bility Company (LLC., Ltd./SARL); a Partnership Limited by Shares (SCA) or as
a Co-operative in the form of a Public Limited Company (SCOSA). In practice
in Luxembourg, the Public Limited Company (PLC., Corp./SA) is the preferred
form, particularly if issued securities are to be publicly sold. Such activity is not
possible with a Limited Liability Company (LLC., Ltd./SARL).
41http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Securitisation Vehicle (SPV)
A Securitisation Company in Luxembourg is formed through the recording of its
articles of association by a notary. Its articles of association will subsequently
be published in the Official Bulletin (Mémorial C) and lodged with Luxembourg‘s
Trade and Companies Register. The minimum capital of a Securitisation Company
is dependent upon the legal form chosen.
1.2. Securitisation Funds
In contrast to a Securitisation Company, a Securitisation Fund in Luxembourg
does not have legal personality and is managed by a Management Company re-
sident in Luxembourg which must be a Trading Company. A Securitisation Fund
in Luxembourg is formed in contractual form as jointly owned assets or as trust
assets. However, the Securitisation Fund‘s assets must be separated from those
of the Management Company.
No minimum capital is prescribed for a Securitisation Fund in Luxembourg. The
managing Management Company must satisfy the minimum capital require-
ment prescribed for its legal form.
1.3. Separate Compartments
The assets of a Securitisation Vehicle (SPV) in Luxembourg may be separated
into a single or several compartments if so permitted by the articles of associ-
ation of a Securitisation Company in Luxembourg or the contractual provisions
of a Securitisation Fund.
2. Securitisation Structure
The permitted Securitisation Structures are the „True Sale“ transaction and the
„Synthetic“ transaction. In a „True Sale“ transaction, the securitisation takes
place through the transfer of the legal ownership of the assets. In a „Synthetic“
transaction, the securitisation takes place through the transfer of the credit risks
of the assets.
3. Asset Classes (Securitisation Objects)
There exist no restrictions on which assets may be securitised. Securitisation
transactions may consequently pertain to moveable and immoveable assets
including but not limited to, for example, diamonds; intellectual property; recei-
42http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Securitisation Vehicle (SPV)
vables as well as all activities having a real value or which are expected to gene-
rate proceeds in the future. The securitised assets will finally be represented by
registered or bearer shares including, for example, shares, certificates and bonds.
4. Supervision
If a Securitisation Vehicle (SPV) in Luxembourg issues securities to the public,
it requires the consent of and is subject to the supervision of Luxembourg‘s
Financial Market Authority (CSSF). Moreover, a Securitisation Vehicle (SPV) in
Luxembourg must entrust its current assets, including its securities, to a bank
in Luxembourg on a fiduciary basis.
III. Tax Structure of a Securitisation Vehicle (SPV) in Luxembourg
1. Securitisation Company
1.1. Corporate Taxation
All Securitisation Companies in Luxembourg are subject to corporate taxation at
a rate of 29.22%. This said rate consists of the following components: corporate
income tax at a rate of 21% on income exceeding 15,000 EUR (or a rate of 20%
for income not exceeding 15,000 EUR); the Solidarity Surtax at a rate of 7%
as well as the Municipal Business tax at a rate of 6.75%. Therein, the rate of
corporation tax may be reduced through the obligations arising from the inves-
tors‘ remuneration such as interest or dividends. All Securitisation Companies
resident in Luxembourg which do not require a trade licence and whose assets,
securities and bank balance together exceed 90% of its balance sheet total are
required to pay only the minimum corporate taxation of 3,210 EUR (3,000 EUR
plus the 7% Solidarity Surtax). Due to a Securitisation Company in Luxem-
bourg having unlimited tax liability, it can benefit from Luxembourg‘s network
of double taxation agreements.
1.2. Tax Exemptions
A Securitisation Company in Luxembourg is neither liable to the net wealth tax
nor to withholding tax on distributions to its investors.
43http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Securitisation Vehicle (SPV)
2. Securitisation Funds
Due to a Securitisation Fund in Luxembourg lacking its own legal personality, it is
the shareholders and their income which is liable to tax and not the Fund itself.
A Securitisation Fund in Luxembourg is neither liable to income tax nor to the
so-called „subscription tax“ („Tax d’ Abonnement“). As also applies in the case of
a Securitisation Company in Luxembourg, a Securitisation Fund in Luxembourg
is not liable to withholding tax on distributions to its investors.
44http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Company for Intellectual Property Rights (IP-Box)
Formation of a Company for Intellectual Property Rights (IP-Box) in Luxembourg
I. Luxembourg‘s Tax Regime (IP-Box)
The so-called IP-Box (Intellectual Property Box) is a special tax regime in which
income from intellectual property rights is subject to preferential taxation. In
Luxembourg, such a tax regime takes the form of tax relief for income from
intellectual property rights. In Luxembourg, net income and capital gains from
the use, licensing and sale of intellectual property rights are accordingly only
subject to corporate taxation at a rate of 20%. This results in 80% of the said
income being exempt from tax. The effective tax burden of the said income
subject to preferential taxation is therefore 5.84%.
The following criteria must be satisfied for Luxembourg‘s tax relief to apply:
Firstly, the intellectual property rights must have been acquired or deve-
loped after December 31st, 2007. Secondly, the intellectual property rights and
the development costs already spent must have achieved a favourable trade
balance. Furthermore, proof is required when intellectual property rights are
acquired that they were acquired for reasons unrelated to taxation. The transfer
of intellectual property rights between parent and subsidiary companies with a
shareholding exceeding 10% and by subsidiary companies with common share-
holders is not permitted.
II. Intellectual Property Rights (IP) in Luxembourg
In accordance with Luxembourg‘s tax relief, the following constitute intellec-
tual property rights (IP): patents; copyright; software; trademarks; industrial
designs and utility models; models; domain names; brands for services and
goods such as production and marketing know-how.
45http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Company for Intellectual Property Rights (IP-Box)
III. IP-Companies in Luxembourg: Tax Optimisation Instrument
The value of a Company for Intellectual Property Rights (IP) can increase through
having a tax efficient structure. Foreign IP-Companies are therefore used and
their intellectual property rights transferred to be managed and exploited. The
resulting gains are subsequently subject to preferential taxation at the resi-
dence of the company to which the said rights are transferred. By so doing, it
can be ensured that income from the use and exploitation of one‘s own or third-
party intellectual property rights is taxed efficiently.
Accordingly, if intellectual property rights are transferred to an IP-Company
formed in Luxembourg, gains made from the intellectual property rights can be
preferentially taxed in accordance with Luxembourg‘s tax relief. To do so, it is
required that the IP-Company has a business address in Luxembourg and that
at least one of its directors be resident in Luxembourg.
In respect of the use of such IP-Companies in practice in Luxembourg, the struc-
ture of the IP-SOPARFI-Holding Company, which belongs to a group of compa-
nies, is chosen. The IP-SOPARFI-Holding Company is within the scope of appli-
cation of the parent subsidiary Directive and which, among other advantages,
can profit from dividend distributions being tax-free. An IP-SOPARFI-Holding
Company in Luxembourg is formed in the legal form of a corporation and thus as
a Public Limited Company (PLC., Corp./SA); a Limited Liability Company (LLC.,
Ltd./SARL); a Partnership Limited by Shares or as a Cooperative in the form of
a Public Limited Company (SCOSA). The particular formation requirements will
be determined by the legal form the said company takes.
IV. Further Tax Advantages in Luxembourg
1. Tax Exemptions
In Luxembourg, intellectual property rights are not subject to the net wealth
tax. Similarly, gains made from liquidation, royalties payments or interest pay-
ments are exempt from taxation.
46http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Company for Intellectual Property Rights (IP-Box)
2. Further Advantages
Luxembourg‘s tax assessment framework in the form of the so-called “tax
rulings” is flexibly administered. Questions on the scope of tax liability and
undertakings relating to the taxation can be sought from Luxembourg‘s tax
authority prior to the tax being due. In principle, these can be relied upon by
both sides. In Luxembourg, such tax ruling procedures can be completed within
weeks.
Luxembourg is a signatory to several double taxation agreements (DTA‘s) which
prevent the double taxation of Trading and Service Companies.
47http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Formation of a SICAV/SICAF Fund
Formation of a SICAV/SICAF Fund in Luxembourg
I. Legal Structure of a SICAV/SICAF Investment Fund in Luxembourg
1. Concept
The SICAV and SICAF are investment fund structures in Luxembourg which may
be formed as UCITS (Collective Investment of Transferable Securities) Funds or
as Specialised Investment Funds (SIF). Their purpose is the investment of the
share capital in securities or in other liquid financial investments in accordance
with the principle of diversification to allow the shareholders to receive the ear-
nings generated from the management of their assets. The SICAV and SICAF In-
vestment Funds are only permitted to manage the assets in their own portfolios.
A SICAV (Société d’Investissement à Capital Variable) in Luxembourg is an in-
vestment fund in the form of an Investment Company whose share capital is
variable and the value of which at any time matches the value of the net assets
of all the sub-funds, constituted as shares without a statement of their nominal
value. In contrast thereto, a SICAF Investment Fund (Société d’Investissement
à Capital Fixe) in Luxembourg exists in the form of an Investment Company
whose share capital is fixed.
Due to both of the afore-mentioned Investment Funds not having their own
legal personality, they are either self-managed or externally managed Invest-
ment Companies.
2. Investment Policy
Due to it being possible to mix both both the SICAV and SICAF Investment
Funds with other investment assets, they may be formed as, among others,
Security-; Real Estate-; Money market- as well as Holding-Funds.
48http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Formation of a SICAV/SICAF Fund
3. Investors
If a SICAV and SICAF in Luxembourg are formed as UCITS funds, no restrictions
apply as to who may be an investor. Only in respect of Specialised Investment
Funds (SIF) is a „qualified investor“ required.
4. Formation
A SICAV in Luxembourg is formed as a Public Limited Company (PLC., Corp./
SA), whereas a SICAF can be formed as any type of corporation in Luxembourg
(e.g. Public Limited Company (PLC., Corp./SA); Limited Liability Company (LLC.,
Ltd./SARL); Partnership Limited by Shares (SCA)). A SICAV and SICAF in Lux-
embourg can be formed as umbrella funds with several sub-funds, each of which
being independent of the others.
The registered office and main place of control and management of a SICAV and
SICAF under the articles of association must be located in Luxembourg.
Furthermore, the assets of a SICAV and SICAF must be transferred to a cus-
todian (depositary bank) to ensure that the income or profits are used in ac-
cordance with its articles of association. The custodian is liable to both Invest-
ment Funds in Luxembourg as well as the shareholders only for loss arising from
the culpable non-performance or defective performance of its duties.
The subscribed capital of a SICAV/SICAF Investment Fund, amounting to at
least 1.25 million EUR, requires to be reached within a period of 6 months fol-
lowing the obtaining of consent from Luxembourg‘s Financial Market Authority
(CSSF) if it is an UCITS Fund and within a period of 12 months in the case of a
Specialised Investment Fund (SIF) respectively. The minimum share capital is
dependent upon which legal form is chosen.
5. Investment and Distribution Policy
A SICAV and SICAF in Luxembourg can issue, and cancel, at any time new
shares not exceeding its net asset value and may regulate the distribution of
dividends or other repayments to its investors by way of formal conditions in its
article of associations. Both Investment Funds in Luxembourg are not subject to
a duty to create legal reserves.
49http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Formation of a SICAV/SICAF Fund
6. Supervision
A SICAV and SICAF in Luxembourg are subject to the permanent supervision
of Luxembourg‘s Financial Market Authority (CSSF). Both Investment Funds,
as well as the investment managers and advisers of the said funds, require a
licence prior to commencing business.
In addition, a SICAV and SICAF must produce annual accounts and half-yearly
accounts which must be audited by an independent auditor. The accounts are
subsequently required to be published no later than 4 months (and no later than
6 months in the case of a Specialised Investment Fund (SIF) in Luxembourg)
after the conclusion of the year. Moreover, Investment Funds in Luxembourg are
required to prepare, with the exception of those Investment Funds in the form
of a closed UCITS Fund, a sale prospectus which must contain, among others,
the founding documents in order to provide investors with the opportunity of
carrying out an informed evaluation of the investment and the associated risks.
II. Tax Structure of a SICAV/SICAF Investment Fund in Luxembourg
1. Corporate Taxation
The SICAV and SICAF Investment Funds in Luxembourg are neither liable to income
tax nor corporate taxation. They are liable to the so-called „subscription tax“ at an
annual rate of 0.05% on their net worth or at a rate of 0.01% if the Investment
Funds are formed as a Specialised Investment Fund (SIF) in Luxembourg.
2. Tax Exemptions
A SICAV and SICAF in Luxembourg are exempt from the net wealth tax and with-
holding tax on the distribution of dividends to non-resident investors.
Moreover, Fund management services provided by a Management Company in
Luxembourg are not subject to value-added tax (VAT). Notwithstanding this,
other services may be still subject to value-added tax (VAT) in Luxembourg at
a rate of 15%.
50http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: SICAR Investment Company
Formation of a SICAR Investment Company in Luxembourg
I. Legal Structure of a SICAR Investment Company in Luxembourg
1. Concept
A SICAR Investment Company (Société d’investissement en capital à risqué) in
Luxembourg is an instrument for venture capital investments which is regulated
by the SICAR law and which has legal personality separate from its investors.
A SICAR Investment Company in Luxembourg is designed for the investment
of its resources in high-risk assets in order to distribute the result generated
therefrom to qualified investors. The said result offsets the risk borne.
2. Investment Policy
The Luxembourg investment vehicle SICAR is permitted to invest in venture
capital (private equity) only. This means that funding is directly or indirectly
contributed to a company for assistance during its early stage, for its develop-
ment or its flotation on the stock market. Investments in real estate are only
permitted under certain conditions.
A SICAR Investment Company in Luxembourg is not under a duty to comply
with the principle of diversification in choosing its investments. It is therefore
possible for it to invest in one or several companies active in a particularly
crowded segment of the market.
3. Investors
The Luxembourg SICAR investment vehicle is exclusively reserved for “quali-
fied investors”, namely professional investors as well as institutional investors.
Moreover, natural persons, who invest at least 125,000 EUR, are required to
submit written proof of their well-informed investment status (e.g. in the form
of a letter from their bank).
51http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: SICAR Investment Company
4. Formation
A SICAR in Luxembourg is formed either as a corporation or as a partnership
(Public Limited Company (PLC., Corp./SA); Limited Liability Company (LLC.,
Ltd./SARL); Partnership Limited by Shares (SCA); Co-operative in the legal form
of a Public Limited Company (SCOSA) and Limited Partnership (SCS). It is not
permitted to be organised in the form of a contractual Investment Fund (fonds
commun de placement, FCP). A SICAR in Luxembourg may however take the
structure of a Holding Fund constituted by several sub-funds, each of which
being independent of the others.
The registered office and main place of central management and control of a
SICAR, under its articles of association, must be located in Luxembourg. More-
over, the assets of a SICAR are to be transferred to an independent custodian
(financial institute) resident in Luxembourg. This ensures that the subscription
price of shares in the company will be received on time, that transactions invol-
ving equivalent assets are transferred or paid and that the proceeds are used in
accordance with its founding documents.
Furthermore, the company management and custodian of a SICAR in Luxem-
bourg require to be sufficiently qualified and to provide proof of their correspon-
ding experience in the area of venture capital investments. Notwithstanding this,
they must not necessarily have a “Sponsor/Promoter”.
Beginning from the date when a SICAR in Luxembourg was approved by
Luxembourg‘s Financial Market Authority (CSSF), a SICAR must reach its
subscribed share capital of at least 1 million EUR within 12 months. However,
the minimum share capital is dependent on the particular business form chosen.
If a SICAR in Luxembourg is formed as a corporation, the shares issued required
to be fully subscribed and at least 5% of every share requires to be paid up
through a cash or non-cash contribution.
5. Issuance and Distributions Policy
The provisions contained in the articles of association are wholly authoritative
with regard to the issuance of new shares due to the SICAR law containing no
specific provisions thereon. This is also the case for the regulation of the formal
52http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: SICAR Investment Company
criteria for the distribution of dividends or other repayments to the investors.
Furthermore, a SICAR in Luxembourg is not required to create reserves.
6. Supervision
A SICAR in Luxembourg is subject to the permanent supervision of Luxembourg‘s
Financial Market Authority (CSSF). A SICAR requires a licence prior to commen-
cing business. A SICAR may be quoted on Luxembourg‘s stock market directly
after obtaining approval from the CSSF. Moreover, its annual accounts must
be audited by an independent auditor and must be published no later than
6 months after the close of the year.
Moreover, a SICAR in Luxembourg is required to prepare a sale prospectus
which must contain, among others, the founding documents in order to provide
investors with the opportunity of carrying out an informed evaluation of the
investment and the associated risks.
II. Tax Structure of a SICAR Investment Company in Luxembourg
1. Corporate Taxation
In principle, a SICAR corporation in Luxembourg is subject to corporate taxation
at a rate of 29.22%. This said rate consists of the following components: cor-
porate income tax at a rate of 21% on income exceeding 15,000 EUR (or a rate
of 20% for income not exceeding 15,000 EUR); the solidarity surtax at a rate of
7% as well as the municipal business tax at a rate of 6.75%. In contrast thereto,
income from securities as well as from the sale, contribution or liquidation of its
securities is exempt from income tax.
If a SICAR in Luxembourg is formed as a Limited Partnership, it is the persons
carrying on business as partners and not the partnership itself that is liable to
tax. The SICAR consequently remains exempt from corporate income and the
municipal business tax. In contrast thereto, its investors remain liable to tax in
the country in which they are resident.
53http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: SICAR Investment Company
2. Tax Exemptions
A SICAR in Luxembourg is neither liable to the net wealth tax nor to withholding
tax on the distribution of dividends to investors as well as investment income
from the disposal of such investments. It is likewise exempt from the so-called
“subscription tax” (Tax d’Abonnement). In addition, withholding tax does not
require to be paid by non-resident investors on interest paid by a SICAR as
well as on liquidation proceeds. Moreover, management services provided to a
SICAR by a Management Company in Luxembourg remain exempt from value-
added tax (VAT).
Due to a SICAR in Luxembourg in the form of a corporation being fully liable to
tax, it is able to benefit from Luxembourg‘s double taxation agreements (DTA‘s).
54http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Specialised Investment Funds (SIF)
Formation of Specialised Investment Funds (SIF) in Luxembourg
I. Legal Structure of a Specialised Investment Fund (SIF) in Luxembourg
1. Concept
A Specialised Investment Fund (SIF) in Luxembourg is a type of investment
fund which is regulated and which is not intended for the general public. In cont-
rast to UCITS Funds (Collective Investment of Transferable Securities) which fall
within the scope of application of the EU Directive and which invest in securities
such as shares and bonds, the Specialised Investment Fund (SIF) offers greater
flexibility.
2. Investment Policy
A Specialised Investment Fund (SIF) in Luxembourg is permitted to deal with all
types of assets including traditional and alternative investment strategies. This
includes, for example, securities or money market Funds; real estate; private
investment capital; infrastructure; private equity and hedge Funds.
A Specialised Investment Fund (SIF) in Luxembourg must comply with the diver-
sification principle when choosing its investments in order to protect the inves-
tors and is subsequently not permitted to invest more than 30% of its assets in
securities of the same type and from the same issuer.
3. Investor
The Luxembourg investment vehicle which is the Specialised Investment Fund
(SIF) is reserved for “qualified investors”, namely professional investors and
institutional investors as well as all those investors investing at least 125,000 EUR.
The latter are required to submit written proof of their well-informed investment
status (e.g. in the form of a letter from the bank).
55http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Specialised Investment Funds (SIF)
4. Formation
A Specialised Investment Fund (SIF) is formed either in contractual form and
consequently as an Investment Fund represented by a Managing Company
(fonds commun de placement, FCP) or in the form of a company, namely as
an Investment Company whose capital is variable (SICAV) or fixed (SICAR). If
a SIF is formed as a company, it may be formed as a Public Limited Company
(PLC., Corp./SA); a Limited Liability Company (LLC., Ltd./SARL); a Partnership
Limited by Shares (SCA) or as Co-operative in the form of a Public Limited
Company (SCOSA). A SIF in Luxembourg may take the structure of a Holding
Fund constituted by several sub-funds, each of which are independent of the
others.
The registered office and main place of central management and control of a
Specialised Investment Fund (SIF) under its articles of association must be
located in Luxembourg. If a Specialised Investment Fund (SIF) is formed as
an Investment Fund FCP in Luxembourg, it will be managed by a Management
Company in Luxembourg. Moreover, the assets of a Specialised Investment Fund
(SIF) are to be transferred to an independent custodian (financial institute) re-
sident in Luxembourg. This ensures that the subscription price of shares in the
company will be received on time, that transactions involving equivalent assets
are transferred or paid and that its proceeds are used in accordance with the
founding documents.
Furthermore, the management of a Specialised Investment Fund (SIF) in Luxem-
bourg or the Management Company (in the case of an Investment Fund FCP)
and the custodian require to be sufficiently qualified and to provide proof of
their corresponding professional experience. Notwithstanding this, a Specialised
Investment Fund (SIF) must not necessarily have a “Sponsor/Promoter”.
Beginning from the date when a Specialised Investment Fund (SIF) in Luxem-
bourg was approved by Luxembourg‘s Financial Market Authority (CSSF), the
net assets of a SIF must amount to at least 1.25 million EUR within 12 months.
Furthermore, a minimum share capital is required for the formation of a Specia-
lised Investment Fund (SIF) and is dependent upon the business form chosen.
56http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Specialised Investment Funds (SIF)
5. Issuance and Distributions Policy
The provisions contained in the articles of association are wholly authoritative
with regard to the issuance of new shares due to the SIF law containing no
specific provisions thereon. This is also the case for the regulation of the formal
criteria for the distribution of dividends or other repayments to the investors.
Furthermore, a Specialised Investment Fund (SIF) in Luxembourg is not requi-
red to create reserves.
Provisions regarding the method of valuation of the assets of a Specialised
Investment Fund (SIF) in Luxembourg should be regulated in the founding
document. This is despite a SIF in Luxembourg having a degree of freedom in
the regulation thereof.
6. Supervision
A Specialised Investment Fund (SIF) is subject to the permanent supervision
of Luxembourg‘s Financial Market Authority (CSSF). A Specialised Investment
Fund (SIF) requires a licence prior to commencing business. Notwithstanding
this, a SIF may commence activity before such time if its application for the
said licence was submitted within 1 month following its formation. A SIF can
be quoted on Luxembourg‘s stock market directly following obtaining the said
licence from Luxembourg‘s CSSF. Moreover, its annual accounts require to be
audited by an independent auditor and must be published no later than 6 months
after the close of the year.
Moreover, a Specialised Investment Fund (SIF) in Luxembourg is required to
prepare a sale prospectus which must contain, among others, the founding
documents in order to provide investors with the opportunity of carrying out an
informed evaluation of the investment and the associated risks.
57http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Specialised Investment Funds (SIF)
II. Tax Structure of a Specialised Investment Fund (SIF) in Luxembourg
1. Corporate Taxation
A Specialised Investment Fund (SIF) is neither subject to income tax nor cor-
porate taxation. A SIF is liable to „subscription tax“ annually at a rate of 0.01%
on its net worth. Notwithstanding this, several investments are not liable to the
said tax.
2. Tax Exemptions
A SIF in Luxembourg is exempt from the net wealth tax as well as from with-
holding tax on the distribution of dividends to non-resident investors. Moreover,
value-added tax (VAT) is not payable by a Management Company in Luxem-
bourg for Fund management services. Notwithstanding this, other services may
remain liable to value-added tax in Luxembourg at a rate of 15%.
58http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Real Estate Company
Formation of a Real Estate Company in Luxembourg
I. Real Estate Company in Luxembourg: Concept
A Real Estate Company in Luxembourg is a business carrying on or the purpose
of which under its articles of association is exclusively or predominantly the
acquisition, management, use of and sale of real estate. A Real Estate Company
in Luxembourg can be formed in the form of a corporation (as a Public Limited
Company (PLC., Corp./SA); Limited Liability Company (LLC., Ltd./SARL); Part-
nership Limited by Shares (SCA) or Co-operative in the form of a Public Limited
Company (SCOSA)). The particular formation requirements will be determined
by the legal form the said company takes.
II. Tax Aspects
1. The Taxation of Income from the Sale of Real Estate
In principle, gains made from the sale of real estate are taxed in accordance
with the situs principle, namely where the real estate is situated.
2. The Taxation of Gains on the Sale of Shares
In principle, gains made on the sale of shares of a Real Estate Company, which
owns the real estate, are taxed in the country in which the seller is resident. If
the Real Estate Company is a Luxembourg corporation, the gains on the sale of
the shares shall be taxed in Luxembourg.
However, some of the new double taxation agreements (DTA‘s) which Luxem-
bourg has agreed with many countries extend the situs principle to cover the
sale of shares to Real Estate Companies whose assets, directly or indirectly,
consist of at least 50% real estate. In such cases, the gains on the sale of the
shares are taxed at the location of the Real Estate Company rather than where
the seller is resident. Consequently, such Real Estate Companies in Luxembourg
59http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: Real Estate Company
are unable to make use of Luxembourg‘s preferential tax regime if the real
estate is located outwith Luxembourg.
3. Two-tier Company Structure
However, the provisions permit exceptions to that effect meaning the exten-
ded situs principle does not apply to parent companies which are resident and
the management of which is located abroad. In respect of a two-tier structure,
gains from the sale of the shares of a Real Estate Company continue to be taxed
where the seller is resident. Accordingly, if real estate owned by a resident Real
Estate Company is to be held by a foreign corporation and shares in the resident
Real Estate Company are to be sold, the tax liability remains with the foreign
corporation. In this regard, the following procedure has developed in practice in
Luxembourg:
Firstly, a Luxembourg corporation is formed in the form of a SOPARFI-Financial
Holding Company. The said Holding Company is particularly attractive due to
its tax status whereby it benefits from the „inter-corporate privilege“ under the
parent subsidiary Directive and is exempt, in accordance with certain requi-
rements, from corporate taxation and withholding tax. The SOPARFI-Financial
Holding Company is formed in the legal form of a Public Limited Company (PLC.,
Corp./SA) in Luxembourg which is preferred herein due to the ability to issue
bearer shares which are easily transferable. The Luxembourg SOPARFI-Financial
Holding Company forms or acquires shares in the capital of an EU Real Estate
Company which are subsequently sold. The resulting gains are subject to taxa-
tion in Luxembourg. Within this framework, dividends and the sale proceeds and
liquidation proceeds resulting from investments remain exempt from tax. The
SOPARFI-Financial Holding Company in Luxembourg will finally be liquidated
and the liquidation proceeds subsequently distributed free from withholding tax.
60http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: E-Commerce Company
Formation of an E-Commerce Company in Luxembourg
I. E-Commerce Luxembourg: Concept
E-Commerce is the electronic trading of goods and services on the internet and
is divided into indirect and direct E-Commerce. In the case of indirect E-Com-
merce, the contract is concluded on the internet whilst the performance of the
contract takes place outwith the internet. With regard to value-added tax (VAT),
this transaction is treated in the same way as a conventional commercial trans-
action. In contrast, in the case of direct E-Commerce transactions, the entire
legal transaction and the subsequent exchange of goods and services take place
on the internet. In light of this special feature, the remainder of this text will
exclusively focus on direct E-Commerce:
E-Commerce includes the following services:
» The provision of websites, web hosting and the maintenance of program-
mes and equipment;
» The provision of software and the updating thereof;
» The provision of texts and information for, but not limited to, e-books and
other electronic publications as well as online advertisements;
» The provision of databases such as those required for search engines;
» The provision of music, films and games used for gambling and lotteries as
well as for programmes and events from the worlds of politics; culture;
sport; science and entertainment;
» The provision of long-distance learning;
» Online auctions, insofar as this is not already dealt with by web hosting
services, through automated databases where the customer is required to
input data and where no or minimal human intervention is necessary;
61http://www.startup-luxembourg.cominfo@startup-luxembourg.com Telephone: 00 352 250 345 27
Company Formation LuxembourgBusiness form: E-Commerce Company
» Internet service packages which include more than mere access to the in-
ternet, instead including -but not limited to- news; the weather forecast;
travel information; gaming forums; web hosting and access to chatlines.
In Luxembourg, E-Commerce Companies are specifically designed for such direct
E-Commerce services. E-Commerce Companies may be formed as corporations
or as partnerships in Luxembourg. The particular formation requirements will be
determined by the legal form the said company takes.
II. Tax Aspects of Direct E-Commerce
In accordance with the European Directive on E-Commerce, direct E-Commerce
services are subject to a special EU value-added tax (VAT) regime. The said
Directive will remain in force until January 1st, 2015:
1. The Taxation of Direct E-Commerce Services
For the purposes of value-added tax (VAT), every supplier of E-Commerce direct
services will be treated as a business person and is accordingly required to pay
value-added tax (VAT) on the services he provides. The place of performance is
decisive therefor and is to be measured against the following criteria:
» The residence of the performing business person
» The status and residence of the purchaser
1.1. Business persons outwith the EU
(1) Services to Customers in the same EU Member State
Where an EU business person provides E-Commerce services to a private person
in the same EU member state or to a commercial customer in the same EU
member state, value-added tax (VAT) requires to be paid by the EU business
person providing the services.
(2) Services to Customers in another EU Member State
Where an EU business person provides E-Commerce Services to a commercial
customer in another EU member state, value-added tax (VAT) requires to be
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Company Formation LuxembourgBusiness form: E-Commerce Company
paid in the member state in which the commercial customer is resident. In
cases such as this, the so-called “reverse charge” procedure, a special regula-
tion which uniformly applies to all EU member states, will operate. Thereafter,
the commercial customer -as the recipient of the services- is to calculate the
value-added tax (VAT) liability in accordance with the tax rates in force in his
country and to pay the tax to the competent tax office. In so doing, the said
commercial customer has the right to deduct input tax for the same amount.
Where an EU business person provides direct E-Commerce services to a private
person in another EU member state, tax requires to be paid in the member
state in which the performing business person is resident. Notwithstanding
this, from January 1st, 2015, where an EU business person has provided direct
E-Commerce services to private persons, value-added tax (VAT) will required to
be paid in the customer‘s member state.
(3) Services to Customers outwith the EU
Where direct E-Commerce services are provided by EU business persons to
customers outwith the EU, no EU value-added tax (VAT) is paid. In such cases,
tax is levied in the jurisdiction of the customer.
1.2. Business Persons Resident outwith the EU
(1) Commercial EU Customers
Where a business person resident outwith the EU provides direct E-Commerce
services to a commercial EU customer, value-added tax (VAT) will be paid on
the said services in the jurisdiction of the customer through the reverse charge
procedure. The non-EU business person is not required to be registered in the
EU for value-added tax (VAT) purposes due to the commercial customer himself
paying the value-added tax (VAT) within the reverse charge procedure.
(2) EU Private Person
Likewise, where a business person resident outwith the EU provides direct
E-Commerce services to a private person in the EU, value-added tax (VAT) will
be paid in the EU. However, in this case the said business person must be re-
gistered in the EU, in a member state of his choice, for value-added tax (VAT)
purposes and must bill such customers at the standard rate of value-added tax
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Company Formation LuxembourgBusiness form: E-Commerce Company
(VAT) in force in the EU member state in which the customers are resident. The
said business person is thereafter required to pay value-added tax (VAT) to the
tax authority in the member state in which he is registered every three months
and to simultaneously provide an electronic statement detailing the transactions
during that period. In accordance with the said statement, the taxes will there-
after be forwarded to the relevant member state of the customers.
2. Taxation of Direct E-Commerce Services in Luxembourg
Luxembourg is an attractive location for direct E-Commerce due to its favou-
rable and, with respect to certain services, reduced rates of value-added tax
(VAT). The provision of goods and services is subject to value-added tax (VAT)
at a rate not exceeding 15% in Luxembourg. In Luxembourg, a reduced rate of
value-added tax (VAT) of 3% applies to the supply of e-books to end-customers.
The said reduced rate is in force until January 1st, 2015.
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Company Formation Luxembourg
Questions on Company Formation in Luxembourg?
START-UP LUXEMBOURG is an independent information platform providing
information on all questions regarding company formation in Luxembourg free
of charge.
Our lawyers and tax experts stand ready to advise you personally and free of
charge and to guide you through the decision-making process and the company
formation process.
START-UP LUXEMBOURG
INTERNATIONAL ADVOKAT TRUST AND MANAGEMENT G.E.I.E.
11 A, Boulevard Joseph II
L- 1840 Luxembourg
The Grand Duchy of Luxembourg
Telephone: 00 352 250 345 27
(Monday – Friday, between 9am and 4pm)
info@startup-luxembourg.com
www.startup-luxembourg.com
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