There are many situations in which an individual could benefit from organising part of his or her patrimony in a structure with a distinct legal personality. These include succession planning, the organisation of management powers within a family business, speculative operations or borrowing.
With the law of 11 May 2007, the Luxembourg government created a vehicle designed for the management of individuals’ private wealth: the société de gestion de patrimoine familial (SPF). It is a simple, flexible wealth management vehicle that conforms with EU regulatory requirements.
An SPF must take the form of a capitalised company. Its share capital will depend on the legal form chosen.
SPF shareholders can be individuals managing their own private wealth or else structures acting on behalf of eligible individuals.
For the purposes of an SPF, the term “family wealth” (“patrimoine familial”) is understood to mean “the wealth of individuals” (“patrimoine privé de personnes physiques”) as no family relationship is required between the different shareholders.
The SPF is a passive investment vehicle. Its objective is strictly limited to the acquisition, holding and sale of financial assets. No commercial activity is possible, nor involvement in the management of a company in which the SPF has a shareholding, even if this is a majority stake.
In order to ensure complete tax neutrality, SPFs are exonerated from corporation income tax, communal business tax and wealth tax. Due to these exemptions, an SPF cannot take advantage of double tax treaties.