The SPF (family wealth management company)

Legal framework and incorporation

The SPF must take the form of a capital company: an S.à r.l., an SA, a partnership limited by shares (SCA) or a cooperative company organised as an SA. Its articles of association must expressly state that it is subject to the SPF Law. The 1915 Law on commercial companies also applies.

For transparency, its corporate name must include the words “société de gestion de patrimoine familial” or “SPF”. It is incorporated by notarial deed in Luxembourg and does not require any specific licence.

Corporate purpose and activities

The corporate purpose of the SPF is strictly limited to the acquisition, holding, management and disposal of financial assets. It is expressly prohibited from engaging in any commercial or industrial activity.

Permitted activities

The SPF may hold or acquire any type of financial instrument: shares, bonds and other securities equivalent to shares, interests in companies or undertakings for collective investment (UCIs), derivative instruments, cash and bank deposits. It may finance itself by issuing bonds. It may also grant advances or guarantees to companies in which it holds a participation, provided they are interest-free and ancillary.

Prohibited activities

• interfering in the management of its subsidiaries;
• granting interest-bearing loans, even to its subsidiaries;
• acquiring real estate directly. Indirect holding remains possible, but since 1 July 2021 the SPF may no longer hold interests in companies (SCI, SNC, etc.) that themselves own real estate;
• offering its securities to the public or listing them on a stock exchange.

Eligible investors

Shareholding is restricted to a limited circle of investors. Only the following may hold its securities:

• natural persons acting in the context of managing their private wealth;
• wealth holding entities acting exclusively in the interest of the private wealth of one or more natural persons (family office, trust, private foundation or similar entity);
• intermediaries acting on behalf of eligible investors.

Shareholders do not need to be related by family ties. Each investor must provide a written declaration confirming their eligibility.

Tax regime

The SPF benefits from a very favourable tax regime: it is exempt from corporate income tax (CIT), municipal business tax (MBT) and net wealth tax (NWT). Given its corporate purpose, it is not subject to VAT either.

It is liable only to an annual subscription tax at a rate of 0.25%, with a minimum of €1,000 per year (since 1 January 2025) and a cap of €125,000 per year.

The tax base is the paid-up share capital plus share premiums, together with the portion of debt exceeding eight times the amount of that capital and those premiums.