As globalization advances, Chinese families and high-net-worth individuals (HNWIs) increasingly seek international opportunities for wealth management and asset diversification. Luxembourg, a small European nation known for its robust financial infrastructure and regulatory framework, has emerged as a leading destination for these individuals. Luxembourg offers an array of wealth management services tailored to the unique needs of Chinese families, including the Société de Patrimoine Familial (SPF), a private wealth management company designed to optimize tax advantages and preserve wealth across generations.
Luxembourg’s Appeal for Chinese HNWIs
Luxembourg’s appeal to Chinese families lies in its stable political environment, sophisticated financial sector, and favorable tax regime. The Grand Duchy has positioned itself as a premier hub for international wealth management by offering specialized financial services and legal structures designed to protect and grow assets. As of late, Luxembourg’s financial center has grown significantly, partly due to the increasing number of Chinese HNWIs looking to safeguard their wealth in a secure and stable jurisdiction.
Société de Patrimoine Familial (SPF): A Key Wealth Management Tool
One of the most attractive vehicles for wealth management in Luxembourg is the Société de Patrimoine Familial (SPF), or Family Wealth Management Company. An SPF is a family private wealth management company specifically designed for individuals wishing to manage and protect their private wealth. It provides a flexible, tax-efficient solution for family members to hold and manage their private assets. The SPF is particularly appealing to Chinese families due to its simplicity, privacy, and ease of administration.
Tax advantages of an SPF
The SPF is characterized by a favorable tax regime. It is exempt from corporate income tax, municipal business tax, and net wealth tax. Instead, it is subject to a subscription tax (taxe d’abonnement) at a rate of 0.25% per annum, capped at EUR 125,000. This tax is levied on the company’s net asset value, making it a highly efficient tool for wealth preservation. The absence of withholding tax on dividends distributed to non-resident shareholders and the lack of capital gains tax on the sale of shares add to the attractiveness of the SPF structure.
Legal types and share capital requirements
Luxembourg offers various legal forms for establishing an SPF, the most common being the Société à Responsabilité Limitée (SARL) and the Société Anonyme (SA). The choice between these forms depends on the needs and preferences of the family.
- Société à Responsabilité Limitée (SARL): This is the most common legal form for an SPF, particularly favored by smaller families or groups of individuals. SARL requires a minimum share capital of EUR 12,000, which must be fully paid up at the time of incorporation. The SARL is characterized by limited liability, meaning that shareholders are only liable up to the amount of their contribution.
- Société Anonyme (SA): For larger families or those seeking more flexibility in share transferability, an SA is a popular choice. The SA (société anonyme) requires a minimum share capital of EUR 30,000, with at least 25% paid up at the time of incorporation. This structure also provides limited liability to shareholders, ensuring that personal assets remain protected.
For Chinese families seeking to protect, grow, and diversify their wealth internationally, Luxembourg offers a compelling range of options through its advanced financial infrastructure. The Société de Patrimoine Familial (SPF) provides a legally secure, tax-efficient means of wealth management, tailored to meet the unique needs of high-net-worth individuals. With its attractive tax advantages, flexible legal structures, and a proven track record of financial excellence, Luxembourg stands out as a premier destination for Chinese families aiming to secure their financial futures. By leveraging the benefits of an SPF, Chinese HNWIs can effectively manage and preserve their wealth, ensuring a legacy for future generations while taking full advantage of Luxembourg’s expertise in global wealth management.
Damalion helps Chinese families and entrepreneurs to benefit from Luxembourg’s expertise in family wealth management. Contact your Damalion expert now.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
