1. Soparfi Vs SPF: purpose
- SOPARFI: Primarily designed for holding and managing participations in other companies. It is widely used by investors looking to invest in commercial activities or manage portfolios with a mix of passive and active investments. Please click our video link about Luxembourg SOPARFI.
- SPF: Specifically for private individuals or families managing their private wealth, it cannot engage in commercial activities. It’s strictly designed for holding passive investments like stocks, bonds, and other financial assets. Please click our video link about Luxembourg SPF.
2. Soparfi Vs SPF: eligible Investors
- SOPARFI: Open to all types of investors, whether individuals, families, or legal entities (e.g., other companies).
- SPF: Restricted to individuals, family estates, and private wealth management entities. It’s not available to institutional or commercial investors.
3. Taxation
- SOPARFI:
- Subject to corporate income tax, municipal business tax, and net wealth tax.
- Exemptions: Dividend income, capital gains, and liquidation proceeds from qualifying shareholdings may benefit from the participation exemption regime.
- VAT registration is required if SOPARFI conducts any taxable activities.
- Access to Double tax treaties.
- SPF:
- Exempt from income taxes, wealth taxes, and municipal taxes, but subject to an annual subscription tax (0.25% on the value of its financial assets).
- No VAT registration required, as it cannot engage in taxable business activities.
- No access to Double tax treaties.
4. Soparfi Vs SPF: permitted activities
- SOPARFI: Can hold participations in other companies and conduct commercial activities (directly or indirectly).
- SPF: Strictly limited to managing private wealth, investing in financial assets (e.g., stocks, bonds), and cannot engage in commercial activities or hold direct participations in companies conducting a commercial business.
5. Regulation and Reporting
- SOPARFI: Not subject to specific financial regulation, but it must comply with general corporate regulations in Luxembourg, including filing annual financial statements.
- SPF: Exempt from prudential supervision but must still comply with basic legal requirements like filing annual accounts. SPFs are closely monitored to ensure they do not engage in commercial or professional activities.
6. Soparfi Vs SPF: key takeaways
- SOPARFI: Suitable for investors who want flexibility in managing both active and passive investments and possibly engaging in commercial activities.
- SPF: Ideal for passive investors managing private, non-commercial wealth (e.g., a family office).
Soparfi Vs SPF: are you ready to start?
If you’re a passive investor looking to manage private financial assets (like stocks and bonds) without engaging in any commercial activities, the SPF is likely the best fit due to its tax benefits and simplicity.
However, if you want the flexibility to invest in or hold participations in commercial companies or anticipate broader investment activities, the SOPARFI would be a more suitable choice, even though it’s subject to more tax obligations.
Damalion supports entrepreneurs, investment groups and families who register their Luxembourg holding company. We provide local resident directors. Please 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.
