Preserving and growing wealth across generations is a primary concern for high-net-worth individuals and families. Luxembourg offers a robust and efficient solution through the Family Wealth Management Company (Société de gestion de patrimoine familial or SPF). This corporate vehicle is specifically designed to manage private wealth and optimize asset preservation. Many international fmailies understand the key benefits of the Luxembourg SPF and how it can serve as a strategic tool for safeguarding liquid assets.
1. Understanding the Luxembourg SPF
The Luxembourg SPF is a dedicated investment vehicle that provides a flexible and tax-efficient structure for managing private wealth. It was introduced by the Luxembourg law of 11 May 2007 and is available exclusively for individuals or wealth-holding structures acting on behalf of private investors. It is restricted to holding and managing financial assets without engaging in commercial activities.
2. Asset Preservation through Tax Efficiency
One of the primary advantages of the Luxembourg family holding SPF is its favorable tax regime:
- No corporate income tax – The SPF is exempt from corporate income tax, municipal business tax, and net wealth tax.
- Annual subscription tax – Instead of income tax, the SPF pays an annual subscription tax of 0.25% on its net assets, capped at €125,000.
- Dividend and interest income benefits – While the SPF cannot benefit from Luxembourg’s double tax treaties, dividends, and capital gains earned from eligible financial assets are generally tax-exempt.
These tax benefits make the SPF an efficient vehicle for preserving and growing liquid assets over time.
3. Confidentiality and Asset Protection
The Luxembourg SPF offers a high degree of confidentiality, which is crucial for asset preservation. Moreover, the SPF can be structured to provide robust asset protection mechanisms, shielding assets from potential risks such as creditor claims or political instability.
4. Flexibility in Investment Management
The SPF allows for broad investment options, including:
- Stocks, bonds, and securities
- Investment funds and structured products
- Bank deposits and cash equivalents
While the SPF is not permitted to conduct commercial activities, it can actively manage and diversify liquid assets to optimize returns while maintaining risk control.
5. Succession Planning and Wealth Transfer
The Luxembourg SPF is an excellent tool for intergenerational wealth transfer. It can be structured to facilitate smooth inheritance planning while minimizing estate taxes. Through mechanisms such as trusts, foundations, or family agreements, assets can be transferred efficiently to heirs, ensuring long-term preservation of family wealth.
The Luxembourg Family Wealth Management Company (SPF) is a powerful vehicle for optimizing liquid asset preservation. With its tax-efficient structure, confidentiality, investment flexibility, and succession planning benefits, it is an ideal solution for high-net-worth individuals seeking to protect and grow their wealth. By leveraging the SPF, families can ensure that their financial legacy remains secure for generations to come.
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.
