Wealth
Passing on your wealth in Luxembourg: SPF, gifts and anticipation
Reviewed and approved by a lawyer admitted to the Luxembourg Bar.
Quick answer
The SPF is a Luxembourg company reserved for individuals that holds passive financial wealth (securities, cash). It is exempt from IRC but subject to subscription tax, may carry on no commercial activity or hold real estate directly, and has no access to tax treaties.
The SPF (family wealth management company), created by the 2007 law, is a vehicle for the passive holding of financial assets reserved for individuals and for wealth-holding entities acting for them. It gathers securities, shares and cash into a single structure to organise and pass on private wealth. It is exempt from corporate income tax in return for a subscription tax and significant restrictions: no commercial activity, no real estate held directly, no access to tax treaties. It should not be confused with the SOPARFI.
In short
- The SPF is reserved for individuals and for wealth-holding entities acting for them: never an operating company.
- It holds passive financial wealth: shares, bonds, fund units, financial instruments, cash.
- It may carry on no commercial activity and may not hold real estate directly.
- It is exempt from IRC but liable for an annual subscription tax.
- It has no access to tax treaties or to EU directives, unlike the SOPARFI.
- It is governed by the 2007 law and supervised by the Registration Duties Administration.
| Criterion | SPF | SOPARFI |
|---|---|---|
| Eligible holders | Individuals and wealth-holding entities | Individuals and legal entities |
| Nature of the activity | Passive holding of financial assets | Active holding of participations |
| Taxation (IRC + ICC) | Exempt from IRC | Fully taxable |
| Specific tax | Annual subscription tax | No subscription tax |
| Real estate held directly | Prohibited | Possible (often through subsidiaries) |
| Intra-group services and financing | Prohibited | Permitted |
| Tax treaties | No access | Access (taxable company) |
Anticipate rather than endure the transfer
Passing on your wealth in Luxembourg on good terms rests first of all on anticipation. A transfer prepared several years in advance makes it possible to organise the holding of assets, to allocate rights progressively among the heirs and to avoid conflicts and deadlocks at the time of succession.
This preparation combines several tools: structuring the holding through a wealth management company, framed gifts, agreements and governance clauses. The aim is to pass on control and value progressively and in a managed way, according to your family situation and the nature of your assets.
The role of the SPF
The family wealth management company, or SPF, is a Luxembourg vehicle dedicated to holding and managing private financial wealth: securities, financial instruments and cash. It cannot carry on a commercial activity or directly hold operating real estate.
Used with a transfer in mind, the SPF makes it possible to gather family financial assets into a single structure, to organise their holding among several family members and to prepare the handover. Its scope is regulated: its eligibility and its limits must be checked case by case by a lawyer.
Gifts, governance and coordination
A gift, whether of full ownership or with a reserved usufruct, makes it possible to transfer in stages while retaining prerogatives. Combined with a shareholders' agreement or with provisions in the articles, it organises future governance and protects the unity of the wealth.
The international dimension is common: the residence of the heirs, the location of the assets and the applicable treaties must be taken into account. The family office at Cerno Law Firm coordinates these aspects and, where the tax treatment of the transfer comes into play, relies on its tax team. A lawyer validates the whole arrangement.
Depending on your situation, the right balance is built over time. The firm's digital tools serve only to frame the initial meeting, not to provide personalised wealth advice.
| Category | Permitted | Prohibited |
|---|---|---|
| Securities and financial instruments | Shares, bonds, fund units, options | None |
| Cash | Bank deposits, liquid funds | None |
| Real estate | None | Direct holding of buildings |
| Commercial activity | None | Production, sales, paid services |
| Management of participations | Passive holding of shares | Active involvement in management |
Depending on your profile
For high net worth individuals
The SPF makes it possible to house a portfolio of securities and cash in a single structure, exempt from IRC in return for a subscription tax. It is reserved for individuals and remains confined to passive holding: no commercial activity and no real estate held directly.
For families
The SPF centralises the family's financial assets and makes it easier to pass them on in stages, by gradually allocating shares among the heirs. A gift with a reserved usufruct and governance clauses preserve the unity of the wealth. The transfer should be anticipated several years in advance.
For expatriates
The SPF is analysed in light of the heirs' residence, the location of the assets and the succession rules that apply. Its exclusion from tax treaties may give rise to withholding taxes on foreign income. Coordination between jurisdictions is decisive.
For passive investors
The SPF offers a stable, tax-neutral framework for holding financial assets without commercial activity. In return, it has no access to tax treaties and prohibits any involvement in the management of participations. The SOPARFI may be preferable for an active holding.
Official sources