Family office
Setting up a family office in Luxembourg: structuring and governance
Quick answer
A family office in Luxembourg coordinates the management of family wealth: it organises ownership through vehicles such as the SOPARFI or the SPF, sets the governance through a family charter and prepares the succession. The family office activity is regulated by the 2012 law.
The family office is the organisation that coordinates the management of family wealth over the long term. In Luxembourg, a distinction is made between the single family office, dedicated to one family, and the multi-family office, shared among several. The family office activity is regulated by the law of 21 December 2012, which reserves certain services for regulated professionals. Ownership is organised through vehicles such as the SOPARFI or the SPF, while family governance is formalised in a charter. For investors, it is a tool for structuring, succession and confidentiality, always validated by a lawyer.
In short
- The family office coordinates the management of family wealth: ownership, governance, succession and reporting.
- The single family office serves one family; the multi-family office pools costs among several.
- The family office activity is regulated by the law of 21 December 2012 in Luxembourg.
- Ownership is organised through vehicles such as the SOPARFI or the SPF, depending on the nature of the assets.
- Family governance is formalised in a charter and, where relevant, a shareholders' agreement.
- Certain services are reserved for regulated professionals: the scope must be framed by a lawyer.
| Criterion | Single family office | Multi-family office |
|---|---|---|
| Families served | One family only | Several families |
| Cost structure | Dedicated, higher | Pooled, shared |
| Level of control | Maximum | Shared between families |
| Confidentiality | Very strong | Strong, within a shared framework |
| Accessibility | Large estates | More varied estates |
| Service providers | Dedicated to the family | Pooled |
What is a family office?
Quick answer. A family office is the organisation that coordinates the management of family wealth over time. It is not limited to investment: it covers the holding of assets, the governance of the family, succession between generations and the regular reporting that gives a consolidated view of the wealth.
In practice, the family office acts as a coordination point between the various holding vehicles, the advisers (lawyers, tax advisers, bankers, asset managers) and the members of the family. It ensures overall consistency where each asset, taken in isolation, follows its own logic. It is an organisational structure, not a financial product.
In Luxembourg, the family office benefits from a stable environment, a proven legal framework and an ecosystem of specialised service providers. For a family or a group of investors, it is a suitable framework for structuring international wealth, provided its scope is precisely defined with a lawyer.
Single family office or multi-family office?
The first structuring distinction is between the single family office and the multi-family office. The single family office is a structure dedicated to one family: it employs or engages its own teams and works exclusively on that family's wealth. It offers maximum control and strong confidentiality, at the price of a heavier cost structure.
The multi-family office, by contrast, pools services among several families. It makes it possible to share the costs of governance, reporting and expertise, which makes it accessible to more modest estates. In return, the family does not have a fully dedicated structure and shares its service providers.
The choice between these two models depends on the size of the wealth, the level of control sought, the complexity of the assets and the succession objectives. There is no universal answer: it is a trade-off that is built case by case, according to the family's actual situation.
The Luxembourg framework: the 2012 law
The family office activity is regulated in Luxembourg by the law of 21 December 2012 on the family office activity. This text defines what the family office activity is and specifies who may carry it out on a professional basis. It aims to protect families by reserving certain services for regulated professionals.
The law distinguishes service providers that fall within a regulated profession (lawyers, notaries, chartered accountants, approved statutory auditors, financial sector professionals) from the others. Members of these professions may carry on the activity within their own framework; any other person must obtain an authorisation from the Minister of Finance, issued after review by the CSSF, which then supervises them as a professional of the financial sector (PSF).
In practice, this framework means that a family office cannot be improvised: the scope of the services determines the applicable status and the corresponding obligations. The legal characterisation of the activity is a preliminary step, which shapes the entire structuring. It requires the analysis of a lawyer registered with the Bar.
Holding vehicles: SOPARFI and SPF
A family office does not hold the assets directly: it organises them within holding vehicles suited to their nature. The two most common structures in Luxembourg are the SOPARFI (financial participation company) and the SPF (family wealth management company), whose logic differs radically and which are chosen according to the assets concerned.
The SOPARFI is a fully taxable holding company, open to legal entities, which can hold active participations, finance its subsidiaries and benefit from tax treaties and the parent-subsidiary regime. The SPF, by contrast, is reserved for natural persons and private wealth management entities acting on their behalf, is exempt from corporate income tax (IRC), but is confined to the passive holding of financial assets, without access to tax treaties.
In a wealth structure, these vehicles are not mutually exclusive: they are combined. The SPF can house a passive financial portfolio, the SOPARFI can hold active participations, and other structures can hold the real estate. Allocating the assets between these building blocks is structuring work that the family office coordinates, under the supervision of a lawyer.
Family governance and the charter
The added value of a family office lies as much in governance as in legal structuring. Without clear rules, wealth shared between several members and generations becomes a source of tension and deadlock. Family governance aims to prevent these situations by setting common principles.
The central tool is the family charter. This document, which is not binding in itself but guides the whole structure, sets out the family's values, vision and operating rules: decision-making arrangements, role of the various bodies, distribution policy, conditions for assets entering and leaving. It is supplemented by legally binding instruments such as the articles of association and the shareholders' agreement.
The charter is built through dialogue between the members of the family, often over several months. It is not set in stone: it evolves with the family and its wealth. The role of the lawyer is to translate these principles into consistent and enforceable legal clauses that secure governance over time.
Succession between generations
Succession is one of the main purposes of the family office. Wealth built up over a lifetime becomes vulnerable at the moment it is handed over if this has not been prepared. The family office organises this transfer in a gradual and anticipated way, rather than having to deal with it when an inheritance arises.
The tools combine structuring and carefully structured gifts. Rather than passing on scattered assets, shares in companies holding those assets are passed on, which preserves the unity of the wealth and allows a step-by-step allocation. The gift can be made in full ownership or with a reservation of usufruct, depending on the objectives.
A successful succession is planned in advance: the earlier it is prepared, the wider the room for organisation. Governance, formalised in the charter and the shareholders' agreement, also prepares the next generation to take on its responsibilities. For a complete arrangement, you can request a quote from the firm.
Confidentiality and wealth protection
Confidentiality is a strong expectation of wealthy families, who do not wish to expose the composition or organisation of their wealth. The family office makes it possible to centralise information within a single structure, with controlled access, rather than dispersing it among multiple parties.
This confidentiality is exercised in compliance with legal obligations, in particular the declaration of beneficial owners and the rules on tax transparency. It is not about concealment, but about a controlled organisation of information, in compliance with Luxembourg and international law.
Wealth protection also involves separating risks: housing assets in separate vehicles prevents a risk from spreading to the whole. This logic of ring-fencing, combined with clear governance, contributes to the resilience of family wealth over time.
Services, service providers and the role of the lawyer
A family office draws on an ecosystem of service providers: lawyers, notaries, chartered accountants, approved statutory auditors, private bankers, asset managers. The 2012 law regulates who may act on a professional basis, reserving certain services for regulated professions and subjecting the other service providers to an authorisation from the Minister of Finance and to the supervision of the CSSF.
The lawyer plays a central role in this set-up. Registered with the Luxembourg Bar, the lawyer characterises the activity under the 2012 law, structures the holding vehicles, drafts the charter and the shareholders' agreement, and secures the succession. The lawyer coordinates the other parties involved and ensures the legal consistency of the arrangement.
Within Cerno Law Firm, legal support for family office projects is provided by lawyers who frame the entire project. The firm's digital tools serve only to organise the initial meeting and to structure the collection of information: they never deliver wealth planning advice, which remains the preserve of the lawyer. Responsibility for the advice remains entirely human.
| Criterion | SOPARFI | SPF |
|---|---|---|
| Eligible holders | Natural persons and legal entities | Natural persons and private wealth management entities |
| Nature of the activity | Active holding of participations | Passive holding of financial assets |
| Taxation | Fully taxable | Exempt from IRC, subscription tax |
| Direct real estate | Possible (often via subsidiaries) | Prohibited |
| Tax treaties | Access | No access |
| Typical use in the family office | Participations and financing | Passive financial portfolio |
Depending on your profile
For business-owning families
The family office coordinates the holding of participations, the governance and the succession of the family business. The SOPARFI holds the active participations, while a family charter sets the decision-making rules and prepares the next generation. The whole arrangement is validated by a lawyer in the light of the 2012 law.
For high-net-worth individuals
The family office centralises the management of financial wealth within a confidential and stable framework. The SPF houses a passive portfolio and is exempt from IRC in return for a subscription tax. The choice between a single and a multi-family office depends on the size of the wealth and the control sought.
For international families
The family office coordinates the holding of assets spread across several jurisdictions, taking into account the residence of the members and the applicable succession rules. The structuring combines SOPARFI, SPF and other vehicles. Coordination between Luxembourg law and foreign laws is decisive.
For groups of investors
The multi-family office pools the costs of governance, reporting and expertise among several families. It makes professional structuring accessible to estates of varying sizes. The scope of the services determines the applicable status under the 2012 law.
Official sources
Update history
- : Addition of the authorisation from the Minister of Finance, issued after review by the CSSF, required by the law of 21 December 2012 for family office service providers that do not fall within a regulated profession.