B. Tax Status of the SPF

 

Direct Taxes

 

General principal: the SPF is exempt from corporate income tax (IRC), municipal business tax (ICC), and wealth tax (IF).

However, an SPF which, during a particular financial year, has received at least 5% of the total amount of its dividends from companies that are non-resident, non-listed and not subject to a tax comparable to the IRC, shall be excluded from the benefits of such tax exemption.

A company resident in a Member State of the European Union as referred to under Article 2 of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States fulfils the condition of comparable taxation.

 

Indirect Taxes

 

Under the terms of Article 2 of the Act of 29 December 1971 (on commercial companies and non-commercial partnerships and revising certain legislative provisions governing rights of registration), contributions in cash or in kind to Luxembourg companies, including SPFs, are subject, in principal, to capital duty at a rate of 1%.

Under the terms of Articles 4.1 and 4.2 of the above mentioned Act, exemption from capital duty occurs:

- for the part of the debt or loan that is to third parties
- upon formation of the SPF, where share contributions represent at least 65% of the capital of another company having its registered office in another State of the European Union. Contributions must be remunerated in shares, with payment not exceeding 10 % of the value or of the accounting par value of the allocated shares. The allocated shares may not be transferred until a period of five years has passed.
- upon formation of the SPF, in the case of a contribution of the entirety of the assets or of one or more business areas of a company having its registered office in another State of the EU. Contributions must be remunerated in shares, with payment not exceeding 10 % of the value or of the accounting par value of the allocated shares.
- upon transfer of a registered office from a Member State of the European Union to Luxembourg in so far as a similar duty would have been collected at the time of the company's formation in the country where it was formed.
- where a Luxembourg company changes its form to an SPF (1929 Holding Company, Soparfi, etc.)
- upon incorporation of reserves or profit into capital.

 

The SPF is not subject to VAT.

 

The SPF is subject to the annual subscription tax at the rate of 0.25% (with a minimum amount of EUR 100 and a maximum of EUR 125,000) of the value of its paid-up share capital plus the share premiums and the parts of the debts which exceed by eight times the paid-up capital and the share premiums. Declaration and payment are made on a quarterly basis.

 

The taxable base = paid-up capital (PC) + share premiums (SP) + debts exceeding 8 times the sum of (PC + SP).

 

It should be noted that the SPF is excluded from the benefit of the tax treaties for prevention of double taxation concluded by Luxembourg.

 

Furthermore, it cannot invoke the benefits of Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States.

 

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