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Holding Company in Luxembourg

Updated on Thursday 14th April 2016

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holding_company_luxembourg.jpgDue to its stable political and economic environment and the low taxes for certain types of businesses, Luxembourg has been a very attractive country for foreign investors in the last years. The authorities have a liberal attitude towards foreign investors who are encouraged to develop their businesses through the fiscal system especially for those who try to expand their international activities.

Luxembourg is one of the most favorite countries for the foreign entrepreneurs, looking for opening a holding company, and many multinational companies in the world choose this country for setting up a holding known as SOPARFI or Societe de Participations Financieres. The foreign investors can benefit of exemption regime on dividends and capital gains on shares.

Conditions for applying the exemption regime

A holding company must accomplish two conditions for being able to benefit of exemption regime. Firstly, the holding company from Luxembourg must have a participation in the share capital of the subsidiary of 10% or a participation of at least 1.2 million EUR for at least a year.

Secondly, the subsidiary must be owned by a Luxembourg resident entity or an EU entity or a capital company that pays, in its country of residence, an income tax that is almost the same as the one paid in Luxembourg. This is not a mandatory condition if the foreign subsidiary is subject to the EU Parent-Subsidiary Directive.  

Many multinational groups from other European countries transferred their financial activities to Luxembourg because of this country stable tax regime and the advantages for holding companies. Luxembourg is a very well-known business center located in the center of Europe and with a qualified labor force that attracts many foreign investors.

SOPARFI or SPF

The businessmen who decide to open a holding company in Luxembourg should know that this type of company (SOPARFI) is used for doing business in different fields, such as: industry, commerce, real estate etc. Many foreign international groups choose this form of company – SOPARFI – for developing their businesses and establish the headquarters in Luxembourg. The investors may also choose to open a SPF in order to benefit of the attractive tax regime.

If you need more information about the advantages of setting up a holding company in Luxembourg or you need assistance throughout the whole procedure, you can contact our local representatives.

 

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