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Open SPV/SPE in Luxembourg
Updated on Tuesday 05th September 2023 Rate this article
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Our company registration agents in Luxembourg can offer information on the law providing for SPVs and SPEs in the Grand Duchy. With our support you can easily set up this type of structure, as we can manage the procedures implicated in company formation in Luxembourg. Below is information about how to open a SPV in Luxembourg.
Definitions of SPVs and SPEs in Luxembourg
A foreign investor knows what an SPV/SPE is used for in Luxembourg. But those interested in this business structure can discover the following definitions:
- • SPV stands for Special Purpose Vehicle - This is a legal entity created for a specific purpose, like holding assets or raising capital. SPVs are regularly applied in corporate and structured financial transactions, like securitization or plan finance.
- • SPE stands for Special Purpose Entity - This is a legal entity frequently used for different investment purposes. An SPE is a company that holds and runs investments in other corporations or assets, like real estate or intellectual property, for example.
One should note that both SPVs and SPEs have precise principles, normally being started for a defined project or investment. Having a flexible legal structure, such structures are allowed to be modified to the particular needs of each investment made in Luxembourg, in this case. You might want to know more about SPVs and SPEs from our dedicated company formation agents in Luxembourg.
The use of SPV/SPE in Luxembourg
The following types of assets can be securitized by special purpose vehicles or entities (SPVs/SPEs) in Luxembourg:
- securities, such as shares, bonds or loans;
- real estate property which can be movable or immovable;
- commercial debts;
- mortgages.
Legal structures used for SPV in Luxembourg
The Commercial Law provides for several types of companies one can set up in Luxembourg. Some of these structures can also be used to open SPV in Luxembourg. Among them are:
- • public limited companies;
- • private limited liability companies;
- • partnerships limited by shares.
Foreign investors may also use securitization funds to set up a SPV in Luxembourg, however this type of entity will have no legal personality. No matter the structure used, the Luxembourg SPV may be compartmented.
How to register the Luxembourg special purpose vehicle
Registering a Luxembourg SPV will begin with the company registration in Luxembourg. For this, the company must be entered into the Commercial Register after which it will apply for approval with the Luxembourg Financial Supervisory Authority, the CSSF. Luxembourg SPVs registered as public companies, will be subject to continuous supervision under the rules of the CSSF because this type of company may trade its assets on the Luxembourg capital markets.
A Luxembourg SPV or SPE may engage in two types of transactions:
- the acquisition or purchase of assets;
- the issuance of securities.
Regardless of the business structure you choose, our accountants can offer you payroll services in Luxembourg if you have a company registered in this country. With the help of this type of service, salaries can be paid in the company, respecting internal regulations, as well as other accounting legislation. Therefore, we recommend you get in touch with us and discover our services, as well as benefit from a free case evaluation.
Opening a bank account for a SPV/SPE in Luxembourg
Opening a company in Luxembourg also involves opening a bank account. This is also the case for Special Purpose Vehicle in Luxembourg. In this case, the documents of the company in question as well as information about the shareholders of the respective business are requested. We emphasize that you can benefit from specialized help if you want to open a bank account in Luxembourg, as our local agents can easily manage the formalities involved.
Is it necessary to apply for a business license for a Special Purpose Vehicle in Luxembourg?
Before starting economic activities, you must consider whether it is necessary to obtain business licenses and permits. This is where the type of activities you want to carry out in Luxembourg, opening a Luxembourg SPV comes into question. We remind you here of the importance of carrying out some checks strictly related to the field of activity for a Special Purpose Vehicle in Luxembourg, to ensure that you obtain the desired business license before starting operations.
Advantages of setting up SPV in Luxembourg
SPVs/SPEs in Luxembourg offer various advantages to foreign investors and more. Among them, we list:
- • Taxation – You can benefit from an advantageous taxation system if you set up a Special Purpose Vehicle in Luxembourg. For example, in this case, there is a low corporate income tax rate of 24.94%. On the other hand, there is no capital gains tax on the sale of shares, and no withholding tax on interest payments in Luxembourg.
- • Strong economy – Another important aspect when you want to open SPV/SPE in Luxembourg is the economy. In the case of Luxembourg, the country has a highly expanded economy and it is home to numerous international establishments, yielding a solid business hub for various foreign and local investments.
- • Political stability – It is very important to direct your attention to a politically stable country when you want to open a company. This is the case of Luxembourg, which has a steady and consistent political system, making it an appealing destination for businesses worldwide.
Making investments in Luxembourg
Luxembourg is one of the strongest financial centers in the world and is home to numerous international businesses all around the world. The destination is certainly attractive for many foreign investors, and the data below sustain the fact that Luxembourg is on the best trajectory from an economic point of view:
- • According to Eurostat, the net international investment position of Luxembourg was around 34.80% of the GDP registered in March 2023.
- • There are more than 3,600 investment funds in Luxembourg. These represent over 14,500 fund units registered in this country.
For assistance in opening a SPV in Luxembourg, please feel free to contact us. Our Luxembourg company formation consultants can also offer information about the taxation of SPVs and SPEs.
Meet us in Luxembourg
Contact our specialists in company formation in Luxembourg, who have a large experience in finance and international business.
Set up an appointment with us at +352 671 533 922. Alternatively you can incorporate your company without traveling to Luxembourg.
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As a BridgeWest partner for many years, CompanyFormationLuxembourg.com is for sure a great choice when wanting to start a business in this important financial hub. International entrepreneurs can rely on the professionalism of this team.
Vlad Cuc, Director of BridgeWest www.bridgewest.eu
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