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Open SPV/SPE in Luxembourg

Updated on Thursday 23rd May 2024

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Open SPV SPE in Luxembourg
 
 
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.
 
 Quick Facts
 
 Legal structure
SPVs and SPEs in Luxembourg are typically established as Sociétés Anonymes (SAs) or Sociétés à Responsabilité Limitée (SARLs), tailored to the specific needs of the project. 
Purpose 
These entities are formed for specific purposes, such as: holding assets, managing risks, facilitating financing, or undertaking particular projects, while limiting liabilities. 
Regulatory environment 
Luxembourg provides a well-established legal and regulatory framework for SPVs and SPEs, ensuring stability, transparency, and investor confidence in the jurisdiction. 
 Taxation
Luxembourg offers favorable tax regimes for SPVs and SPEs, including exemptions or reduced rates on corporate income tax, withholding tax, and capital gains tax, under certain conditions. 
Legal formalities 
Establishing SPVs and SPEs in Luxembourg involves fulfilling legal formalities, such as drafting articles of association, obtaining notarized documents, and registering with the authorities. 
Directors and officers 
SPVs and SPEs in Luxembourg must appoint directors and officers responsible for managing the entity's affairs, ensuring compliance, and making strategic decisions. 
Transparency and disclosure 
SPVs and SPEs must comply with transparency and disclosure requirements, including filing financial statements and notifying authorities of significant corporate changes. 
Investor protection 
Luxembourg provides robust investor protection mechanisms, safeguarding investors' interests and promoting confidence in SPV and SPE structures through regulatory oversight. 
Currency 
Transactions and financial reporting for SPVs and SPEs in Luxembourg are typically conducted in Euro (EUR), the official currency of the Grand Duchy of Luxembourg. 
Legal counsel 
Engaging our legal counsel with expertise in Luxembourg corporate law is advisable when establishing SPVs and SPEs to ensure compliance and optimize the corporate structure. 
Professional services 
We offer various professional services, including accounting, tax advisory, and corporate secretarial services. These services are available in Luxembourg to support SPVs and SPEs in meeting their obligations. 
Access to capital markets 
Luxembourg's financial infrastructure provides SPVs and SPEs with access to capital markets, facilitating fundraising through debt or equity issuances and structured finance arrangements. 
Asset protection 
Establishing SPVs and SPEs in Luxembourg can help protect assets by ring-fencing them from the risks and liabilities of the sponsoring entity or project, enhancing risk management. 
Intellectual property holding
Luxembourg SPVs and SPEs are commonly used for intellectual property (IP) holding activities, offering tax-efficient structures and incentives for consolidating and exploiting IP assets. 
Cross-border transactions
Luxembourg's favorable legal and tax environment makes it an attractive jurisdiction for SPVs and SPEs involved in cross-border transactions, facilitating international business operations. 
 

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. Here is an infographic on this topic:

5 steps of opening a SPVSPE 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:
 
  1. securities, such as shares, bonds, or loans;
  2. real estate property which can be movable or immovable;
  3. commercial debts;
  4. 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 an SPV/SPE 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.
 
Luxembourg SPV or SPE may engage in two types of transactions:
 
  1. the acquisition or purchase of assets,
  2. the issuance of securities.
 
Below is a video presentation about SPV/SPE in Luxembourg:
 
 

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 Vehicles 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.
 

Advantages of Special Purpose Entities (SPEs) in Luxembourg

 
Luxembourg offers a well-established regulatory framework, providing certainty and stability for SPE operations. Please find below the benefits you can gain:
  •  
  • SPEs in Luxembourg often benefit from favorable tax treatment, including exemptions or reduced rates on certain types of income.
  • Luxembourg's legal system allows for a wide range of structuring options, enabling SPEs to tailor their setups to specific transactional needs.
  • Luxembourg is recognized as a reputable international financial center, enhancing the credibility and attractiveness of SPEs established there.
  • Setting up an SPE in Luxembourg is relatively straightforward, with efficient administrative processes and supportive regulatory authorities.
  • Luxembourg's legal framework offers robust asset protection mechanisms, safeguarding the interests of investors and stakeholders in SPE structures.
 
If you are interested in setting up an SPV/SPE in Luxembourg, please get in touch with our agents. They can also offer you comprehensive assistance about the advantages of setting up a company in Luxembourg.
 

Types of Special Purpose Entities (SPEs) in Luxembourg

 
Please find below the types of special purpose entities (SPE) in Luxembourg:
 
  1. Securitization vehicles: SPEs used for securitizing assets, such as mortgage-backed securities or asset-backed securities.
  2. Investment funds: SPEs structured as investment funds, including mutual funds, hedge funds, private equity funds, and real estate funds.
  3. Holding companies: SPEs established to hold and manage specific assets, such as shares in other companies, intellectual property, or real estate.
  4. Finance companies: SPEs engaged in financing activities, such as providing loans, issuing bonds, or arranging credit facilities.
  5. Asset management entities: SPEs set up to manage and administer investment portfolios on behalf of clients, including discretionary and non-discretionary asset management structures.
  6. Insurance and reinsurance vehicles: SPEs used in the insurance and reinsurance industry for risk transfer and risk management purposes.
  7. Structured finance entities: SPEs involved in structured finance transactions, including project finance, trade finance, and lease finance arrangements.
  8. Special Purpose Acquisition Companies (SPACs): SPEs created to acquire or merge with existing businesses, typically to take them public through an initial public offering (IPO).
 
If you need to set up any of the types of special purpose entities in Luxembourg, we can assist you. Please consult with our company incorporation consultants in Luxembourg for details. 
 

Establishing SPACs in Luxembourg: A strategic choice

 
A special purpose acquisition company (SPAC) is a special purpose entity formed by investors through an initial public offering (IPO) to merge with or acquire another business. The primary objectives are to raise sufficient capital for acquisition purposes and to subsequently list the target entity on a stock exchange. Once a target company is chosen, approval from SPAC shareholders is required for the acquisition to proceed, leading to either a merger or the SPAC becoming the listed holding company of the target.
 
Luxembourg emerges as an attractive jurisdiction for establishing SPACs due to its versatile solutions tailored for such entities. This flexibility has positioned Luxembourg as a global leader in housing holding companies and funds. It boasts the title of the second-largest investment fund center worldwide, following the United States, and serves as the largest fund domicile in Europe, managing nearly EUR 5 trillion in assets. 
 
Additionally, funds established in Luxembourg benefit from streamlined distribution within the European Union, leveraging existing passporting rights under the Alternative Investment Fund Managers Directive. This strategic advantage underscores Luxembourg's prominence as an ideal destination for SPAC formation, offering a combination of regulatory adaptability, financial sophistication, and enhanced market access within the EU.
 
If you want to open this type of special-purpose entity, our company formation agents in Luxembourg can help you. With their assistance, you can open a company in Luxembourg.
 

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.
 
Our Luxembourg company formation consultants can also offer information about the taxation of SPVs and SPEs. Regardless of the business structure you choose, our agents offer comprehensive accounting assistance tailored to the specific requirements of businesses. With our expertise and attention to detail, businesses can confidently navigate the complexities of accounting in Luxembourg, allowing them to focus on their core operations. Consult our accountants in Luxembourg for details about our services. 
 
Besides accounting, we also offer other related services. For instance, payroll management, where we handle all aspects of payroll processing on behalf of our clients. This includes calculating salaries, deductions, and taxes, as well as ensuring compliance with local labor laws and regulations. With our expertise and dedication, we aim to alleviate the complexities of Luxembourg payroll administration, allowing our clients to focus on their core business activities with peace of mind.
 
For assistance in opening a SPV in Luxembourg, please feel free to contact us.
 

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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