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Taxation of a Holding Company in Luxembourg

Updated on Thursday 10th May 2018

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Taxation-of-a-holding-company-in-Luxembourg.jpgHolding companies in Luxembourg are among the preferred business entities for foreigners willing to protect their assets and to invest in a smart manner. The taxation structure of such companies is attractive and competitive, offering to foreigners all sorts of tax reliefs. If you would like to know how you can register a company in Luxembourg and what the tax advantages are, we suggest you talk to our team of company formation specialists in Luxembourg.
 

SOPARFI and the tax structure in Luxembourg

 
The Grand Duchy offers a wide range of business opportunities for both nationals and foreigners, under certain conditions and with several benefits. Holding companies or SOPARFI in Luxembourg as they are known, can be easily registered and besides that, they are subject to various benefits for tax efficiency purpose:
 
  • in most cases, there are no withholding taxes for holding companies (capital gains and dividends);
  • there are no taxes on the revenue paid by participants in the holding company;
  • securities exchanges and property transfers are not subject to taxation;
  • tax breaks are granted on patents, brands, and software for holding companies with commercial activities in Luxembourg.
 
You can get in touch with our company formation agents in Luxembourg for in-depth information about holding company registration and the taxation regime.
 

How is the taxation for distribution of dividends in a holding company?

 
SOPARFI dividends are levied with a withholding tax of 15% rate, but if the holding company owns at least 10% of the shares or EUR 1,2 million, then there will be no such tax imposed. Withholding tax exemption also applies to shares own for at least one year.
 

Taxation of capital gains of holding companies in Luxembourg

 
The corporate income tax (CIT) is not imposed on capital gains attained on share sales by a holding company in Luxembourg. This tax exemption is applicable for SOPARFI owning at least 10% in a company participation or EUR 6 million.
 

How is the repatriation of profits levied in Luxembourg?

 
Foreign investors can repatriate the profits and avoid the taxation with hybrid instruments like convertible preferred equity certificates or income sharing loans in holding companies in Luxembourg. This is how investors can repatriate the revenues in an efficient tax manner without having to pay withholding taxes.
 
We invite you to contact our team of company formation representatives in Luxembourg for complete information about the taxation of holding companies in Luxembourg.
 
 
 

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)278 617 15. Alternatively you can incorporate your company without traveling to Luxembourg.
 

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The team from CompanyFormationLuxembourg.com is very qualified and benefits from extensive expertise in this area. I would definitely recommend them to any entrepreneur decided to start his own business here.

Mihai Cuc, Partner of
Enescu&Cuc; Law Firm
www.romanianlawoffice.com

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