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