Open a SPF in Luxembourg
Updated on Thursday 15th June 2017
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Luxembourg is the top European jurisdiction for investment purposes and the first country in which an investment fund was registered. Foreign investors interested in how to start an investment in Luxembourg may choose from a wide category of funds, including the private asset management company (SPF).
Main characteristics of the SPF in Luxembourg
The SPF in Luxembourg represents a type of company which has been incorporated in this country for a long period of time (since 1929). However, the regulations related to the registration of a SPF was modified in 2007 to comply with the European Union’s tax directives for this type of legal entity.
This type of entity can be set up under one of the following:
• public limited company;
• limited liability company.
Although it is registered as a corporation, its articles of association must respect the regulations applicable under the Private Asset Management Companies legislation, which provides the legal framework for the activities that can be carried out under this structure.
The company may issue shares and its trading name must also contain the “SPF” abbreviation.
Business activities of a SPF in Luxembourg
Even though the company is registered under the regular business forms available in Luxembourg, they are not allowed to enter commercial activities if they are incorporated as SPFs. As a general rule, the SPF is incorporated for investment purposes, such as:
• investments in financial instruments, which can be represented by shares, funds, bonds, bank accounts and other similar assets;
• the SPF may also invest in precious metals.
Investors interested in how to start a fund in Luxembourg may also set up a hedge fund startup, which provides the advantage of carrying multiple investment strategies at the same time.
A SPF can also be incorporated for performing management strategies of the private wealth of natural persons. It is important to know that the shares of a SPF can’t be traded on the local stock exchange.
The legal entity benefits from several tax exemptions and in this sense we mention that the company will be exempted from pay the value added tax, the corporate tax or the withholding tax on dividends or interest.
For more information on how to start a fund or a SPF company, please contact our team of affiliates in Luxembourg, who can offer in-depth advice on this matter.