Set up a holding company in Luxembourg: SOPARFI, SPF and participation exemption.
A holding company in Luxembourg holds and manages participations. The choice is mainly between the SOPARFI, fully taxable but benefiting from the participation exemption (art. 166 LIR) and tax treaties, and the SPF, a private wealth-management vehicle exempt from direct taxes. We guide you, incorporate the structure, give it substance and keep it compliant.
A holding (participation company) is a company whose main purpose is to hold shares in other companies. In Luxembourg it usually takes the form of a SOPARFI (fully taxable commercial company benefiting from the participation exemption) or an SPF (family wealth-management company, non-commercial and exempt from direct taxes). The old "1929 holding" regime has been abolished.
SOPARFI: article 166 LIR (participation exemption) and amended law of 10 August 1915 on commercial companies. SPF: law of 11 May 2007 on the family wealth-management company. Economic substance framed by the ATAD directives.
Key takeaway
- In Luxembourg, a holding is usually a SOPARFI (active, treaty-eligible) or an SPF (passive private wealth).
- The SOPARFI exempts qualifying dividends and capital gains (art. 166 LIR) while remaining fully taxable.
- The SPF is exempt from direct taxes but subject to subscription tax (0.25%), reserved for eligible investors, with no commercial activity.
- Since ATAD, economic substance (office, governance, decisions in Luxembourg) is decisive for any holding.
What is a holding company in Luxembourg?
A holding is a company whose purpose is to hold participations in other companies and, where relevant, finance them. Luxembourg is a leading location for holdings thanks to its tax-treaty network, the parent-subsidiary directive and the participation-exemption regime.
The right vehicle depends on your objective: structuring active investments and accessing treaties (SOPARFI), or managing passive private wealth tax-free (SPF). We settle this choice with you before any incorporation.
SOPARFI or SPF: which holding to choose?
The SOPARFI is a fully taxable commercial company benefiting from the participation exemption (exemption of qualifying dividends and capital gains) and tax treaties. It can hold any type of participation, carry on an ancillary activity and invoice services.
The SPF (family wealth-management company) is a non-commercial private vehicle, exempt from direct taxes, but reserved for eligible investors, limited to holding financial assets, excluded from tax treaties and subject to subscription tax. In short: SOPARFI to invest and structure; SPF to manage passive private wealth.
The participation exemption (art. 166 LIR)
For a SOPARFI, dividends from qualifying participations are exempt if the holding owns at least 10% of the capital (or an acquisition price of at least EUR 1.2 million) for at least 12 months; capital gains are exempt with a threshold of at least 10% or EUR 6 million, held for 12 months.
This regime, combined with treaties, is what makes an active Luxembourg holding efficient. We secure its application case by case.
ATAD substance: essential for a holding
A holding without real economic substance risks recharacterisation and denial of tax benefits. The authorities and banks expect an effective registered office, decision-making bodies meeting in Luxembourg, a competent director and local accounting.
We calibrate substance (office, directorship, governance) to your risk profile and the nature of the participations, without over-engineering.
Incorporating and operating your holding
Incorporating a SOPARFI or SPF involves a notarial deed (capital companies), RCS registration and RBE entry, then substance set-up. Then comes operation: LuxGAAP accounting, annual accounts, filings and application of the tax regime.
We handle the full chain, from choosing the vehicle to consolidation, with a single point of contact.
Who this is for
- Investors and groups structuring the holding of participations
- Family offices and individuals organising private wealth
- Entrepreneurs preparing an acquisition, fundraise or exit
- Foreign companies centralising European subsidiaries
What we do
- SOPARFI or SPF choice based on your objective and profile
- Incorporation of the holding (articles, notary, RCS, RBE)
- Substance set-up: registered office, director, ATAD governance
- LuxGAAP bookkeeping, annual accounts and filings
- Participation-exemption application or subscription-tax monitoring
Estimated timelines
Pricing indication
Indicative ranges, excluding 17 % Luxembourg VAT, disbursements and filing fees. Firm quote after scoping.
Ready to structure your holding company?
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Preparation checklist
Get the list of documents and steps to start without friction.
The process, step by step
Wealth scoping
Holding objective (active/passive), nature of assets, co-investors and target taxation. SOPARFI or SPF choice.
Incorporation
Drafting the articles, depositing capital, notarial deed, RCS registration and entry in the register of beneficial owners (RBE).
Substance & governance
Registered office, resident director where relevant, decision-making bodies and ATAD compliance.
Operation
Bookkeeping, annual accounts, filings and application of the tax regime (participation exemption or subscription tax).
Official sources and verification
This page is written and reviewed by Mickaël LOC, licensed accountant in Luxembourg (business permit 10077274). The rules cited can be checked with the competent authorities.
Frequently asked questions
What is the best holding form in Luxembourg?
It depends on the objective. To structure active investments and benefit from tax treaties and the participation exemption, it is the SOPARFI. To manage passive private wealth tax-free, it is the SPF. We decide based on your situation.
What is the difference between a SOPARFI holding and an SPF?
The SOPARFI is fully taxable but exempts qualifying participations and accesses treaties; it may carry on an ancillary activity. The SPF is exempt from direct taxes but non-commercial, reserved for eligible investors, limited to financial assets and excluded from treaties.
Does the "1929 holding" regime still exist?
No. The 1929 holding regime was abolished; for private wealth it was replaced by the SPF (law of 11 May 2007). Active holdings take the form of a SOPARFI.
What capital is needed to create a holding?
A holding is usually set up as a SARL (minimum capital EUR 12,000) or an SA (EUR 30,000). The SARL-S (EUR 1–12,000) is possible for an individual, under conditions.
Does a Luxembourg holding need substance?
Yes. Since the ATAD directives, real economic substance (office, governance, decisions in Luxembourg, local accounting) is decisive to benefit from tax advantages and treaties.
How much does it cost to set up a holding?
Incorporating a SOPARFI or SPF starts at EUR 1,800 one-off, plus accounting and filings from EUR 250 excl. VAT/month for a passive holding, and substance depending on your profile. Firm quote within 24 h.
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