A SOPARFI company in Luxembourg is a company that undertakes holding and financing activities. A SOPARFI (in French, Société de Participations Financières) can also carry out other activities, if it has the necessary business licenses and if such activities are allowed according to the company’s bylaws. This type of company in Luxembourg is subject to the taxation provisions for companies and it can benefit from the double tax treaties concluded between Luxembourg and other countries.
A SOPARFI company may carry out its activities without being subject to supervision by a legal authority. The company can perform commercial activities if it has the necessary special permits and authorizations.
How to set up a SOPARFI in Luxembourg
A SOPARFI company can take the form of several types of companies available in Luxembourg. The choice is made according to the investor’s wishes regarding the management of the company and/or the transferability of its shares. A SOPARFI can take the form of a public limited company, a private limited liability company or a limited shares partnership. The minimum share capital varies according to the type of company. Our lawyers in Luxembourg can offer you detailed information about the advantages of each type of company.
The bylaws of a SOPARFI company in Luxembourg need to be published in the official Luxembourg journal within one month after the company commences its activities. Annual financial reports must be filled and audits may need to be performed.
Our lawyers have prepared a comprehensive video about the SOPARFI holding company:
Taxation of a SOPRAFI company in Luxembourg
SOPARFI companies in Luxembourg are subject to a minimum corporate income tax and an annual net worth tax and they are entitled to the participation exemption. This exemption states that dividends and capital gains may be exempt from the corporate income tax and the municipal business tax if the legal entity deriving such income meets certain conditions.
According to the taxation law in Luxembourg, dividends paid to non-resident companies are subject to a 15% withholding tax, unless special treaties apply. There is no withholding tax on interest payments and royalties.
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