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The 1990 Soparfi is a normally taxed European company, subject to full taxation and is fully protected and subject to the provisions of Luxembourg's double tax treaties. Luxembourg has however managed to conform to the European Commission Directives on dividends and capital gains in such a way that the Luxembourg Soparfi is one of the most efficient holding companies in Europe.
1990 Société de Participation Financiére (SOPARFI) Holding Company (SA).
The Articles of Incorporation (The Acte de Constitution), must be prepared in the form of a deed. This deed should include:
A Certificate of Name Acceptability issued by the Trade Register is required, together with a Certificate of Blockage produced by the proposed company's Luxembourg bankers confirming that the paid capital has been deposited with them. These documents and information must be presented before a Notary Public by the proposed company's appointed representative. After notarisiation, the Notary Public lodges the Articles of Incorporation and By-Laws with the Department of Registration and Trade Register. The Articles of Incorporation are then published in the Official Gazette.
The 1990 Soparfi is normally set up as a holding company. If it were set up as a trading company it would need authorisation to do business.
Companies investing in shares can benefit from the affiliation privilege. This means that these companies are fully subject to corporation tax, but exemptions are granted by law for the following:
This corporate tax exemption is granted with the following conditions:
As dictated by the objects in the Articles of Incorporation.
The Legislation is published in either French or German. The corporate documents can be in any language, provided they are accompanied by a French or German translation.
Yes, must be maintained in Luxembourg.
Due to the costs associated with incorporation and paid up capital requirements, shelf companies are not available.
Subject to adhering to the pre-requisite criteria, a company can be incorporated in two days.
The French, German and foreign names for bank, buildings society, savings, insurance, assurance, reinsurance, fund management, investment fund, council, municipal, co-operative or the foreign language equivalent.
Société Anonyme, SA or AG.
The minimum Authorised Share Capital of a 1990 Company with Soparfi provisions is EUR 31,000 all of which has to be issued and fully paid up. The capital can be expressed in any currency.
Registered shares, bearer shares, preference shares and shares with or without voting rights.
Under the Luxembourg 'affiliation privilege' (or 'participation exemption'), dividends and capital gains may be exempt from tax.
The only taxes payable by the holding company are the Capital Registration Duty (Droit d'Apport 1%) on incorporation and subsequent increases of capital.
Dividends received from any company in which the Soparfi, a branch of a foreign company resident in Luxembourg or a partnership in which the Soparfi is a partner, has at least a 10% shareholding (or if less, whose acquisition cost was at least EUR 1,2 million) are excluded from taxable profit if the shares were held for 12 months.
Capital gains derived by these entities from the sale of shareholding in other companies are also excluded from taxable profit if held for at least 12 months and if they represent at least a 10 % shareholding (or less if the acquisition cost was at least € 6,000,000.
Additionally the EC Parent-Subsidiary directive 90/453 of 23 July 1990 also apply.
Domestic taxpayers are liable to tax on their worldwide income, subject to the restrictions embodied in double taxation conventions. Foreign income tax may, however, be offset against Corporation Tax. Non-resident taxpayers are liable to tax on the income of their Luxembourg permanent establishment. Taxable profit is assessed on the basis of a net worth.
Real estate is assessed at a reduced value (1941 market value) and qualified equity investments are exempt (participation exemption).
A Net worth tax is levied on total gross assets reduced by the debts of the company. This tax amounts to an annual rate of 0.5%. It can be offset against the Corporate Income Tax liability. To benefit from this tax credit, the taxpayer must allocate profits equivalent to five times the Net Worth Tax set off to a special reserve before the following financial year-end. The tax credit cannot be brought forward.
Luxembourg has entered in to many double tax treaties agreements.
Treaties have been concluded with: Austria, Belgium, Brazil, Bulgaria, Canada, China, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Malaysia, Malta, Mauritius, Mexico, Mongolia, Morocco, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, South Africa, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, United Kingdom, United States of America, Uzbekistan and Vietnam.
Non-ratified treaties: Argentina, Azerbaidjan, United Arab Emirates, Estonia, Georgia, Moldavia, San Marino and Ukraine.
In negotiation: Chile, India, Lebanon, Serbia and Montenegro and Yugoslavia.
Interest payments are not subject to Withholding Tax in Luxembourg.
In Luxembourg there is a 20% Withholding Tax on dividends paid by taxable companies. The various double taxation treaties concluded by Luxembourg provide for reduced rates (generally 5%).
In Luxembourg law, surpluses on liquidation are not qualified as dividends. Therefore, surpluses on liquidation are not subject to Withholding Tax.
The application of the Luxembourg participation exemption regime has also been extended to Luxembourg branches of foreign companies. The exemption from dividends paid by Luxembourg qualifying companies to qualifying shareholders was also extended to dividends distributed to Luxembourg branches of EU or treaty country resident companies. Luxembourg does not levy any tax on profit repatriation by a branch to its head office.
Yes. An annual audit is compulsory and abbreviated accounts are filed and accessible to the general public.
The minimum number of directors is three. They may be natural persons or bodies corporate. They may be of any nationality and need not be resident in Luxembourg but to follow the rules of the “permanent establishment” a majority of local directors is advisable.
The Luxembourg Companies Acts do not provide for the appointment of a company secretary.
The minimum number of shareholders is two.
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