Create an SPF (Private Wealth Management Company)

International corporations can set up an investment firm to look after private people’s assets thanks to the Luxembourg SPF Law. SPFs, or private wealth management companies, are permitted to purchase, keep, manage, and sell any type of financial asset in Luxembourg, but they are not permitted to carry on business operations.

A private wealth management company is a corporate legal entity under the latest changes made to Luxembourg’s Corporate Law.

Such a company has a completely distinct legal entity from its trustors — it can be integrated as a limited responsibility company. It can issue numerous varieties of shares, including registered ones. Additionally, it has a private nature, which is useful when the business has several investors.

Due to the SPF’s lack of a requirement for direct capital involvement, it can also replace the conventional holding company. It is an incredible resource for anyone looking to start an investment portfolio in Luxembourg.

The process for registering a company is relatively straightforward, and little share capital is needed. Additionally, SPF offers simple procedures and minimal starting share capital requirements.

Eligibility for investors

The list of eligible investors for a private wealth management company is not that long:

• individuals who manage their own assets;
• private wealth management organizations, including foundations and trusts that are both non-resident and resident entities and exist only to manage the assets of one or more persons;
• intermediaries acting on behalf of the people listed in the preceding points, including fiduciaries.

Although the SPF’s translation from French suggests that it is only accessible to families and certain individuals, there is no requirement for family ties and access is open to anybody.

Additionally, the SPF serves as an investment vehicle for clubs focusing on investing and enthusiast investors who want to test their relationships with potential co-investors. It is also feasible to achieve a great level of privacy and confidentiality if the private wealth management company is built appropriately.

There is a limitation in real estate investments through SPF. A fund participant cannot directly invest in real estate unless it is going to be used by them or through other SPF investors.

Finally, it is strictly forbidden to list assets owned by that company on a stock exchange or to make such securities available for public placement.

Legal forms an SPF can take

There are several legal forms in which a private wealth management company might be established in Luxembourg. It can be constituted in one of several legal forms, depending on the particular demands of the investor, the capital shares, the management control, and the transferability of the shares.

It can be a SA, or public liability company, SARL, or private limited liability company, a SCA, or a cooperative functioning as a public company.

Eligible assets

A Luxembourg Private Wealth Management Company is permitted complete freedom to invest in any kind of financial instrument, both locally and internationally, including derivatives, warrants, shares, bonds, real estate, cash, funds, and securities.

This list can be lengthy as it also contains hedge and securitization funds and other different asset classes.

Management and financial structuring

In Luxembourg, a Private Wealth Management Company may issue shares of several classes, bearer shares, and nominative shares. SPF stockholders could all be residents or non-residents.

Corporate shareholders are excluded by regulation unless they represent the stated shareholder kinds.

Public limited liability companies and partnerships with limited liability must have a minimum share capital of EUR 31000, with at least 1/4 paid upon formation. On the other hand, a private limited liability company must have a minimum share capital of EUR 12500, which must be paid in full at the time it is formed.

Investors might create a Private Wealth Management Company by donating. There are no capital contributions required upon incorporation other than a one-time registration fee of EUR 75. Public limited liability businesses and partnerships with limited liability are required to engage an external auditor to undertake the evaluation, whereas private limited liability firms are not.

Taxes

A private wealth management company is entirely free from the corporation and local company taxes in Luxembourg. Instead, a registration tax of 0.25% of its paid-in capital is levied on it. The profit that is carried forward is not subject to registration tax.

Any debts that exceed eight times a private wealth management company’s paid-in capital will be subject to registration tax. With the exception of double taxation agreements and EU directives, its structure benefits greatly. Such a business might eventually change into another legal structure.