5 Reasons to Establish a Holding Company in Luxembourg

Luxembourg city

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“Soparfi” (Société de Participations Financières) is the name given to a holding company in Luxembourg.

According to Wikipedia, “A holding company is a company that owns other companies’ outstanding stock. The term usually refers to a company that does not produce goods or services itself; rather, its purpose is to own shares of other companies to form a corporate group.”

Healy Consultants Group’ clients often ask specifically to set up a holding company in Luxembourg for a number of reasons, including the fact that it has an extensive tax-treaty network and due to it being an easy and reputable place to do business. Here are some compelling reasons why you should consider it too:

  1. Low or no tax: Your holding company may qualify for the participation exemption regime which means that dividends received and capital gains coming from the nominal paid-up capital of a subsidiary are completely exempt from Corporate Income Tax (CIT). It should be noted though that the subsidiary must either be an EU member state, in a country where CIT is at least 11% or in a country that holds a double taxation treaty with Luxembourg.
  2. Stable and reputable banking: One of the keys to establishing any company is a reputable bank account and Luxembourg ticks all the boxes. Setting up a bank account here is straightforward and in many cases the bank account can be opened without you even having to set foot outside your door. Healy Consultants Group provides this no-travel-required bank opening service at a very reasonable cost. Multi-currency accounts are commonly available which makes dealing with trade and business from around the world a piece of cake.
  3. Ease of doing business/ solid workforce: Though there are three languages spoken in Luxembourg – French, German and Luxembourgish -, English is commonly used in business. The workforce is multilingual in many cases making the surrounding country trade and business efficient. The workforce is educated (boasts 100% literacy) and the financial industry has been the cornerstone of Luxembourg for decades, ensuring experienced and knowledgeable employees and advisors.
  4. Double Tax Treaties: Luxembourg has signed double taxation treaties with 75 countries around the world which makes setting up a holding company very attractive and allows a tax efficient business arrangement. Luxembourg has treaties with all EU member states as well as with OECD (Organisation for Co-operation and Development – has 34 member countries) members and the network of double taxation treaties continues to grow with 19 other countries in the pipeline including Egypt, New Zealand, Pakistan and Ukraine.
  5. Accounting procedures: While all Luxembourg companies are required by law to file their financial records each year, financial statements are not made public and are not subject to annual audit providing the total bank statement is less than 3 million Euro, turnover is less than 6 million Euro or that there is a single shareholder.

These are just 5 reasons off the top of my head why establishing a Luxembourg Soparfi makes sense, but there are many more depending on how you structure your company. Why not let the experts at Healy Consultants Group help you establish the best structure for you. Contact us.

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15 thoughts on “5 Reasons to Establish a Holding Company in Luxembourg

    1. Hi Vibhu Kapoor,

      We can help you more on this topic.

      Please send your questions to our business experts at email[at]healyconsultants.com

  1. Good evening, I would like to establish a soparfi held by an offshore company to hold shares of moroccan and algerian companies and real estate. Could you identify the tax treatment of capital gains, liquidation proceeds and dividends paid to the soparfi and payable to its offshore holding company. Do I need a particular company to hold the soparfi or would a simple BVI be fine to avoid any Luxembourg withholding tax on distribution of dividends or capital gains on the sale of its shares. Thank you

    1. Thank you for your question Mr Mohamed. We can help you understand the correct structure. Could you please email us your concerns to email[at]healyconsultants[dot]com and one of our specialised consultants will start a discussion with you to confirm the best way forward? Looking forward to receiving your email.

  2. I study the system and structure of holdings, and also look for the best jurisdictions for holding companies. Your article is very useful and informative. Thank!

  3. Your article is very informative and useful to me. I study prestigious jurisdictions for creating companies in different countries of the world, including Luxembourg. Thanks for sharing!

  4. I study the structure and creation of holding companies, as well as the best countries for their creation. Your article is very informative and helpful. Thanks.

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