On 4 June 2024, the Luxembourg Tax Authorities (the “LTA”) issued the administrative circular L.I.R. n° 159/2 (the “Circular”). The Circular provides details on the issuance of residence certificates to Luxembourg family wealth management companies (sociétés de gestion de patrimoine familial) (“SPFs”) governed by the Law of 11 May 2007 (the “SPF Law”).
The legal framework applicable to SPFs
SPFs are companies which adopt the form of a limited liability company, a public limited company, a partnership limited by shares or a cooperative company organised in the form of a public limited company and whose exclusive object is the acquisition, holding, management and realisation of financial assets, excluding any commercial activity.
SPFs are designed to serve as investment companies for individuals acting within the management of their private wealth.
Tax status
Under Article 4 of the SPF Law, SPFs are exempt from income tax, municipal business tax and net wealth tax. However, they are subject to a yearly subscription tax in accordance with Article 5 of the SPF Law.
As a result of this specific tax status, SPFs are excluded from the double tax treaties entered into by Luxembourg and cannot claim the benefit of the European Union directives.
Issuance of residence certificates on the basis of domestic law
Under domestic law, SPFs are to be considered Luxembourg residents where the conditions set out in Article 159 of the Luxembourg income tax law ("LITL") are met, i.e. where:
they are constituted in one of the forms listed in Article 159 LITL; and
they have their registered office or central administration in the Grand Duchy of Luxembourg.
The first condition should, in principle, always be met as an SPF must be incorporated in the form of a corporate entity, in accordance with Article 1 of the SPF Law.
A residence certificate may therefore be issued where the SPF's registered office or central administration is located in Luxembourg. This certificate must be issued by the Direct Tax Administration.
All applications for a residence certificate must specify:
the name, tax identification number and address of the company, as well as the date of adoption of the SPF tax status;
the language in which the certificate is to be drawn up (i.e. French, German or English); and
the reason for the request (in particular why the certificate of residence is required, with an express reference to the provision of the foreign legislation which, in order to be applied, requires the production of a residence certificate).
The tax office may request additional information or supporting documents and will then issue the residence certificate, which will be sent to the registered office of the company.
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