Holding Company in Luxembourg

We offer turnkey registration of a holding company in Luxembourg.

    The cost includes legal support for the registration of the holding company in Luxembourg, preparation of registration documents, necessary registration fees and duties and is not final. The final cost is determined after collecting and processing all necessary information.

Who needs a holding company?

A Luxembourg holding company (SOPARFI) is an organization that owns the assets of subsidiaries. It acts as a parent company that controls the management and investment strategies in the subsidiaries.

The two main reasons for registering a holding company are:

  1. Risk diversification. By holding assets in different subsidiaries, a holding company in Luxembourg can spread its investment risk. Instead of investing all of its financial resources in a single entity, the holding company spreads its investments among several companies. This strategy significantly reduces the potential financial consequences if one of the subsidiaries experiences economic difficulties. The holding company acts as a guarantor of the stability and sustainability of the overall business structure.
  2. Tax optimization.
    • "Company Bank". The holding structure allows funds from subsidiaries to be transferred to the holding company tax-free. This arrangement results in significant savings, especially for large corporations with many subsidiaries.
    • "Tax cushion" for the owner of the holding company. Incorporating existing companies into the holding company structure opens up the possibility of effectively repaying their value through tax-free payments from the holding company to its owner. This means that investors can get their investments back without additional taxation of individual profits. This approach provides investors with the opportunity not only to preserve their investment but also to manage their tax liabilities efficiently.
    • Luxembourg tax law allows holding companies to pay dividends to their parent companies tax-free (provided that the investment volume and holding period conditions are met). Profits from dividends, capital gains and interest are exempt from corporate tax if they fulfill the conditions regarding parent-subsidiary status, investment volume and holding period.It is worth noting that SOPARFI is always subject to a minimum lump sum tax of 4,815 Euros per year.

You should choose Luxembourg as a jurisdiction for your holding company if you have an annual turnover of 200 thousand Euros or more.

Why choose Luxembourg as a jurisdiction for a holding company?

The most popular location for holding companies in the EU is Luxembourg.

  • Favorable taxation. Double taxation agreements have been signed with more than 86 countries. VAT rate of 17% is the lowest in the EU.
  • A stable and politically neutral jurisdiction with an ideal reputation. Luxembourg is at the top of the list in terms of political and legislative stability.
  • High standard of living. Leading places in country rankings in terms of GDP per capita, security, pension system and environmental attractiveness.

Additional Services:

  • SOPARFI registration - 2'000 EUR
  • Notary fees - about 900 EUR
  • Valuation of subsidiary company - 250 EUR/hour
  • Provision of legal address - 1.800 EUR/year
  • Annual financial statements - from 1.800 EUR
  • Nominee director - from 4'000 EUR / year
  • Tax consultations - from 250 EUR/hour
  • Legal assistance - from 250 EUR/hour.

Questions and answers

  • What tax rates apply to a Luxembourg holding structure?
    • Corporate income tax depends on the amount of taxable revenue, e.g. up to 175,000 Euros it is 15% (or 16.05% after adding 7% employment fund contribution), from 175,000.01 to 200,000 the tax is 26,250 Euros + 31% of the amount above 200,000 Euros. For amounts above 200,000 Euros, the corporate tax is 17% (18.19%).
    • Net Wealth Tax (Net Wealth Tax), 0.5% of the net asset value, with any portion of such assets exceeding EUR 500,000,000 taxed at a rate of 0.05%.
    • A tax rate of 0.5% is applied to assets that do not exceed €500 million. If the amount of net assets exceeds this amount, the NWT rate is 0.05%.
    • Value Added Tax (VAT). If a company is a VAT payer, the VAT rate in Luxembourg is 17%, which is lower than in other European countries. Companies whose activities are limited to asset ownership only are not subject to VAT. Such companies include holding companies (SOPARFI) if they do not carry out other activities.
  • Do I need to hire a Luxembourg national to manage the holding company?
    No, it is not mandatory. However, you may consider hiring a Luxembourg national or a lawyer as a director of the holding company for better manageability from abroad. We offer such services as well.
  • How to diversify business risks with a holding company?
    For example, you can separate your intellectual property from your operating subsidiary. Manufacturing companies can separate real estate ownership from operations and production.
  • I own several businesses/assets. What is the optimal ownership structure for me?
    In this case, another layer of structure can be added above your business holding company - your personal holding company. This strategy will allow you to effectively redistribute both income between different subsidiaries and losses from failed projects.
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