July, 2006, the European Commission ordered the government
of Luxembourg to dismantle its system of tax breaks for financial
holding companies, after concluding that the preferential
tax regime in favour of Luxembourg’s Exempt, Milliardaire
and 1929 Financial Holding companies violates EC Treaty state
aid rules. (The existing regimes are described in Offshore
Legal and Tax Regimes.)
did finally abolish the holding company regimes as of 1st
January 2007, allowing existing companies to retain their
tax benefits until 2010. As originally drafted, the legislation
would have removed tax benefits from any company that changed
its share-holdings during the 'grandfather' period.
replacement for the holding company regime is the Family Private
Assets Management Company, or SPF, brought into being in 2007,
and aimed at the wealth management sector.
Luxembourg Societe Anonyme
(Joint Stock Company)
The Societe Anonyme, abbreviated SA, or joint stock company,
is formed under the Commercial Companies Law 1915, as amended.
SAs must have a minimum capital of around EUR31,000 divided
into freely transferable shares held by at least two shareholders,
who may be resident or non-resident persons or juridical entities.
The shareholders' liability is limited to the amount of their
subscribed (not necessarily paid-up) capital. There is a Board
of Directors (at least three), and day-to-day management may
be delegated to a managing director.
takes 2 or 3 days; the SA's statutes must be printed in French
or German; a director must give his name, address and occupation.
There must be registered office in Luxembourg, but only the
share register need be kept there. Accounts need to be submitted
annually to the Registrar of Companies, but need only be audited
if a company exceeds a certain size: either the balance sheet
is greater than EUR3.125m, or sales are greater than EUR6.25m,
or there are more than 50 employees.
Societee a Responsabilite Limitee (Limited Liability Company)
The Societe a Responsabilite Limitee, abbreviated SARL, or
limited liability company, is also formed under the Commercial
Companies Law 1915, as amended. The SARL must have a minimum
paid-up capital of around EUR12,400 divided into 'participation
certificates' which are not freely transferable. There may
not be more than 40 shareholders, and they are liable for
the amount of their paid-up capital. If there are fewer than
25 shareholders an annual gemeral meeting is not necessary.
other respects, the SARL is similar to the SA.
General Partnerships are recognised in Luxembourg law either
as a Societe Civile (most professional partnerships take this
form) or as a Societe en Nom Collectif (for instance, a family
business might choose this form). The partners are liable
jointly and severally for the full debts of the partnership.
Partnerships must be registered with Greffe du Tribunal de
Limited partnerships in Luxembourg have general partners,
who are responsible for management, and have unlimited liability,
and limited partners, who are liable only to the extent of
their capital contributions to the partnership. A limited
partnership can either be a Societe en Commandite Simple in
which case it is subject to the same rules as a general partnership,
or it can be a Societe en Commandite par Actions, in which
case the limited partners are issued with shares and the partnership
is treated in the same way as an SA (see above) in most respects.
Branch of Overseas Company
An overseas company can carry on business in Luxembourg through
a branch office, but will need to obtain a permit as does
every business. A branch office will normally constitute a
permanent establishment from a tax point of view (see Domestic
Luxembourg 'Holding' Company
The Luxembourg Holding Company, the 'Soparfi' (Societe a Participation
Financiere) and now the SPF are the forms which permit 'offshore'
activity in Luxembourg: see Offshore
Legal and Tax Regimes for a full description. However,
they are not separate legal forms as such, and employ one
of the above forms, either SA, SARL or Societe en Commandite
par Actions, as a legal base.