Holding companies in Luxembourg

1. What’s a holding company ?

A holding company can be founded through a Société Anonyme (SA), or a Société à responsabilité limitée (Sàrl) or a Société en commandite par actions (SCA).

We often use the SA not to have the UBO directly disclosed.

The minimum share capital depends on the legal form (SA: €30.000,- ; Sàrl: €12.000,-).

The main objective of a holding is to hold shares in other companies (lux resident or not).

It requires a registered address – domiciliation agreement or rental agreement needed.

A dedicated office as well as local directors/managers will bring more substance, especially when the UBO is not resident.

It is only subject to corporate tax & net wealth tax (NWT) and in most cases not registered to the VAT.

2. What you can do with a holding

• Invest in shares (resident or non-resident companies)
• Invest in real estate (incomes from real estate is always taxed in the country when the estate is located)
• Hold IP rights
• Hold patents
• Hold other kind of assets
• Grant loans (a transfer pricing analysis must be mandatory)
• Subscribe to loans
• …

3. What you cannot do with a holding

• Recruit staff
• Manage a commercial activity (or at least it is not advised – VAT/tax consideration)
• Use it to receive money without any appropriate legal documentation
• …

4. Main advantages of the Lux holding

• Benefit from tax exemptions on dividends

You must comply with the following:

• the subsidiary must be taxed in its country with a similar taxation as it would have in Luxembourg = qualifying company

Ex: a GmbH in Germany, a Sàrl in France, a Sprl in Belgium

• the holding must hold at least 10% of the subsidiary or more than €1.200.000 of shares
• the holding period must be longer than one year (or the holding must want to hold the shares more than one year)

The expenses of the year linked to the exempt dividends are not tax deductible.

• Benefit from tax exemption on capital gains

You must comply with the following:

• the subsidiary must be taxed in its country with a similar taxation as it would have in Luxembourg

Ex: a GmbH in Germany, a Sàrl in France, a Sprl in Belgium

• the holding must hold at least 10% of the subsidiary or more than €6.000.000 of shares
• the holding period must be longer than one year (or the holding must want to hold the shares more than one year)

The expenses over previous years linked to the exempt capital gains are not tax deductible.

• Benefit from Net wealth tax (NWT) exemption

You must comply with the following:

• the subsidiary must be taxed in its country with a similar taxation as it would have in Luxembourg

Ex: a GmbH in Germany, a Sàrl in France, a Sprl in Belgium

• the holding must hold at least 10% of the subsidiary or more than €1.200.000 of shares

The debt financing the exempt shares are not tax deductible.

Important – in every case you must check and consider any double tax treaty.

You wish to set up a holding in Luxembourg? Do not hesitate to contact our team of experts.

They will provide you with dedicated & tailor mades solutions.