SOPARFI
The société de participations financières (SOPARFI) is designed to optimise the management of a group of companies. It can be used well beyond the mere holding of assets.
A SOPARFI, which benefits from the Luxembourg network of double taxation treaties, may engage in any activity relating to the ownership and control of shares, including management of intellectual property rights, but also provision of financial advice or financing activity, and any other commercial activity that is directly or indirectly linked to the management of its assets.
1. Dividends exemption
Dividends received by a Luxembourg company are in principle subject to corporate income tax. However, under special rules for parent companies and subsidiaries, the dividends are exempt from tax in Luxembourg if specific conditions are met.
Similarly, dividends distributed by a Luxembourg company can be tax exempt if specific conditions are met.
2. Boni of Liquidation
The same rules apply, i.e. that under specific conditions the Boni of Liquidation will be tax exempt.
3. Capital Gain Exemption
Capital gains on the sale of shares are exempt from tax under the similar conditions as those for dividends and boni of liquidation.
4. IP exemption
Aside from its role as a group parent company, the SOPARFIs can also be used in the structuring of intellectual property portfolios. Any income generated through patents, trademarks, registered designs, copyright on software and domain names is exempt from tax at a rate of 80%. Only the rights created or acquired as from 1st January 2008 can benefit from this new law.
By Olivier Laidebeur
Read also the article on IP tax exemption in our Knowledge Centre.