Offshore to Onshore - Luxembourg Benefits

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Latest news Luxembourg

Corporate, Funds and Family office

Corporate -  Company Redomiciliation - SOPARFI - SPF - Tax Exemption - Permanent Establishment

Funds - Fund redomiciliation  - Tax exemption - Registered Office - Investment Fund

Family Office - Resident Permits - HNWI - Wealth Tax - Inheritance Tax


Incorporation of a Foreign Company

When a foreign company transfers its registered office in Luxembourg, it will sever any links with its country of first incorporation unless it keeps a permanent establishment there. The company will not be taxable in the first country, but will become taxable on its worldwide income in Luxembourg. It will be considered as resident for tax purposes and taxable at the applicable corporation tax rates - unless its shareholders elect a tax regime in Luxembourg which grants a specific tax exemption such as: SOPARFI (Holding Company) or SPF (Private Wealth Management Company). The newly incorporated company may also enjoy the benefit of the generous double tax treaty network that Luxembourg has signed with other countries.


It may also benefit from EU directives such as:

Parent Subsidiary Directive: subject to conditions, the participation exemption - absence of withholding taxes on dividends received from other companies established in other EU countries.

Interests Royalties Directive: subject to conditions, exemption of withholding taxes on interests or royalties received from companies established in the EU.

Merger-Acquisition Directive: subject to conditions, the shareholders can enjoy the delay of taxation on capital gains derived from contribution in kind (or exchange of shares upon contribution in kind) to a company, or exemption of capital gain when contributing by shares to a holding company such as a SOPARFI (Exemption of capital duty when contribution in kind is made on participations at the set-up of a SOPARFI.)


The Luxembourg law grants exemptions such as:

Luxembourg tax exemption of 80% granted to Intellectual Property Rights companies

Luxembourg tax exemption of 100% - subject to conditions - of incoming dividends, exemption of capital gain on participations, exemption of real estate incomes for estates established in a foreign DTT country, exemption of withholding tax on certain income paid, such as royalties, dividends, or interest.

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Read Also :

  Company Incorporation and Set-up

  Intellectual Property Rights

  Accounting, Legal, Corporate and Tax advisory



Fund Redomiciliation

To become an entity duly incorporated under Luxembourg law, a fund established abroad may elect to transfer its registered office and redomicile to Luxembourg.

There are two main ways of fund redomiciliation: 

"Hard" re-domiciliation: transfer of the registered office of an offshore fund to Luxembourg  in keeping its legal personality.

"Soft" re-domiciliation:

contributions in kind of the assets of a foreign fund are transfered to a new luxembourg fund. The foreign investment vehicle becomes an investor of the luxembourg fund. Subsequently, the foreign fund will be liquidated and will distribute to its own investors the liquidation shares and /or units of the luxembourg fund. The investors of the foreign fund will then become investors of the luxembourg fund.

contribution in kind by the investors of the foreign fund in a newly created luxembourg fund. Investors receive in exchange shares/units of the luxembourg fund. Thereafter, the foreign fund is liquidated and the luxembourg fund become the holder of the assets formerly held by the foreign fund.


The new luxembourg fund will be considered as tax resident, at the usual tax rate, unless its shareholders choose a vehicle allowing specific tax exemption, like Special Investment Fund ("SIF"), Venture Capital Fund ("SICAR") or Investment Fund ("SICAV"). 

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Read Also :

  Special Investment Fund - SIF

  Venture Capital Fund - SICAR

  Investment Fund Set-up


Becoming Resident in Luxembourg and Residence Permits

Situated in the heart of Europe, Luxembourg is one of the smartest and safest cities to live in the world and offers a multicultural and multilingual environment and a highly sophisticated infrastructure which enables travel to many major European cities in just a few hours. Besides these strenghts, Luxembourg has also several tax advantages.

Thus, when they become a resident, HNWIs can enjoy various tax benefits, among them: no wealth tax, no inheritance and succession tax (direct line descendants), maximum tax rate of 39%, no capital gains tax (if under 10% and held for at least six months), no tax on life assurance income (if held for at least 10 years) and a wide range of treaties to prevent double taxation.

Luxembourg also proposes an attractive inpatriate tax regime.


HNWIs who would like to establish their residence in Luxembourg are subject to the Luxembourg law on freedom of movement of persons and immigration and specially to the part related to residence permits for “private reasons”. Family members (spouse and children) of the applicant can also be awarded a residence permit. Some conditions have to be fulfiled:

If the presence in Luxembourg of the applicant does not imply a threat for the public order, public heath or security

If the applicant can prove that he/she and relatives is/are covered by a health insurance scheme

If the applicants has an appropriate place to live in Luxembourg

If the applicant has sufficient resources to leave, meaning that the revenues of the applicant must be equal or higher than the Luxembourg wage for non qualified workers (currently 1.921,03 EUR per month or 23.100,00 EUR per year). This amount applies to each adult person in a household.

Read more

Read Also :

  Wealth Structuring Advice and Inheritance Tax Planning

  Concierge and Redomiciliation Services

  Wealth Protection Plan



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> Start-ups - Starting a business au Luxembourg

> Securitisation of Real Estate - Luxembourg Residence Permit Solution for HNWI - Obtaining a Tax Agreement in Luxembourg

> Raising Capital via Luxembourg - SLP Tax treatment - Structuring Private Equity investments and funds

> Special Limited Partnership - Securitisation for IP projects - Private Foundation in Luxembourg

> Minimum Income Tax for collective entities - Individual versus collective investment vehicles - Luxembourg Step Up principle

> Private Placement in Luxembourg - Foreign Permanent Establishment - Luxembourg Private Foundation

> Permanent Establishment in Luxembourg - Loi Propectus - Brochure Family Office Services

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