Lex Thielen, of Luxembourg law firm member THIELEN & ASSOCIATES, provides an overview of the issues and benefits of SOPARFI companies in Luxembourg.

The system of the Financial Participation Companies (SOPARFI), introduced by a grand-ducal decree of December 24, 1990, did not have as effect to create a new form of company. Indeed a SOPARFI is an ordinary commercial company established in Luxembourg and fully taxable according to the common law, which is mainly used as a holding. This system is nevertheless not without interest.

It mainly allows, under certain conditions, the tax exemption of three kinds of income which are:

• the dividends,
• the increased values realized on the transfers of participation stock, by application of the parent company/ subsidiary system provided for by the Council Directive 90/435/EEC of July 23, 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States,
• the liquidation bonus.

Please review that attached document for further informaton on SOPARFI or alternatively contact Lex Thielen (email: lex.thielen@barreau.lu or Tel. (+352) 26260202)

Article Date: 12th October 2009

Author: Lex Thielen