LuxembourgCompany formation, tax and banking
Europe's home for institutional funds and SOPARFI holding companies.
Luxembourg is Europe's capital for institutional funds — €5 trillion under management, second only to the US. Its SOPARFI holding companies, its RAIF and SIF fund structures, and its unmatched access to tax treaties and EU directives make it the default European base for institutional money.
It's small, expensive and demanding — not a place for lightweight structures. But for institutional funds, international holding groups and companies that finance IP, few countries match its mix of tax efficiency, treaty access and reputation.
Why people choose Luxembourg
- Europe's home for institutional funds, with €5 trillion under management
- SOPARFI holding companies pay no tax on qualifying dividends and gains
- Strong access to tax treaties and EU directives
- A RAIF can launch without the regulator (CSSF) approving it first
- Deep custody, administration and depositary services for funds
Where Luxembourg fits
- RAIF/SIF funds
- SOPARFI
- SPVs
Where Luxembourg fits in a structure
Typical role · European holding company or fund
The SOPARFI sits at the top of a European group and owns its subsidiaries' shares. Qualifying dividends and gains it receives aren't taxed (the participation exemption), and EU directives cover interest, royalties and dividends across borders. It relies on a serious budget and real presence: Luxembourg is small, expensive and demanding, not a place for lightweight structures.
What it depends onLuxembourg expects an office, local directors, and board meetings and decisions held there, and under EU anti-avoidance rules (ATAD, DAC6, the proposed ATAD3) and the global minimum tax (Pillar Two), failing on presence now has real consequences.
A simplified picture to explain the idea, not a recommendation. General information, not tax or legal advice.
Opening a bank account
Luxembourg banking is deep for institutional funds and private banking. Every major European bank is there, and its custody, administration and depositary services are unmatched in Europe.
How tax works here
24.94% combined company and local tax on ordinary trading income. SOPARFI holding companies don't pay tax on qualifying dividends and gains (the participation exemption). Full access to EU directives on interest, royalties and dividends across borders.
Real presence, and who can see the owners
Luxembourg expects real presence — an office, local directors, board meetings held there and decisions made there. EU anti-avoidance rules (ATAD, DAC6, the 'unshell' proposal ATAD3) and the OECD's global minimum tax (Pillar Two) all affect Luxembourg structures; failing on presence now has real consequences.
When to choose it
Choose Luxembourg for institutional funds (RAIF, SIF, SICAV), for European holding groups where tax treaties and EU directives are critical, or for IP financing where the participation exemption and treaties matter.
You get a written comparison, not a sales pitch.
Every Luxembourg recommendation comes as a written comparison with the alternatives — whether the setup will stand up to scrutiny, how easy banking will be, which tax treaties apply, who can see the owners, what it costs to run each year and the risk to your reputation — so you can see the trade-offs before you commit.
Considering Luxembourg? Get a written comparison first.
Answer six questions and our team will come back with a shortlist, rough costs and where you could bank.
Questions we hear on every Luxembourg intake.
- What is a SOPARFI?
- A Société de Participations Financières — a Luxembourg holding company that pays no tax on qualifying dividends and gains from its subsidiaries (the participation exemption). The workhorse of European holding structures.
- RAIF or SIF?
- A RAIF (Reserved Alternative Investment Fund) can launch without the regulator (CSSF) approving it first — faster and more flexible, but it needs an authorised fund manager (AIFM). A SIF is supervised directly by the CSSF and suits funds whose investors want that regulatory badge.
- What is ATAD3 (unshell)?
- An EU proposal (the third Anti-Tax-Avoidance Directive) setting minimum real-presence rules for EU shell companies. Companies that fail would lose tax-treaty and EU-directive benefits. We design against it from the start.
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Every engagement begins with a twenty-minute advisory call. The fee is in writing before any work begins. No hourly billing.