What is a Soparfi ?
A Soparfi is a company governed by the ordinary tax laws of Luxembourg, and whose main purpose is to hold shareholding and other activities in connection with the management of its shareholding.
Therefore the Soparfi is subject to the same taxation as any commercial company.
However, while commercial business will be liable to taxation according to general law, financial transactions (dividend collection, gains in values) can in some circumstances be exempted from taxation.
Since the Soparfi do not enjoy personal exemption, double taxation agreements apply (https://impotsdirects.public.lu/fr/conventions/luxembourg.html); the provisions of the European tax directives also apply, for instance Directive 2003/123/EC referred to as the Parents-Subsidiary Directive.
In order to be entitled to the parent company & subsidiary privileges, and as a result to tax exemptions for subsidiary profits:
- The parent company should be a share company based in Luxembourg holding a shareholding of at least 10% in the share capital of the subsidiary (or an investment of EUR 1,250 million).
- The subsidiary should be a resident or foreign company liable to profit taxation and the parent company should hold the shareholding for at least 12 months or agree to retain it for at least 12 months.
- The exemption covers not only current distributions but also the distribution at the liquidation of the subsidiary if it is liquidated, converted, merged, split, absorbed or sold.
- Gains in value from the sale can benefit by an exemption if the parent company holds a 10% shareholding (or EUR 6 million) in the subsidiary.
- Depreciations are allowed and possible losses of the liquidation are fully deductible.
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