Types of holding and benefits of holding companies and in Luxembourg

Updated time: 09 Jan, 2019, 17:47 (UTC+08:00)

A holding company can have one of the following legal forms to operate in Luxembourg:

Public Limited Company – SA
Private Limited Company – SARL
Partnership Limited by Shares – SCA
Co – operative – SC
A public company incorporated in conformity with the article 2 of the European Council regulation from 2001 – SE

Regardless of the types of companies in Luxembourg, all share capital contributions can be paid in cash or kind and the shares may be issued as registered or bearer shares under certain conditions.

A public company may utilize a board of directors or a management board and a supervisory board as forms of management. There are no legal requirements relating to the nationality or residence of the directors.

This type of company requires that an annual balance sheet, a profit and loss account and notes to the accounts must be prepared and submitted for the shareholders’ approval within six months after the financial year-end.

Benefits of a holding company in Luxembourg

Received pidends and capital gains on disposal of shareholding are exempt from taxation under certain conditions;
Limited or no withholding tax on pidends paid to a company resident of a country that has a double tax treaty with Luxembourg, under certain conditions;
No withholding tax on pidends paid between the Luxembourg company and other EU resident companies, under certain conditions;
No withholding tax on the liquidation process of a holding company;
Possibility of offsetting financial charges such as capital losses on disposal of shareholdings, acquisition of shareholdings in respect of taxable activities and, under certain conditions, foreign tax credits against profits made from other activities subject of taxation;
Flexible thin capitalization rules and possibility of VAT registration;
No requirements on paying any subscription tax.