SOPARFI is the acronym for “Société de Participations Financières”, the French term for “Holding company”.
A SOPARFI is a commercial company fully subject to the general provisions of the company and tax law. The term SOPARFI is not a legal concept but describes a company that carries out a holding activity under the general tax regime.
A SOPARFI is an unregulated vehicle, the incorporation of which does not require any authorization and is not subject to the preliminary or continuous supervision of any regulator or government body. It offers flexibility regarding investment policies while allowing investors to benefit from the Luxembourg participation exemption regime.
A SOPARFI is generally incorporated under the legal form of a private limited company (S.à r.l.) or a public limited company (S.A.). The SOPARFI is an attractive investment vehicle as it benefits from the extensive Luxembourg double tax treaties network, EU Directives, and the Luxembourg participation exemption regime (subject to clear and straightforward requirements) on dividends, liquidation proceeds and capital gains from eligible subsidiaries for corporate income tax and net wealth tax purposes.
The participation exemption also allows for withholding tax exemption on distribution to qualifying shareholders and there is no withholding tax on liquidation proceeds, interests and royalties.
This favorable economic environment has made the SOPARFI a vehicle of choice and is commonly used as holding company by multinational groups, investment funds and private individuals either to hold subsidiaries and other types of assets.
The brochure aims at providing a general overview of the SOPARFI’s tax and legal regime.
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