Definition of SPVs and SPEs
Before we dive into the specifics of setting up an SPV/SPE in Luxembourg, let's start with a brief overview of what these acronyms stand for and what they mean.
SPVs
SPV stands for Special Purpose Vehicle, which is a type of legal entity that is created for a specific purpose, such as to hold assets or raise capital. SPVs are often used in corporate finance and structured finance transactions, such as securitization or project finance.
SPEs
SPE stands for Special Purpose Entity. It is a type of legal entity commonly used for investment purposes. An SPE is a company that holds and manages investments in other companies or assets, such as real estate or intellectual property.
Both SPVs and SPEs have a specific purpose and are created for a specific project or investment. They have a flexible legal structure that allows them to be adapted to the specific needs of each investment. SPVs and SPEs are often used to minimize risk and optimize tax efficiency for businesses operating in multiple jurisdictions.
In Luxembourg, both SPVs and SPEs are commonly used due to the country's favorable tax environment and flexible legal framework. In the following sections, we'll delve into the specifics of opening an SPV/SPE in Luxembourg and the benefits it can offer for businesses looking to establish a presence in Europe.
Benefits of Opening SPVs or SPEs in Luxembourg
Luxembourg is a prime location for opening an SPV/SPE due to its favorable tax environment, political stability, and strong economy. By setting up an SPV/SPE in Luxembourg, companies can benefit from the following advantages:
Taxation
Luxembourg offers a wide range of tax incentives for companies, including a low corporate income tax rate of 24.94%, no withholding tax on interest payments, and no capital gains tax on the sale of shares.
Political stability
Luxembourg has a stable and reliable political system, making it an attractive location for businesses looking to establish a long-term presence in Europe.
Strong economy
Luxembourg has a highly developed economy and is home to many international corporations, making it a hub for business and investment.
The Six Steps to Open an SPV or SPE in Luxembourg
Opening an SPV or SPE in Luxembourg can provide significant advantages for businesses looking to establish a presence in Europe. Follow these step-by-step instructions to set up your company in Luxembourg :
Step 1: Determine the Legal Structure of the Company
The first step to opening an SPV/SPE in Luxembourg is to determine the legal structure of the company. Companies can choose from a variety of legal forms, including a public limited company, a private limited company, or a partnership. It's essential to choose the legal structure that best fits your business needs.
Step 2: Choose a Company Name
Once you've decided on the legal structure, the next step is to choose a company name. The name must be unique and not already registered with the Luxembourg Trade and Companies Register. You can use the Trade and Companies Register's online database to check if your chosen name is available.
Step 3: Register the Company
After the company name has been chosen, the next step is to register the company with the Luxembourg Trade and Companies Register. This can be done online or in person at the One-Stop Shop for Entrepreneurs. The required documents include articles of association, a list of board members, and a bank statement showing proof of capital.
Step 4: Open a Bank Account
In order to operate as a legal entity, the company must open a bank account in Luxembourg. The bank will need to verify the company's documents and obtain information on the company's directors and shareholders.
Step 5: Obtain a Registered Office Address
All companies registered in Luxembourg must have a registered office address in the country. The address must be a physical location where the company can receive official correspondence. It can be a commercial address or a private address.
Step 6: Obtain Any Necessary Licenses
Depending on the nature of the business, companies may need to obtain additional licenses or permits before they can begin operating. The required licenses depend on the business activities and the industry in which the company operates. It's essential to research the specific requirements for your industry and obtain the necessary licenses before starting operations.
Conclusion
In conclusion, opening an SPV or SPE in Luxembourg can offer significant advantages for businesses looking to establish a presence in Europe. By following these six steps you can successfully set up the company, and benefit from Luxembourg's favorable tax environment, political stability, and strong economy. If you need help with any of these steps, our team of experts and chartered accountants at Qualix can guide you through the process and help you make the most of this opportunity. Schedule a complimentary consultation today.