Meridien International is able to assist sports persons, entertainers and their advisors on appropriate trust and corporate structures that offer wealth protection and non-aggressive and sensible tax mitigation.
Luxembourg’s reputation as a stable and secure financial center is anchored in its political and economic stability, robust legal protections, and a comprehensive network of over 90 double tax treaties worldwide. This extensive treaty network enables effective mitigation of withholding taxes on dividends, interest, and royalties—critical revenue streams for athletes and entertainers who often receive income from licensing and endorsements across multiple jurisdictions.
The country’s regulatory framework is designed to offer flexibility without compromising compliance. Luxembourg’s commitment to substance requirements, transparency, and adherence to international standards—including the OECD’s Base Erosion and Profit Shifting (BEPS) initiatives—makes it particularly attractive to clients who prioritize both tax optimization and reputational integrity.
Furthermore, Luxembourg provides an environment conducive to complex planning, accommodating the diverse needs of these professionals, from managing intellectual property and sponsorship income to safeguarding family wealth and planning inter generational succession.
Key Luxembourg Structures for Wealth Protection, Tax Efficiency, and Long-Term Planning
1. Luxembourg Private Wealth Holding Structures (SOPARFI)
The Société de Participations Financières (SOPARFI) is one of Luxembourg’s most versatile and widely used holding company vehicles, ideally suited for sports professionals and entertainers. It facilitates the tax-efficient holding of income-generating assets, intellectual property rights (IPR), and investment portfolios.
Key benefits include:
- Access to Luxembourg’s extensive double tax treaty network, reducing withholding taxes on dividends, interest, and royalties
- Eligibility for the participation exemption regime, allowing exemption on qualifying dividends and capital gains from subsidiaries
- The ability to hold and manage a diversified portfolio including real estate, equity investments, and IP rights, thus centralizing asset management under one corporate entity
- Enhanced confidentiality and asset protection afforded by Luxembourg company law, providing a shield against unsolicited claims and liabilities
2. Family Wealth Holding Companies (Société à responsabilité limitée – S.à r.l.)
The S.à r.l. is a limited liability company offering operational flexibility combined with legal protection, often used for managing personal wealth linked to professional earnings. This structure is particularly useful for organizing sponsorship income, licensing contracts, and other revenue streams in a clear and manageable way.
Advantages include:
- Separation of personal assets from professional and business liabilities, limiting exposure to personal risk
- Simplified governance structures that ease administration while maintaining control over assets and income
- Efficient mechanisms for succession planning and intergenerational wealth transfer, ensuring continuity and preservation of wealth within families
3. Trust-Like Structures: Fiducie and Foundations
While Luxembourg does not have a traditional common-law trust regime, it offers fiduciary arrangements known as fiducie and foundations, which can be tailored to replicate many trust functions.
These structures provide:
- Protection of wealth from creditor claims, litigation, or other external risks, offering a secure vehicle for asset segregation
- Flexibility to support charitable endeavors, family governance frameworks, or specific wealth management objectives
- Confidentiality and adaptability, making them valuable for estate planning and the long-term preservation of wealth
Tax and Regulatory Advantages of Luxembourg for High-Net-Worth Individuals
Luxembourg’s tax regime is structured to optimize wealth preservation while ensuring full compliance with international standards:
- Tax neutrality on capital gains and dividends under specific qualifying conditions, reducing tax leakage within holding structures
- Minimal withholding taxes on outbound dividends, interest, and royalties, facilitated by Luxembourg’s double tax treaties, thereby maximizing income repatriation
- No inheritance or gift taxes at the Luxembourg level for assets held within compliant wealth structures, offering efficient intergenerational transfer possibilities
- Full adherence to the EU Anti-Tax Avoidance Directive (ATAD) and other global initiatives, ensuring sustainability, transparency, and regulatory alignment to protect against harmful tax practices
Substance Requirements and Compliance
To benefit from Luxembourg’s tax treaties and avoid challenges under anti-abuse rules, structures must demonstrate genuine economic substance. This entails maintaining:
- Qualified local management and directors physically present in Luxembourg
- Dedicated office space within the jurisdiction
- Conducting core management and operational activities on Luxembourg soil
Our advisory team ensures that every structure complies fully with these requirements, balancing regulatory demands with operational efficiency and client convenience.
