Holding 1929

The Holding 29 (H29 in our jargon) was the main concern of the financial place of Luxembourg, largely used by banks like CPA offices.

 

Definition of Holding 1929

It is a Luxembourg holding company which is :

  • not liable to company income tax,

  • no liable of any withholding tax on dividends distributed to its shareholders

  • allowed to have certain non-holding companies activity, without any taxation.

 

In 2006, the European Commission has enacted provisions aimed to put an end to this system on 31.12.2010.

 

Presently, new H29 companies cannot be created anymore and those existing have to comply with strict requirements to benefit from this system until the end of the transitional period.

H29 companies constitute a type of structure which is no longer recommended.

Alternatives to Holding 1929

At the end of 2010, H29 companies shall automatically be considered as Soparfi, unless they choose another possibility : Luxembourg SPF company, head office transfer to Malta, etc.

The head office transfer to Malta allows that the corporate entity remains the same, only the head office address changes.

 

These changes of tax statuts of juridiction are redacted in an Extraordinary General Assemby, in front a Luxembourg Notary.

 

 

In the specific case of a Holding 1929 that is paid commissions by a SICAV, the Luxembourg company will be liable to company standard income tax, since 01/01/2011 (28,53% in Luxembourg city), it will have to register to VAT and its Managing Director will have to obtain a business licence .

 

The head office transfer to Malta is here an efficent solution. The Luxembourg holding 1929 will become a Maltese trading company (liable to an income tax rate of 5%).