The glossary to understand and take action

Parent-subsidiary regime

Subject to conditions, the parent-subsidiary regime provides for exemption treatment of certain income and shareholdings between companies.

Notion comptable, fiscale ou juridique · Luxembourg Fiduciaries Editorial Team · Reviewed on

Understand the scope

Definition and points to distinguish

Dividends, capital gains and outbound distributions are not dealt with under a single rule. Check the entities, thresholds, holding period, evidence and anti-abuse provisions for the relevant flow.

In your file

What this changes in practice

The parent-subsidiary regime may eliminate certain taxation on income or shareholding transactions where the conditions are met. These conditions concern, in particular, the entities, the shareholding and its holding period, depending on the income and mechanism under review. Dividends, capital gains and withholding taxes must not be confused. Documentation must demonstrate compliance with the criteria and take anti-abuse rules into account.

A scenario to help you understand

Educational example

A company receives a dividend from a recent shareholding. It checks the conditions specific to that income and to its holding situation before applying an exemption treatment.

Fictitious situation, presented to illustrate the concept.

Prepare for what comes next

Points to check

  • Identifier le revenu concerné
  • Vérifier toutes les conditions du dispositif
  • Conserver les preuves et analyser les règles anti-abus

The practical question

Find out more

Quels éléments examiner avant d’appliquer le régime mère-filiale ?

Identifiez les sociétés concernées, leur statut, la participation, les dates et le type de revenu. Les conditions du régime et les règles anti-abus doivent être documentées pour l’opération. Une structure qualifiée de holding ou un lien de groupe ne suffit pas. Conservez les pièces montrant pourquoi le traitement retenu s’applique à cette distribution ou cession précise.

Connecting concepts

Terms to know as well

Continue with the concepts, contacts and procedures related to this topic.

DividendA dividend is a distribution decided for the benefit of partners or shareholders under the conditions applicable to the company.Capital gainA capital gain is a gain determined in a transaction by comparison with a reference value under the relevant rules.Withholding tax on dividendsTax withheld when a dividend is made available and declared by the debtor company in accordance with the applicable rules.SOPARFISOPARFI commonly refers to a financial holding company subject to ordinary law, incorporated in a legal form such as an SARL or an SA.Economic substanceEconomic substance refers to the actual elements of organisation, resources and decision-making assessed in the analysis of an activity or structure.SARLAn SARL is a private limited liability company whose organisation and shareholders’ rights are governed by law and the articles of association.

Put it into practice

Explore further with our guides

Practical guideParent-subsidiary regime in Luxembourg: conditions to reviewPractical guideSOPARFI in Luxembourg: how it works, obligations and points to watch

Sources and verification

References consulted on 20 September 2026. Official procedures specify the applicable conditions and exceptions.

This guide explains a general process. The applicable rules depend on your situation; it does not constitute personalised advice. Report a correction.

A definition gives you a reference point. To examine your situation, clarify your question with a professional.