In recent years, we have heard a lot of talk around blockchain technology and are constantly hearing “these Bitcoins” and “that Ethereum”. It’s hard not to hear about cryptocurrencies discussed at a social gathering or in the news. Most major television programmes now have a cryptocurrency and blockchain segment in their financial or business shows. Whether we want to believe it or not, blockchain could be the next version of the Internet – Web 3.0 – that could impact our lives in ways we don’t realise today. It is similar to the early years of the Internet or smartphones; today, we cannot live without them.
From a revolutionary mass hobby, this young industry has grown into a global industry with crypto assets valued at more than $400 billion and will grow substantially over the next decade, according to many participants. Needless to say, in the face of excessive growth and volatility, a group of insiders have made millions and even billions in the process.
This industry is on the rise, and useful products and services are beginning to go beyond the narrow circle, which will lead to even greater growth. That is why investments in crypto assets are becoming increasingly popular and accessible to the mass market, ensuring their ease of management and making it possible to choose the best assets for investment and management.
Many countries do not have rules governing the circulation of cryptocurrencies. There is no way to pay taxes on income. In addition, there are countries where digital money is prohibited.
Nevertheless, many entrepreneurs are interested in investing in cryptocurrencies despite some risks. This is a great chance to make good money, so you should use it while you have the opportunity.
Limited liability partnerships are one of the most attractive financial instruments for managing your business and jointly investing in various types of assets.
The Duchy of Luxembourg has an exceptionally favourable business environment, so many business people worldwide are interested in setting up shop here. They enter into local partnerships or set up independent entities to do so. The most popular forms of partnerships are limited liability partnerships. Such partnerships are excellent at performing their functions: structuring investments in the private sector, asset protection, financial planning, and ensuring the operation of real estate projects or closed-end investment businesses.
Consider three popular types of partnerships in Luxembourg – SECA (SCA), SECS (SCS) and SCSp.
All of these are limited liability partnerships, of which only SCSp does not have a legal personality separate from its partners, i.e., it is not a legal entity. SCSp is formed by an agreement between the partners, which provides more flexible structuring compared to SCS and other corporate entities in Luxembourg.
The main difference between SECS and SECA is the ability to trade interest shares freely – SECS shares are not freely tradable, unlike SECA shares.
All types of businesses can use all three types of partnerships in practice. They require a minimum of two partners, namely one general partner and one limited partner. The main difference between the partners lies in their obligations: general partners are jointly and severally liable for the company’s obligations; limited partners are liable only to the extent of their contributions.
The difference between these two types of partners has two main advantages: allowing general partners to increase the company’s capital without weakening their powers and limited partners to support the company (financially) without facing unlimited risk. This is why it is exciting in the FinTech sector for young entrepreneurs with innovative ideas who need funding from other parties, as well as for entrepreneurs who want to invest in a company while limiting their liability. They are also suitable for small and medium-sized family businesses, as they provide the possibility of a transition to a minor heir.
Both individuals and legal entities can be members of partnerships in Luxembourg, and their residence does not matter. As for the share capital of Luxembourg partnerships, there are no requirements for it, as it consists of the amounts of contributions of each partner (except for SECA – here the minimum share capital is EUR 30,000, of which at least 1/4 must be fully subscribed and paid on the day of registration). The partnership’s capital is distributed in the form of shares or stocks, and the partners are not entitled to transfer their shares to third parties unless the General Meeting has so decided.
When establishing a partnership, a partnership agreement is drawn up. It stipulates the issue and compensation of partnership interests, distribution of profits and losses between partners, voting rights, transfer of partnership interests, etc.
The advantage of the SCSp is that this type of partnership is not subject to income tax, municipal tax, or net asset tax at the partnership level in Luxembourg (as a general rule). Income can be reclassified as commercial if a partner holds at least 5% of the capital with unlimited liability, which is a legal entity.
In conclusion, whatever type of partnership you choose, remember that it must be entirely voluntary. The criterion of profitability in a partnership is the need of the partners for each other and the business’s financial performance. A partnership is profitable when it allows you to achieve your financial goals.
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