setting up an investment fund in luxembourg ... - Casa4Funds

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VII. taxation 2002 Law 2007 Law Subscription tax (levied on a quarterly basis on the net assets) - Generally 0.05% per annum calculated on the net asset value (valued on the last day of each quarter); - Exemptions: Portion of assets represented by holdings in units of other funds already subject to subscription tax; Institutional cash/money market funds or sub-funds, where the portfolio has a residual maturity of less than 90 days and where the assets have the highest possible rating; Pension pooling vehicles. - Generally 0.01% per annum calculated on the net asset value (valued on the last day of each quarter); - Exemptions: Portion of assets represented by holdings in units of other funds already subject to subscription tax; Institutional cash/money market funds or sub-funds, where the portfolio has a residual maturity of less than 90 days and where the assets have the highest possible rating; Pension pooling vehicles. - Reduced rate of 0.01% per annum: Money market and cash funds or sub-funds; Individual sub-funds or classes of shares designed for institutional investors. Corporate income tax and municipal business tax No. No. Registration tax Double tax treaty benefits Taxation of investors Contributions to a corporate investment fund structure (SICAV/SICAF) or to a management company of an FCP are subject to a fixed registration duty of EUR 75. This amount is also due in case of any amendment to the articles of incorporation. - FCP: the FCP is transparent for taxation purposes and is thus not entitled to double tax treaty benefits; - SICAV or SICAF: yes, unless excluded under a double tax treaty (the following double tax treaties are generally applicable to SICAVs or SICAFs, i.e. those concluded with the following countries: Austria, China, Denmark, Finland, Germany, Indonesia, Ireland, Israel, South Korea, Malaysia, Malta, Mongolia, Morocco, Poland, Portugal, Romania, San Marino, Singapore, Slovakia, Slovenia, Spain, Thailand, Trinidad and Tobago, Tunisia, Turkey, Uzbekistan and Vietnam). - Investors are not subject to capital gains or income tax in Luxembourg, except for: (a) Those residing or having a permanent establishment /permanent representative in Luxembourg, or (b) Non-residents of Luxembourg who hold more than 10% of the shares of a fund of the corporate type, who dispose of all or part of their holdings within six months from the date of acquisition (subject to the provisions of an applicable double tax treaty), or (c) In some limited cases, some former residents of Luxembourg who hold more than 10% of the shares of such a corporate type of fund (subject to the provisions of an applicable double tax treaty). 22
2002 Law 2007 Law Withholding tax on distributions Generally there is no withholding tax levied on distributions made by a Luxembourg fund to its investors, except that under the Luxembourg laws dated 21 June 2005 implementing the EU Savings Directive and several agreements concluded between Luxembourg and certain associated territories of the EU, a Luxembourg paying agent must levy a withholding tax on interest payments made to EU resident individuals and residual entities, unless the beneficiary opts for an exchange of information whereby the tax authorities of the beneficiary’s state of residency are informed thereof. The same regime applies to payments made to individuals or residual entities resident or established in Aruba, British Virgin Islands, Guernsey, Isle of Man, Jersey, Montserrat and Netherlands Antilles. The withholding tax rate is currently 20% and increasing to 35% as from 1 July 2011. In respect of UCITS, UCIs and SIFs interest payments include (i) distributions of profits by a fund derived from interest payments and (ii) income - realised upon the sale, refund or redemption of units or shares if the fund has invested directly or indirectly more than 40% of its net assets in debt claims and to the extent such income corresponds to gains directly or indirectly derived from interest payments (as an exception, these rules do not apply if either (a) the investment in debt claims of a fund does not exceed 15% or (b) the fund is governed by Part II of the Law of 2002 or the Law of 2007 and is set-up as a SICAV or a SICAF). VAT - VAT taxable persons: UCITS, UCIs and SIFs are considered as taxable persons; they are deemed to carry out economic activities in the sense of the VAT Law; for FCPs, a management company, in principle, qualifies as a taxable person. The Luxembourg VAT authorities consider the activities performed by UCITS, UCIs or SIFs as VAT exempt with no right of input VAT deduction; - Management services: in Luxembourg, management services rendered to Luxembourg UCITS, UCIs or SIFs under the supervision of the CSSF are VAT exempt (article 44, paragraph 1, under d) of the Luxembourg VAT law); Management services comprise: portfolio management and administration services, i.e. legal and fund management accounting services, investor inquiries, valuation and pricing, regulatory compliance monitoring, maintenance of the shareholders/unitholders register, distribution of income, unit issues and redemptions, contracts settlements, record keeping. In case part of these management services are sub-contracted, VAT exemption applies if, viewed broadly, the services performed by a third party form a distinct whole and are specific to and essential for the management of the investment funds. Control and supervision services supplied by a depositary are excluded from the exemption and are therefore subject to VAT. - VAT registration: UCITS, UCIs or SIFs are not required to register for VAT purposes, except upon receipt of taxable intangible / intellectual services from outside Luxembourg (e.g. legal or tax advice, consulting services, “set up costs”). 23
Page 1: investment management setting up an
Page 4 and 5: definitions 1993 Law Law of 5 April
Page 6 and 7: I. legal framework for setting up a
Page 8 and 9: Part I (UCITS) Part II (UCIs) 3. Tr
Page 10 and 11: Part I (UCITS) Part II (UCIs) which
Page 12 and 13: III. specialised investment funds (
Page 14 and 15: IV. available structures The 2002 L
Page 16 and 17: One or more classes of shares or un
Page 18 and 19: V. main players 1. The management c
Page 20 and 21: 3. The central administration agent
Page 24: VIII. once-off and ongoing costs at
Page 28: ALFI thanks Arendt & Medernach, whi

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