Presentation Financial Seminar Riyadh Final
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Transcript of Presentation Financial Seminar Riyadh Final
Luxembourg, a global financial centre for asset and wealth management services
Riyadh, May 17, 2010
Luxembourg, an international hub for
financial services
Fernand GrulmsCEO, Luxembourg for [email protected]+352 27 20 21-1
3
The Luxembourg financial centre
… at a glance :
Europe’s number one investment fund centre (number 2 worldwide behind the US)
N 1 wealth management centre in the Eurozone
Europe’s leading domicile for captive reinsurance companies
3
Luxembourg: financial centre,but also...
4
5
International financial centresInvestments managed in international centres, $bn, end-2007
Source: Bank for International Settlements, International Monetary Fund
3’615
1’1281’2551’317
2’451
2’954
5
International competitiveness
indicatorsSource Ranking
LuxembourgAnalysed
locations/countries
Growth Environment Score (GES)
Goldman Sachs, 2005 1 170
Global Competitiveness Index IMD Lausanne, 2008 5 55
Growth Competitiveness Index (GCI)
World Economic Forum, 2009 21 133
Index of Economic Freedom
Heritage Foundation & Wall Street Journal, 2009
15 183
Regional European Competitiveness Index
Robert Huggins associates, 2006 6 118
Competitive environment
6
Luxembourg financial intermediaries
Banks150
Investment funds> 3,516 (12’513 units)
InsuranceLife : 53
P&C : 40
Reinsurance : 261
Professional intermediaries(asset managers,brokers, transfer
agents…)
290
Source: CSSF, CAA
7
What do all thesefinancial intermediaries do
in Luxembourg ?
8
- banking- insurance- reinsurance- securities- investment funds
The principle of the european passport
- hedge funds- private equity- real estate
No EU passport yet
9
The Luxembourg financial centre
Employment
Direct employment44,000
Banks, other financialintermediaries, insurance
48,000
Law firms Audit, Tax
Other ICT
30,000
Source: CODEPLAFI, 2007
45’000 are university graduates
10
Luxembourg : well regulated
Minister of Finance
Commission for the supervision of the
financial sector
InsuranceCommission
Luxembourg Central Bank
Macro supervisionSystemic risk
LiquidityPayment systems
BanksFinancial intermediaries
Securities Markets
Investment fundsPension fundsOther vehicles
Life insuranceP & C insurance
ReinsuranceCaptives
11
Luxembourg: highly international
… in terms of origin of banks
Figures as at March 31, 2010, Source: CSSF
Others
12
Luxembourg : highly international
… in terms of origin of fund promoters
Market shares in terms of assets under management Figures as at December 31, 2009, Source :CSSF
21,1
19,0
15,911,9
7,7
8,56,8
1,6
3,8
1,62,1 Others
13
Luxembourg : highly international
… in terms of origin of captive reinsurers
Country of origin ofthe parent company
Sector of the parentcompany’s activity
67
48
131017
19
36
1620
15Others
Source: CAA Annual Report 2008
21
77
15
30
41
15
42 14 6
Distribution
Industry
Telecomm.
TransportOther
FoodProcess
Insurance
Banking
Chemistry
14
Luxembourg : highly international
… in terms of clients
The example of private banking
B, F, D
Latin AmericaUSAAsia
Middle East
Luxembourg
12%
16%
26% 46%
Other EUSource: ABBL
15
Luxembourg : highly international
Source: CAA Annual Report 2008
21,8%
17,2%
17,3%5,2%
10,1%
11,3%
6,5%8,4%
Other EEAcountries
2,6%Other
countries
… in terms of clients
The example of life insurance
16
17
Luxembourg : highly international
… in terms of population and work force
More than 40% of the Luxembourg population are non Luxembourgers
145,000 commuters from Germany, Belgium and France are working in Luxembourg
Most staff members speak 2 or 3 foreign languages
3
4
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2425
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4849
50
5152
4753
60
2
5868
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56
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1554
62
63
65
57
70
71
75
521
72
Double tax treaties in force
Double tax treaties pending
41
736167
746469
01. Austria 02. Azerbaijan 03. Belgium 05. Bulgaria 08. Czech Rep. 09. Denmark 10. Estonia 11. Finland 12. France 13. Germany 14. Greece 16. Hungary 17. Iceland 19. Ireland
21. Italy 24. Latvia 25. Lithuania 27. Malta 32. Netherlands 33. Norway 34. Poland35. Portugal 36. Romania 37. Russia 38. San Marino 40. Slovakia 41. Slovenia 43. Spain 44. Sweden 45. Switzerland 49. Turkey 50.United Kingdom 52. Uzbekistan 55. Georgia 57. Moldavia 59. Cyprus 61. Albania 62. Kazakhstan 64. Kyrgyzstan 66. Liechtenstein 67. Macedonia 74. Armenia69. Monaco 72. Serbia 75. Ukraine
04. Brazil 06. Canada29. Mexico 47. Trinidad & Tobago51. United States60. Argentina 68. Barbados
20. Israel 28. Mauritius 31. Morocco 56. U.A.E.42. South Africa 48. Tunisia 54. India 58. Bahrain 63. Kuwait 65. Lebanon 70. Pakistan 71. Qatar 73. Syria
66
We are connected to the world: tax treaty network
18
Ongoing diversification
2005
Venture Capital
Microfinance
Fund adminstration
Securitisation vehicles
Real estate investment vehicles
Intellectual property
SIF
Covered bonds
SPF
2010
Pension funds
Philanthropy
Pension pooling vehicles
19
20
Luxembourg : key success factors
Complies with all international rules (not offshore)
Expertise of more than 40 years in international
financial transactions
Stable political, legal & social environment
=> AAA country
Strong support from Government for financial
services
Pierre Oberlé, Business Development OfficerALFI – Association of the Luxembourg Fund Industry
Bishr Shiblaq, Head of Representative Office in DubaiArendt & Medernach
Pierre Weimerskirch, PartnerErnst & Young
Marc Theisen, LawyerTheisen Law
The Luxembourg Investment Fund Sector
The Luxembourg investment fund sector… at a glance :
3516 investment funds
12 513 fund units
1980.54 billion euros in assets under management
22
Figures as at February 28, 2010; Source: CSSF
The Luxembourg investment fund sector
0
5
10
15
20
25
US DE CH GB IT BE FR NL SE LU Others
%in terms of net assets
Market shares (%) of promoters of Luxembourg domiciled funds by country of origin in terms of assets under management
2323
Figures as at December 31, 2009; Source: CSSF
Peru 93%
Chile 78%
Singapore 67%
Japan 76%
Hong Kong 72%
South Korea 100%Switzerland 73%
France 73%
Germany 73%Sweden 80%
Italy 78%Bahrain 77% Taiwan 72%
Luxembourg market share of foreignfunds registered for sale
24
Luxembourg: center for global distribution
76.2
12.9
2.5
2.1
1.3
0 10 20 30 40 50 60 70 80
Luxembourg (LU)
Ireland (IE)
United Kingdom(UK)
France (FR)
Belgium (BE)76.2 % of all UCITS registered
in at least 3 countries (including home state) are Luxembourg funds
25
Sources: Lipper Hindsight, 31.12.2007, PWC Global Fund Distribution 2008
26
The Luxembourg investment fund sectorPrincipal markets for distribution of Luxembourg investment funds
(in terms of the number of registrations)
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Ger
man
y
Aus
tria
Switz
erla
nd
Fran
ce
Spai
n
Net
herla
nds
Italy
Uni
ted
Kin
gdom
Swed
en
Finl
and
Bel
gium
Sing
apor
e
Port
ugal
Nor
way
Chi
le
Hon
g K
ong
Den
mar
k
Cze
ch R
epub
lic
DE AT CH FR ES NL IT GB SE FI BE SG PT NO CL HK DK CZ
Americas
Asia Pacific
Europe
26
Sources: Lipper Hindsight, 31.12.2007, PWC Global Fund Distribution 2008
Bishr Shiblaq, Head of Representative Office in DubaiArendt & Medernach
Luxembourg investment funds:particular focus on UCITS
Key criteria UCITS Non-UCITS SIF SICAR
Investment restrictions
(eligible assets)Restricted Flexible Flexible Moderate
Risk diversification High Medium Low None
Ease of public distribution High Medium Low Low
Supervisory framework
Targeted to retail investor
protection
Targeted to retail investor
protection More flexible More flexible
Time to establish Low – Medium Low-Medium Very low Low
Target investors All All Institutional / HNWI
Institutional /HNWI
The Luxembourg investment fund sector
Main distinctions between UCITS and Non-UCITS
28
Source: ALFI
Eligible asset classes:□ Transferable securities□ Money market instruments□ Shares and units of UCITS and other eligible funds□ Cash□ Derivatives
• Exposure to non eligible asset classes (real estate, commodities, hedge funds) through:
□ Structured financial instruments□ Derivatives □ Closed-ended funds □ Open-ended funds
Trend towards convergence between sophisticated UCITS and alternative investment strategies:
□ Short positions through use of derivatives
Undertakings for Collective Investment in Transferable Securities (UCITS)(Part I of the law dated December 20, 2002)
29
Distribution aspects:Retail and institutional investors Single “passport” within EU and recognition beyond (EEA, Middle East, Asia, Americas)
Other features: Risk management and risk monitoringSubstance requirementsRole, scope and development of Luxembourg fund management companies (173 UCITS III management companies established in Luxembourg as at 3 February 2010)
Service providers:Central AdministrationCustodian BankAuditorTransfer AgentOther service providers
Undertakings for Collective Investment in Transferable Securities (UCITS)(Part I of the law dated December 20, 2002)
30
• Approval process of UCITS:□ Filing of UCITS documentation with the CSSF:
• Prospectus / Offering Circular• Core documents (Articles of Incorporation / Management Regulations)• Description of promoter and resumes of managers / directors of the
structure□ Approval by the CSSF□ Inception of the UCITS□ Notification under the EU passport for EU countries
Filing with CSSFApproval and Notification
Start of public offer in Luxembourg
2 months notification period
Start of public offer in other EU countriesNo max. review period
Undertakings for Collective Investment in Transferable Securities (UCITS)(Part I of the law dated December 20, 2002)
31
Source: CSSF
UCITS71,6%
SIF14,2%
UCI14,2%
Luxembourg Islamic UCITS
- UCITS investing in Sharia-compliant investments- Sharia Board (investment screening process)- Cleansing of dividends/revenues
32
88% of the Funds are launched as investment companies (SICAV) and 12% as mutual funds (FCP).
UCITS IV
Current main development at EU level
33
Pierre Weimerskirch, PartnerErnst & Young
Luxembourg –Centre of Choice for Alternative Funds
Luxembourg – attractive location for alternative investment funds
Long established financial center of first class reputation
A world renowned “Quality Brand”
Legal structures catering for all segments of the alternative
investment funds industry
Fastest growing alternative investment fund sector in the world
Deep levels of expertise in all aspects of fund creation,
administration and distribution
A highly qualified multi-lingual workforce
Highly respected regulator, and efficient supervision
35
Fund regimes for every taste
Level of regulation
Structuring flexibility
UCITS
SIF
- All Asset Classes - Restricted to well informed / sophisticated investors
- Lower level of regulation
- All Asset Classes- Public distribution without EU passport
- High level of regulation
- Restricted Asset Classes- Public distribution with EUpassport
- Very High level of regulation
SICAR
- Private Equity only- Restricted to well informed / sophisticated investors
- Lower level of regulation
SV
UCI
Part II
36
Luxembourg – European hub for private equity and venture capital funds
Leading European center for regulated PE/VC fundsMore than 300 PE/VC fundsAUM in excess of $US 40 billionLeading PE/VC service providers present in LuxembourgLeading global PE houses operating in Luxembourg
< $US 40 billion AUM
< 300 PE/VC Funds
Major Payers• 3i• Apax Partners• CVC• Fortress• Goldman Sachs• Investcorp• JP Morgan• KKR• Permira• […]
37
Leading European center for regulated property fundsMore than 130 property fundsAUM in excess of $US 30 billionLeading property fund service providers present in LuxembourgLeading global “property” (fund) mangers operating in Luxembourg
Luxembourg – European hub for international property funds
< $US 30 billion AUM
< 130Property Funds
Major Payers• Aberdeen• Aviva• Black Rock• Deutsche Bank• Heitmann• Hines• ING• JP Morgan• Morgan Stanley• Pramerica• […]
38
Leading European center for regulated hedge funds & FoHF More than700 hedge funds and FoHFAUM in excess of $US 128 billion Leading hedge fund service providers present in LuxembourgLeading global hedge fund managers operating in Luxembourg
Luxembourg – European hub for hedge funds & funds of hedged funds (“FoHF”)
< 700Hedged Funds & FoHF
< $US 128 billion AUM
Major Payers• Aberdeen Asset Managers• Black Rock• Crédit Risk• Deutsche Bank• Goldman Sachs• JP Morgan• Lyxor• Morgan Stanley• UBS• […]
39
Redomiciliation is in the air...Luxembourg is in many cases the target country
©
Re-domiciliation of funds (incl. UCITS) from end 2007 to end 2009.
Luxembourg, 31%
Hong Kong, 17%
Cayman Islands, 11%
Guernsey, 8%
Ireland, 6%
Jersey, 6%
UK, 6%
BVI, 3%
Channel Islands, 3%
France, 3%Malaysia, 3%
Mauritius, 3%Delaware, 3%
Countries of origin Target countries
Source : Lipper & The Cayman Islands Gazette based on a sample of 36 OPC
40
Good reasons to re-domicile to Luxembourg
Access to worldwide distributionReputationAttractive tax regimePresence of global asset managersExpertise and know-howCommitment to excellence and reliabilityStable jurisdiction, predictable planning and long-term investment decisions
Renowned “Quality Brand”
Access to Worldwide Distribution
41
Alternative investment trends: Thematic funds
Clean (green) technologies/SRI fundsPassion funds/Emotional assets funds“Distressed” (property) assets fundsMicrofinance fundsNanotechnology fundsGreen PE/VC fundsGreen infrastructure (wind, solar, water) fundsSharia compliant PE/RE fundsEtc.
42
Luxembourg : a Hub for Shariah Compliant Investment Funds
Marc Theisen, LawyerTheisen Law
Luxembourg: an history of innovation in theEuropean Islamic finance market
□ 1978 First islamic finance institution established in a westerncountry (Islamic Banking system)
□ 1982 First life insurance company (Takafol SA, actuallySolidarity Takafol SA)
□ 1983 First Shariah compliant insurance company in Europe(Bahraini Solidarity Group)
□ 2002 First European stock exchange to enter sukuk market(Malaysia Global Sukuk)
□ 2009 Platform “Al Mi’yar” (Shariah compliant Securities)
A first mover in Europe
44
Full support of all authorities and institutions
April 2008: Luxemburg Financial Center(Luxembourg for Finance; ALFI)
July 2009: Governmental support:Declaration of the Government
November 2009: Central Bank of Luxemburg(IFSB member)
45
Structuring Islamic Finance investment
Luxembourg is perfectly equipped to address the dynamic needs of Islamic finance investments in and through Europe
□ Regulated Investment Vehicles : UCIT part I and part II
□ Semi regulated Investment vehicles: SIF / SICAR
□ Unregulated holding companies: SOPARFI / SPF
□ The Luxemburg securitization vehicle (SV)
46
Luxembourg and Islamic Finance
38 Sharia compliant funds
16 Sukuk with a combined value of USD 7.3 billion listed at the Lux stock exchange (Bourse de Luxembourg)
4th domicile for Shari’ah compliant funds in the world with 7% of them, following Malaysia (23%), Saudi Arabia (19%) and Kuwait
Luxembourg moves to the Golf (fiduciaries, law firms, serviceproviders, A.L.F.I.)
47
How Luxembourg can help you developing your business
EXPERTISEN 1 fund international servicing centre in Europe and the 2nd worldwide - 152 Banks
QUALITYHigh quality regulated framework for UCITS and non UCITS funds
LEADERSHIPWorldwide leadership in cross border distribution of financial products
FLEXIBILITYFlexible and tax efficient structures
DEVELOPMENTCommitted to develop Shariah compliant solutions. Stable and predictable environement.
48
Taxation of shariah products
49
Tax circular from the Director of Contribution 12thJanuary 2010
Circular covers whole range of Islamic Financeproducts: Specific rules: Murabaha and Sukuk
Liberal approach to Islamic transactions
Pragmatic and open minded position
49
Islamic products in Luxembourg
Islamic products to be set up within the existing legal and tax framework of Luxembourg
50
Mudaraba Ijara MurabahaWakala Sukuk
50
Conclusion
51
Strenghts
VehiclesFull Range
Futur PE, Sukuk
MarketMarket to Market,
Crossborder
TargetMiddle Eastern investors,
Institutional investors, HNWI, West European Muslim
Population (15M)
51
Atman Haloui, Head of MENA MarketsBanque de LuxembourgAmran Ansar, Tax Adviser and Consultant in Islamic FinanceKPMG Tax
Luxembourg: The Leading European place for wealth management solutions
Agenda
INTRODUCTION
1. Shari’ah compliant investment vehicles available in Luxembourg
2. Selection of the right investment vehicle
3. Benefit from Luxembourg as a platform
3.1 Investing in Europe through a SIF vehicle
3.2 Structuring acquisition of European companies / real estate through Luxembourg
53
INTRODUCTION
54
ALL ROADS LEADS TO LUXEMBOURG
Highly attractive country
Unprecedented political and economic stabilityTradition of a Private Banking spiritInternational environment, multi-lingual, multi-culturalWealth managers are highly mobileFounding member of the European UnionHub for European activities: EU PassportInvestor protection – MiFIDProtection of private sphere, financial privacyCompetitive fiscal framework, within the OECD/G20 standardsDeposit guarantee scheme – banking, insurance
55
ALL ROADS LEADS TO LUXEMBOURG
Luxembourg has to be on the screen radar of:
Family members in Saudi Arabia and around the worldInvestments outside of Saudi Arabia:real estate, private equity, life style…Entrepreneurs wanting to internationalize their businessExpatriatesFamily offices or asset managers seeking a cross border platform complementary to their local providersPhilanthropy, Socially Responsible Investments
56
ALL ROADS LEADS TO LUXEMBOURG
Luxembourg compared to other financial centers
Complementary offering to domestic solutions, other PB centersIdeal for complex, wealthy, international clients and familiesFull range of private banking products and servicesComplemented by comprehensive range of estate and tax planning solutionCompetitive fee structureLarge number of specialist service providers, working closely with banksIdeal platform for investing or operating in Europe
57
Banking Services
Transfers/Payments
E-Banking
MulticurrencyBank Accounts
Investment Services
Execution Only
Advisory
Discretionary Asset Management
Funds in Open Architecture
Structured Products
Capital Market Products dedicated to Private
ClientsWealth Structuring
International Wealth and Tax Planning
Life Insurance
Financing
Fiduciary Services
Private Investments Vehicles
Full range of services
58
Summary
Luxembourg is a key solution of the key rule in wealth management: Geographical diversification
Luxembourg offers a wide range of attractive vehicles for individuals (and institutional) investors that can be tailored to their specific needs
Luxembourg political, legal and tax environment is stable and favorable
59
1. Shari’ah compliant investment vehicles available in Luxembourg
60
Shari’ah compliant investment vehicles
Investment funds:SICAV (Investment company with variable capital)SICAF (investment company with fixed capital)FCP (unincorporated co-ownership of assets managed by a management company)
Private Equity and Venture Capital investments:
SIF (Specialised Investment Funds)
SICAR (Venture capital vehicle)
Regulated Securitisation Vehicle
Private investments:
SOPARFI (holding company)
SPF (Private family asset holding company)
Non regulated Securitisation Vehicle
Fiduciary contract
Regulated Semi-regulated Unregulated
61
2. Selection of the appropriate investment vehicle
62
Selection of the appropriate investment vehicle
Type of investor
Size of investmentIndividual investors Retail / corporate /
Institutional investors
Small size portfolio SPF SOPARFI
Medium size portfolio SIF SICAR
Large size portfolio SICAV/SICAF/FCP
63
3. Benefit from Luxembourg as a platform
64
Benefit from Luxembourg as a platform
Saudi Corporateor institutional
Investors
LuxCo
Assets or companyIn Europe
tax efficient Investment
Tax freeincome repatriation
Shari’ah compliant investments are possible
Luxembourg is used as a platform for the investments in Europe
Advantages:Tax neutrality at the level of LuxCo
Tax efficient investments
65
3.1 Investing in Europe through a SIF
66
Investing in Europe through a SIF vehicle
Specialised Investment Funds
Sub FundMoney Market
MM
Sub FundDefensive
DEF
Sub FundReal Estate
RE
Sub FundPrivate Equity
PE
Luxe
mbo
urg
Saud
i Ara
bia
Saudi Corporateor institutional
Investors
• Greater flexibility with regard to
- The investment policy (e.g. asset pooling, no restriction on eligible assets,)
- The broadening of the sphere of investors
- Single regulatory regime
• One or several managers
• Risk diversification
• Internationally well known vehicle
67
Specialised Investment Funds: legal & tax aspects
Legal Tax•The fund may be structured as a:- Common contractual fund (FCP),- Variable or fixed capital investment company (SICAV / SICAF)
At the level of the SIF•SIF are not subject to:-Corporate income tax-Municipal business tax-Net wealth tax-No withholding tax in dividend distributions and liquidation proceeds•Principle: Subscription tax of 0,01% of the net asset value of the SIF on the last day of each quarter•Exception:-Investment in other Luxembourg UCIS being subject to subscription tax-Institutional cash UCIS-Pension pooling funds-Micro finance funds-European Savings Directive applicable-VAT exemption on management services
•Possibility to set-up as an umbrella fund with multiple compartments and / or different share classes
•Shares / units are restricted to “well informed investors”
•No restriction on repayments, distributions or dividends payments
•Reduced publication & reporting duties
•The capital gain realised on the sales of the SIF units / shares by a non resident investors are not taxable in Luxembourg for non resident investors
68
SIF a necessary vehicle for wealth management
Specialised Investment Funds
Sub FundMoney Market
MM
Sub FundDefensive
DEF
Sub FundReal Estate
RE
Sub FundPrivate Equity
PE
Luxe
mbo
urg
SaudiWealth Manager
Saud
i Ara
bia
Advantages:For the customer: no bank change,
protection by the fund regulation, steady independent net asset value (NAV)
For the Wealth Manager: efficient fee handling, independent reporting and NAV, administrative time gain, so the Wealth Manager can focus on its core activities (i.e. asset management and client relationship)
Client 1
Client 2
Client 3
Bank X
Bank X
Bank X
100% of RE
50 % of MM30% of PE
20% of DEF
50% of MM50% of PE
69
3.1 Structuring acquisition of European companies / real estate through Luxembourg
70
Practical issues:Shari’ah compliant investments
Tax issues:Potential income taxation in Europe
(corporate income tax, income tax, net wealth tax, rental income tax)
Potential withholding tax issues
Potential capital gain taxation
In the absence of a tax efficient planning:
The return on investment will be significantly reduced
Acquisition of European companies / real estate in Europe
Saudi Corporateor institutional
Investors
European located company-
Real estate located in Europe
Saud
i Ara
bia
Euro
pe
71
Structuring acquisition of European companies / real estate through Luxembourg
Saudi Corporateor institutional
Investors
LuxembourgSOPARFI
Companies located in
Europe
Operational companiesFinancial assets
Real estate
Tax transparentstructureEurope
Real Estate
1- Inflows: Investments in Europe
through Luxembourg SOPARFI
• Kind of income: Dividends, rental
income, capital gains etc…
•At the level of target country:
No or reduced withholding tax
No capital gain taxation
Rental income and capital gain on
real estate are taxed in the European
target country
Euro
peta
rget
cou
ntry
Luxe
mbo
urg
Saud
i Ara
bia
Rental incomeDividendsCapital gains
SICARor
SPF
1 1
72
Structuring acquisition of European companies / real estate through Luxembourg
Saudi Corporateor institutional
Investors
LuxembourgSOPARFI
Company located in
Europe
Operational companiesFinancial assets
Real estate
Tax transparentstructureEurope
Real Estate
Luxe
mbo
urg
Saud
i Ara
bia
Rental incomeDividendsCapital gains
SICARor
SPF
2 2
2- At the level of the Luxembourg SOPARFI:
• Dividends and capital gains income received
Luxembourg Participation Exemption
regime
•Rental income is in principle not
subject to Luxembourg taxation based
on the double tax treaty concluded by
Luxembourg
Euro
peta
rget
cou
ntry
73
Structuring acquisition of European companies / real estate through Luxembourg
Saudi Corporateor institutional
Investors
LuxembourgSOPARFI
Company located in
Europe
Operational companiesFinancial assets
Real estate
Tax transparentstructureEurope
Real Estate
Luxe
mbo
urg
Saud
i Ara
bia
Tax
neut
ralit
y
SICAR3Dividends
3- Option 1: At the level of the SICAR
SICAR is established as a resident company which is fully liable to Luxembourg income taxes
Effective tax rate might be close to 0 (under certain conditions)
No withholding tax on income distributed by the Luxembourg SOPARFI
If a SICAR is established in the form of a limited partnership, the SICAR will be considered as tax transparent entity in Luxembourg.
Euro
peta
rget
cou
ntry
74
Structuring acquisition of European companies / real estate through Luxembourg
Saudi Corporateor institutional
Investors
LuxembourgSOPARFI
Company located in
Europe
Real Estate
Tax transparentstructureEurope
Real Estate
Luxe
mbo
urg
Saud
i Ara
bia
Tax
neut
ralit
ySPF3Hybridinstrument
3- Option 2: At the level of the SPF• SPF (The Family Wealth Management
No withholding tax on income distributed by
Luxembourg SOPARFI
SPF is exempt from Luxembourg income
taxes
Annual subscription tax of 0,25% on its
share capital
Euro
peta
rget
cou
ntry
75
Structuring acquisition of European companies / real estate through Luxembourg
Saudi Corporateor institutional
Investors
LuxembourgSOPARFI
Company located in
Europe
Real Estate
Tax transparentstructureEurope
Real Estate
Luxe
mbo
urg
Saud
i Ara
bia
SICARor
SPF
4Dividends
Liquidation proceeds4- Repatriation of income to the Saudi investors•Income distribution from SICAR or SPF
No withholding tax on dividends distributionNo withholding tax on liquidation proceeds
•At the level of the Saudi investors
The structuring could be realised pursuant to the Shari’ah law
Efficient investmentPeriodic income flows
4
Euro
peta
rget
cou
ntry
76
Shari’ah investments in Europe are recommended to be realised through Luxembourg
Using Luxembourg as gateway or hub provides:
Access to European market, European directives (i.e. EU Parent / Subsidiary) and to Luxembourg extensive treaty networkLegal and regulatory flexibility (attractive vehicles for High Net Worth Individuals and Family Offices) Tax neutrality and certainty in LuxembourgTax efficiency at the level of target country
Summary: Luxembourg is the leading wealth management center in Eurozone
77
Thank you!www.lff.lu