Investment In Australian Real Estate - Netherlands and Luxembourg
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Investment In Australian Real Estate - Netherlands and Luxembourg

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    Investment In Australian Real Estate - Netherlands and Luxembourg Investment In Australian Real Estate - Netherlands and Luxembourg Presentation Transcript

    • Investment in Australian real estate - Netherlands and Luxembourg Sydney, 9 February 2009 Bart Rubbens Peter Moons Matthijs Vogel
    • Topics
      • Dutch investors and investment structures
      • Luxembourg investment structures
      • Recent developments
    • Dutch investors
      • Pension funds
      • Taxable corporate investors
      • Investment funds
    • Dutch investors – pension funds
      • Strictly regulated
      • Fully exempt from corporate income tax
      • Dutch perspective: treaty residents
      • Dutch tax considerations no structure driver
    • Dutch investors – pension funds Pension fund Pension fund 1 LPT Pension fund LPT Units Pension fund LPT Trust Unit linked notes 75% Pension fund 2 CV
    • Dutch investors – taxable corporate investors Corporate investor Corporate investor Trust Direct: Indirect: Exemption under treaty Qualification
    • Dutch investors – taxable corporate investors
      • Investment in property trust
        • Qualification
        • Compare to Dutch fund for mutual account
        • Two types: transparent and non-transparent
          • If units only transferable to fund: transparent
          • If units only transferable with unanimous consent: transparent
          • In all other cases: not transparent
        • LPT: not transparent
        • Wholesale fund: depends on the trust deed
    • Dutch investors – taxable corporate investors
      • Transparent: direct investment
      • Non-transparent LPT or wholesale fund:
        • Participation exemption only if real estate company (90% test) - ruling
        • If no participation exemption:
          • all dividends and gains taxed
          • if 25% or more interest: mark-to-market at year-end
        • No credit for Australian WHT on profit distributions
      • Stapled structure:
        • No qualification issues for company site
        • Participation exemption for company
    • Dutch investors – investment funds
      • Dutch LP and transparent fund for mutual account
        • Mainly pooling vehicle for institutional investments
      • VBI (= tax exempt investment institution)
        • Entity for collective investment
        • For investment in financial instruments
        • On a risk diversified basis
        • Full tax exemption (CIT and DWT)
        • No treaty protection
        • Not widely used (competition with Luxembourg)
        • Not for real estate investments
    • Dutch investors – investment funds
      • Dutch FBI (‘REIT’) – Corporation or non-transparent fund for mutual account with special tax status:
        • 0% CIT rate
        • 15% DWHT rate
        • Financing limits and shareholders’ requirements
      • Co-op – For pooling foreign investors
        • 25.5% CIT
        • Treaty protected
        • Participation exemption
        • No shares, no dividend WHT
        • CIT risk for holder of substantial interest: ruling practice or blocker
    • Dutch investors – Co-op Dutch Co-op BV
      • No Dutch DWHT if Co-op has no capital divided by shares
      • Netherlands Antilles to avoid Dutch CIT on substantial shareholding (dividends and capital gains) or ruling
      • Fiscal unity possible between Co-op and BV
      • Functional currency possible
      • Participation exemption
      • Dutch-Australian tax treaty contains information exchange clause
      Investors <5% SPV Netherlands Antilles Investors ≥ 5%
    • Dutch investors – investment funds
      • Dutch BV held by Luxembourg fund
        • Alternative foreign investor pooling platform
    • Luxembourg funds overview
      • Luxembourg track records
        • N° 2 largest funds centre in the world
          • 3,371 registered investment funds
          • EUR bn 1,560 net assets under management
        • N° 1 centre in Europe for Funds distribution in and outside Europe
          • 75% of worldwide distribution autorisations
          • 75% of UCITS registered in at least 3 countries
      Figures as at December 31, 2008 – Source ALFI
    • Peru 93% Chile 78% Singapore 67% Japan 76% Hong Kong 72% South Korea 100% Switzerland 73% France 73% Germany 73% Sweden 80% Italy 78% Bahrein 77% Taiwan 72% Figures as at June 30, 2008 – Source ALFI Luxembourg funds overview Registered foreign funds worldwide, Luxembourg market share
    • Onshore versus offshore funds
      • Globalization of alternative investments
      • ‘ New’ (institutional) investors constrained to invest ‘offshore’
        • Marketability/reputation/policy guidelines
        • Supervision
        • Listing possibilities
      • ‘ Offshore’ funds constrained to invest in certain countries (e.g. Spain and Italy)
      • Other possible benefits of ‘onshore’ funds:
        • Time-zone
        • Substance solutions (at the level of the fund and at the level of the holding vehicles)
        • Investors protection (regulatory framework, corporate governance, infrastructure/service providers etc.)
        • Investment protection with BITs
        • Tax efficiency
    • Luxembourg fund model: pillars Investor Protection Authorisation Fund management Specialised Investors Supervision Custody Reporting Audit Tax Efficiency Income tax exemption No tax on distributions No exit tax SIF: 1 bp annual subscription tax Specific VAT exemption Structuring Flexibility Access Quick Start (SIF) Choice of vehicle All invest. policies No statutory diversification (But: CSSF Circular) No borrowing restrictions
      • UCITS (2002)
      • Undertakings for Collective Investment in Transferable Securities
      • SEPCAV/ASSEP
      • Luxembourg and potentially pan-european pension funds
      • SIF (2007) Specialized Investment Fund
      • SICAR (2004) Investment Company in Risk Capital
      • SV (2004) Securitization Vehicle
      Luxembourg investment regimes overview
    • Example of structuring of Luxembourg fund into Australian LPT
      • Investors in Lux Fund
      • Information exchange country needed (Australian WHT reduction)
      • Luxembourg blocker entity to avoid WHT in information exchange country
      • Hybrid to avoid DWHT in Luxembourg (ruling)
      FUND FCP - SIF Investors Luxembourg SPV Luxembourg ManCo VAT exemption No tax on interest No tax on distributions Dutch SPV No tax on income/gains LPT Hybrid
    • Example of structuring of Luxembourg fund into Australian LPT
      • Optimisation before 2011: intercompany interest deductions? Interest withholding rate lower than dividend withholding
      • Need tax treaty country for reduced Australian interest withholding tax rate
      FUND FCP - SIF Investors Luxembourg SPV Luxembourg Management Company VAT exemption No tax on interest No tax on distributions Dutch SPV No tax on income/gains LPT Lending through SPV Hybrid
    • Example of structuring of Luxembourg fund into Australian LPT
      • For which investors?
        • Exempt investors
          • E.g. sovereign wealth funds
          • Fund of funds
          • Offshore funds
          • Pension funds (but better of investing directly)
        • Corporate Investors in tax treaty country
          • Potentially through tax-optimised feeder vehicle (mostly debt financed)
      FUND FCP - SIF Exempt Investors Luxembourg SPV Luxembourg ManCo VAT exemption No tax on interest No tax on distributions Dutch SPV No tax on income/gains LPT Lending through SPV Treaty country corporate investor Feeder
    • Example of structuring of Luxembourg fund into Australian LPT
      • For which investors?
        • Exempt investors
          • E.g. sovereign wealth funds
          • Fund of funds
          • Offshore funds
          • Pension funds (but better of investing directly)
        • Corporate investors in EU country
          • Could invest into Dutch SPV if they hold at least 5%
      FUND FCP - SIF Exempt Investors Luxembourg SPV Luxembourg ManCo VAT exemption No tax on distributions Dutch SPV LPT Lending through SPV EU country corporate investor >=5%
    • Example of structuring of Luxembourg fund into Australian LPT
      • For which investors?
        • Exempt investors
          • E.g. sovereign wealth funds
          • Fund of funds
          • Offshore funds
          • Pension funds (but better of investing directly)
        • Corporate Investors in tax treaty country
          • Corporate investors look (generally) through Luxembourg FCP
          • Withholding taxes not applicable to redemptions of classes of shares
      FUND FCP - SIF Exempt Investors Luxembourg SPV Luxembourg ManCo VAT exemption No tax on distributions Dutch SPV LPT Treaty country corporate investor 1 - 8
    • Example of structuring of Luxembourg fund into Australian LPT
      • Alternative structure through a SICAR
        • Exempt investors
          • E.g. sovereign wealth funds
          • Fund of funds
          • Offshore funds
          • Pension funds (but better off investing directly)
        • Corporate investors
        • SICAR only open to investments ‘with a view to launch, develop or IPO a business’
      Exempt Investors No tax on distributions Dutch SPV LPT Until 2011 lending (bonds) through SPV corporate investor Lux SICAR
    • Recent European developments
      • Property values decreasing
        • Divestments
        • Stronger focus on real estate transfer tax and VAT
        • More asset deals
      • Further limitation of interest deductions
        • Closing of loopholes in thin cap rules
        • Thin cap rules replaced by earnings stripping rules