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Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
Presentation Financial Seminar Riyadh Final
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Presentation Financial Seminar Riyadh Final

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Luxembourg for Finance Presentation in Riyadh with own part on UCITS, p 27 -33

Luxembourg for Finance Presentation in Riyadh with own part on UCITS, p 27 -33

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  • 1. Luxembourg, a globalfinancial centre for assetand wealth managementservicesRiyadh, May 17, 2010
  • 2. Luxembourg, aninternational hub for financial services Fernand Grulms CEO, Luxembourg for Finance fernand.grulms@lff.lu +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 companies3
  • 4. Luxembourg: financial centre, but also...4
  • 5. International financial centres Investments managed in international centres, $bn, end-2007 3’615 2’954 2’451 1’317 1’255 1’128Source: Bank for International Settlements, International Monetary Fund 5
  • 6. Competitive environment International Ranking Analysed competitiveness Source Luxembourg locations/countries indicators Growth Environment Goldman Sachs, 1 170 Score (GES) 2005 Global Competitiveness IMD Lausanne, 2008 5 55 Index Growth Competitiveness World Economic 21 133 Index (GCI) Forum, 2009 Heritage Foundation Index of Economic & Wall Street 15 183 Freedom Journal, 2009 Regional European Robert Huggins 6 118 Competitiveness Index associates, 20066
  • 7. Luxembourg financial intermediaries Banks Investment funds 150 > 3,516 (12’513 units) Professional Insurance intermediaries Life : 53 (asset managers, P&C : 40 brokers, transfer Reinsurance : 261 agents…) 290Source: CSSF, CAA7
  • 8. What do all these financial intermediaries do in Luxembourg ?8
  • 9. The principle of the european passport - banking - insurance - reinsurance - securities - investment funds No EU passport yet - hedge funds - private equity - real estate9
  • 10. The Luxembourg financial centre 45’000 are university graduates Employment Law firms Audit, Tax Direct employment 44,000 Banks, other financial intermediaries, insurance Other ICT 48,000 30,000Source: CODEPLAFI, 2007 10
  • 11. Luxembourg : well regulated Minister of Finance Commission for the Luxembourg Insurance supervision of the Central Bank financial sector Commission Banks Financial intermediaries Life insurance Macro supervision P & C insurance Systemic risk Securities Markets Reinsurance Liquidity Investment funds Captives Payment systems Pension funds Other vehicles11
  • 12. Luxembourg: highly international … in terms of origin of banks OthersFigures as at March 31, 2010, Source: CSSF12
  • 13. Luxembourg : highly international … in terms of origin of fund promoters 2,1 Others 1,6 1,6 3,8 6,8 19,0 8,5 7,7 21,1 11,9 15,9 Market shares in terms of assets under management Figures as at December 31, 2009, Source :CSSF13
  • 14. Luxembourg : highly international … in terms of origin of captive reinsurers Country of origin of Sector of the parent the parent company company’s activity Chemistry Distribution 16 15 21 Others 20 Banking Industry 48 30 15 19 77 41 Insurance 67 36 15 Food 14 6 17 42 Telecomm. 10 13 Process Transport OtherSource: CAA Annual Report 2008 14
  • 15. Luxembourg : highly international … in terms of clients The example of private banking Luxembourg Latin America USA 12% Asia Middle East 26% 46% B, F, D 16% Other EUSource: ABBL 15
  • 16. Luxembourg : highly international … in terms of clients The example of life insurance Other EEA countries Other 2,6% countries 8,4% 6,5% 21,8% 11,3% 17,2% 10,1% 5,2% 17,3% Source: CAA Annual Report 200816
  • 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 languages17
  • 18. We are connected to the world: tax treaty network 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. Poland 35. 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. Armenia 69. Monaco 72. Serbia 75. Ukraine 17 44 33 11 10 37 6 9 24 32 25 19 50 3 13 34 40 8 66 75 62 45 12 4116 36 30 21 55 1 69 5 2 52 64 51 57 35 43 14 49 74 23 22 38 48 27 7 31 70 72 61 73 29 63 54 15 67 68 56 46 47 58 5304. Brazil 06. Canada 71 2629. Mexico 47. Trinidad & Tobago 65 39 1851. United States 59 4 2060. Argentina 68. Barbados 28 42 60 Double tax treaties in force 20. Israel 28. Mauritius 31. Morocco 56. U.A.E. 42. South Africa 48. Tunisia 54. India Double tax treaties pending 58. Bahrain 63. Kuwait 65. Lebanon 70. Pakistan 71. Qatar 73. Syria 18
  • 19. Ongoing diversification Real estate investment vehicles Securitisation Pension pooling vehicles vehicles Fund Pensionadminstration funds SPF Intellectual property Microfinance Covered Venture Philanthropy bonds Capital SIF 2005 201019
  • 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 services20
  • 21. The Luxembourg Investment Fund SectorPierre Oberlé, Business Development OfficerALFI – Association of the Luxembourg Fund IndustryBishr Shiblaq, Head of Representative Office in DubaiArendt & MedernachPierre Weimerskirch, PartnerErnst & YoungMarc Theisen, LawyerTheisen Law
  • 22. The Luxembourg investment fund sector … at a glance : 3516 investment funds 12 513 fund units 1980.54 billion euros in assets under management Figures as at February 28, 2010; Source: CSSF22
  • 23. The Luxembourg investment fund sector 25 % Market shares (%) of promoters in terms of net assets of Luxembourg domiciled funds by country of origin 20 in terms of assets under management 15 10 5 0 US DE CH GB IT BE FR NL SE LU Others Figures as at December 31, 2009; Source: CSSF23 23
  • 24. Luxembourg market share of foreign funds registered for sale Sweden 80% Germany 73% Switzerland 73% France 73% South Korea 100% Italy 78% Japan 76% Bahrain 77% Taiwan 72% Hong Kong 72% Peru 93% Singapore 67% Chile 78%24
  • 25. Luxembourg: center for global distribution Belgium (BE) 1.3 76.2 % of all UCITS registered in at least 3 countries 2.1 (including home state) France (FR) are Luxembourg funds United Kingdom 2.5 (UK) 12.9 Ireland (IE) 76.2 Luxembourg (LU) 0 10 20 30 40 50 60 70 80 Sources: Lipper Hindsight, 31.12.2007, PWC Global Fund Distribution 200825
  • 26. The Luxembourg investment fund sector Principal markets for distribution of Luxembourg investment funds (in terms of the number of registrations) 4500 Europe 4000 Asia Pacific 3500 Americas 3000 2500 2000 1500 1000 500 0 Hong Kong Germany United Kingdom Czech Republic Finland Austria France Netherlands Italy Belgium Norway Chile Denmark Spain Portugal Singapore Switzerland Sweden DE AT CH FR ES NL IT GB SE FI BE SG PT NO CL HK DK CZ Sources: Lipper Hindsight, 31.12.2007, PWC Global Fund Distribution 200826 26
  • 27. Luxembourg investment funds: particular focus on UCITSBishr Shiblaq, Head of Representative Office in DubaiArendt & Medernach
  • 28. The Luxembourg investment fund sector Main distinctions between UCITS and Non-UCITS Key criteria UCITS Non-UCITS SIF SICAR Investment restrictions Restricted Flexible Flexible Moderate (eligible assets) Risk High Medium Low None diversification Ease of public High Medium Low Low distribution Targeted to Targeted to Supervisory retail investor retail investor More flexible More flexible framework protection protection Time to Low – Medium Low-Medium Very low Low establish Institutional / Institutional / Target investors All All HNWI HNWISource: ALFI28
  • 29. Undertakings for Collective Investment in Transferable Securities (UCITS) (Part I of the law dated December 20, 2002)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 andalternative investment strategies: □ Short positions through use of derivatives29
  • 30. Undertakings for Collective Investment in Transferable Securities (UCITS) (Part I of the law dated December 20, 2002) Distribution aspects: Retail and institutional investors Single “passport” within EU and recognition beyond (EEA, Middle East, Asia, Americas) Other features: Risk management and risk monitoring Substance requirements Role, scope and development of Luxembourg fund management companies (173 UCITS III management companies established in Luxembourg as at 3 February 2010) Service providers: Central Administration Custodian Bank Auditor Transfer Agent Other service providers30
  • 31. Undertakings for Collective Investment in Transferable Securities (UCITS) (Part I of the law dated December 20, 2002)• 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 Approval and Notification Filing with CSSF No max. 2 months notification Start of public offer in other EU countries review period period Start of public offer in Luxembourg31
  • 32. Luxembourg Islamic UCITS - UCITS investing in Sharia-compliant investments - Sharia Board (investment screening process) - Cleansing of dividends/revenues UCI 14,2% SIF 14,2% UCITS 71,6% 88% of the Funds are launched as investment companies (SICAV) and 12% as mutual funds (FCP).Source: CSSF32
  • 33. Current main development at EU level UCITS IV33
  • 34. Luxembourg – Centre of Choice for Alternative FundsPierre Weimerskirch, PartnerErnst & Young
  • 35. 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 supervision35
  • 36. Fund regimes for every taste - Restricted Asset Classes - Public distribution with EU - Private Equity only Level of passport - Restricted to well - Very High level of informed /regulation regulation - All Asset Classes sophisticated - Public distribution investors without EU passport - Lower level of - High level of regulation regulation UCITS UCI Part II SICAR SIF SV - All Asset Classes Structuring - Restricted to well informed / flexibility sophisticated investors - Lower level of regulation36
  • 37. Luxembourg – European hub for private equity and venture capital funds Leading European center for regulated Major Payers PE/VC funds • 3i More than 300 PE/VC funds • Apax Partners AUM in excess of $US 40 billion • CVC • Fortress Leading PE/VC service providers • Goldman Sachs present in Luxembourg • Investcorp Leading global PE houses operating in • JP Morgan Luxembourg • KKR • Permira • […] < $US 40 < 300 billion PE/VC Funds AUM37
  • 38. Luxembourg – European hub for international property funds Leading European center for regulated property funds Major Payers More than 130 property funds • Aberdeen • Aviva AUM in excess of $US 30 billion • Black Rock Leading property fund service providers • Deutsche Bank present in Luxembourg • Heitmann Leading global “property” (fund) mangers • Hines operating in Luxembourg • ING • JP Morgan • Morgan Stanley • Pramerica < $US 30 < 130 • […] billion Property AUM Funds38
  • 39. Luxembourg – European hub for hedge funds & funds of hedged funds (“FoHF”) Leading European center for regulated hedge funds & FoHF Major Payers More than700 hedge funds and FoHF • Aberdeen Asset Managers AUM in excess of $US 128 billion • Black Rock • Crédit Risk Leading hedge fund service providers • Deutsche Bank present in Luxembourg • Goldman Sachs Leading global hedge fund managers • JP Morgan operating in Luxembourg • Lyxor • Morgan Stanley • UBS < 700 • […] < $US 128 Hedged billion Funds & AUM FoHF39
  • 40. 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. Countries of origin Target countries Mauritius, 3% Malaysia, 3% Delaware, 3% France, 3% Channel Islands, 3% BVI, 3% UK, 6% Luxembourg, 31% Jersey, 6% Ireland, 6% Hong Kong, 17% Guernsey, 8% Cayman Islands, 11% Source : Lipper & The Cayman Islands Gazette based on a sample of 36 OPC 40©
  • 41. Good reasons to re-domicile to Luxembourg Access to worldwide distribution Reputation Attractive tax regime Presence of global asset managers Expertise and know-how Commitment to excellence and reliability Stable jurisdiction, predictable planning and long-term investment decisions Access to Renowned Worldwide “Quality Brand” Distribution41
  • 42. Alternative investment trends: Thematic funds Clean (green) technologies/SRI funds Passion funds/Emotional assets funds “Distressed” (property) assets funds Microfinance funds Nanotechnology funds Green PE/VC funds Green infrastructure (wind, solar, water) funds Sharia compliant PE/RE funds Etc.42
  • 43. Luxembourg : a Hub for Shariah Compliant Investment FundsMarc Theisen, LawyerTheisen Law
  • 44. A first mover in Europe Luxembourg: an history of innovation in the European Islamic finance market □ 1978 First islamic finance institution established in a western country (Islamic Banking system) □ 1982 First life insurance company (Takafol SA, actually Solidarity 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)44
  • 45. 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
  • 46. 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
  • 47. 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, service providers, A.L.F.I.)47
  • 48. How Luxembourg can help you developing your business EXPERTISE N 1 fund international servicing centre in Europe and the 2nd worldwide - 152 Banks QUALITY High quality regulated framework for UCITS and non UCITS funds LEADERSHIP Worldwide leadership in cross border distribution of financial products FLEXIBILITY Flexible and tax efficient structures DEVELOPMENT Committed to develop Shariah compliant solutions. Stable and predictable environement.48
  • 49. Taxation of shariah products49 Tax circular from the Director of Contribution 12th January 2010 Circular covers whole range of Islamic Finance products: Specific rules: Murabaha and Sukuk Liberal approach to Islamic transactions Pragmatic and open minded position 49
  • 50. Islamic products in Luxembourg50 Islamic products to be set up within the existing legal and tax framework of Luxembourg Mudaraba Ijara Wakala Murabaha Sukuk 50
  • 51. Conclusion51 Vehicles Full Range Target Futur Middle Eastern investors, Institutional investors, HNWI, Strenghts PE, Sukuk West European Muslim Population (15M) Market Market to Market, Crossborder 51
  • 52. Luxembourg: The Leading European place for wealth management solutionsAtman Haloui, Head of MENA MarketsBanque de LuxembourgAmran Ansar, Tax Adviser and Consultant in Islamic FinanceKPMG Tax
  • 53. 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 Luxembourg53
  • 54. INTRODUCTION54
  • 55. ALL ROADS LEADS TO LUXEMBOURG Highly attractive country Unprecedented political and economic stability Tradition of a Private Banking spirit International environment, multi-lingual, multi-cultural Wealth managers are highly mobile Founding member of the European Union Hub for European activities: EU Passport Investor protection – MiFID Protection of private sphere, financial privacy Competitive fiscal framework, within the OECD/G20 standards Deposit guarantee scheme – banking, insurance55
  • 56. ALL ROADS LEADS TO LUXEMBOURG Luxembourg has to be on the screen radar of: Family members in Saudi Arabia and around the world Investments outside of Saudi Arabia: real estate, private equity, life style… Entrepreneurs wanting to internationalize their business Expatriates Family offices or asset managers seeking a cross border platform complementary to their local providers Philanthropy, Socially Responsible Investments56
  • 57. ALL ROADS LEADS TO LUXEMBOURG Luxembourg compared to other financial centers Complementary offering to domestic solutions, other PB centers Ideal for complex, wealthy, international clients and families Full range of private banking products and services Complemented by comprehensive range of estate and tax planning solution Competitive fee structure Large number of specialist service providers, working closely with banks Ideal platform for investing or operating in Europe57
  • 58. Full range of services Execution Only International Wealth and Tax Planning Multicurrency Advisory Bank Accounts Fiduciary Services Discretionary Asset Management Private Investments Transfers/Payments Funds in Open Vehicles Architecture Life Insurance Structured Products E-Banking Capital Market Products dedicated to Private Financing Clients Banking Services Investment Services Wealth Structuring58
  • 59. 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 favorable59
  • 60. 1. Shari’ah compliant investment vehicles available in Luxembourg60
  • 61. Shari’ah compliant investment vehicles Regulated Semi-regulated UnregulatedInvestment funds: Private Equity and Venture Private investments: SICAV (Investment Capital investments: company with variable SOPARFI (holding capital) SIF (Specialised Investment company) SICAF (investment Funds) SPF (Private family company with fixed asset holding company) capital) SICAR (Venture capital FCP (unincorporated co- vehicle) Non regulated ownership of assets Securitisation Vehicle managed by a Regulated Securitisation management company) Fiduciary contract Vehicle61
  • 62. 2. Selection of the appropriate investment vehicle62
  • 63. Selection of the appropriate investment vehicle Type of investor Retail / corporate / Individual investors Institutional investors Size of investment Small size portfolio SPF SOPARFI Medium size portfolio SIF SICAR Large size portfolio SICAV/SICAF/FCP63
  • 64. 3. Benefit from Luxembourg as a platform64
  • 65. Benefit from Luxembourg as a platform Saudi Corporate Shari’ah compliant investments or institutional Investors are possible Tax free income Luxembourg is used as a platform repatriation for the investments in Europe LuxCo Advantages: Tax neutrality at the level of LuxCo Tax efficient investments tax efficient Assets or company Investment In Europe65
  • 66. 3.1 Investing in Europe through a SIF66
  • 67. Investing in Europe through a SIF vehicleSaudi Arabia Saudi Corporate • Greater flexibility with regard or institutional to Investors - The investment policy (e.g. asset pooling, no restriction on eligible assets,) - The broadening of the sphere of investors - Single regulatory regime Luxembourg Specialised Investment Funds • One or several managers • Risk diversification Sub Fund Sub Fund Sub Fund Sub Fund Money Market Defensive Real Estate Private Equity • Internationally well known MM DEF RE PE vehicle 67
  • 68. Specialised Investment Funds: legal & tax aspects Legal Tax •The fund may be structured as a: At the level of the SIF - Common contractual fund (FCP), •SIF are not subject to: - Variable or fixed capital -Corporate income tax investment company (SICAV / -Municipal business tax SICAF) -Net wealth tax •Possibility to set-up as an -No withholding tax in dividend distributions and liquidation proceeds umbrella fund with multiple •Principle: Subscription tax of 0,01% of the net asset value of the SIF on compartments and / or different the last day of each quarter share classes •Exception: -Investment in other Luxembourg UCIS being subject to subscription tax •Shares / units are restricted to -Institutional cash UCIS “well informed investors” -Pension pooling funds -Micro finance funds •No restriction on repayments, -European Savings Directive applicable distributions or dividends -VAT exemption on management services payments •Reduced publication & reporting •The capital gain realised on the sales of the SIF units / shares by a non duties resident investors are not taxable in Luxembourg for non resident investors68
  • 69. SIF a necessary vehicle for wealth management Client 1 Bank X 100% of RESaudi Arabia 50 % of MM Saudi Client 2 Bank X 30% of PE Wealth Manager 20% of DEF Client 3 50% of MM Bank X 50% of PE Advantages: For the customer: no bank change, protection by the fund regulation, steady Luxembourg Specialised Investment Funds independent net asset value (NAV) For the Wealth Manager: efficient fee Sub Fund Sub Fund Sub Fund Sub Fund handling, independent reporting and NAV, Money Market Defensive Real Estate Private Equity administrative time gain, so the Wealth MM DEF RE PE Manager can focus on its core activities (i.e. asset management and client relationship) 69
  • 70. 3.1 Structuring acquisition of European companies / real estate through Luxembourg70
  • 71. Acquisition of European companies / real estate in Europe Saudi Corporate Practical issues:Saudi Arabia or institutional Shari’ah compliant investments Investors 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 efficientEurope European located company - planning: Real estate located in Europe The return on investment will be significantly reduced 71
  • 72. Structuring acquisition of European companies / real estate through Luxembourg Saudi Arabia Saudi Corporate or institutional 1- Inflows: Investments in Europe Investors through Luxembourg SOPARFI SICAR • Kind of income: Dividends, rental or SPF income, capital gains etc… Luxembourg Luxembourg SOPARFI •At the level of target country: Dividends No or reduced withholding tax Capital gains Rental income No capital gain taxation Rental income and capital gain ontarget country Companies located in 1 real estate are taxed in the European 1 Europe Tax transparent target countryEurope structure Europe Operational companies Real Estate 72 Financial assets Real estate
  • 73. Structuring acquisition of European companies / real estate through Luxembourg Saudi Arabia Saudi Corporate or institutional 2- At the level of the Luxembourg Investors SOPARFI: • Dividends and capital gains income SICAR or received SPF Luxembourg Luxembourg Participation Exemption regime Luxembourg 2 SOPARFI 2 Dividends •Rental income is in principle not Capital gains Rental income subject to Luxembourg taxation based on the double tax treaty concluded bytarget country Company Luxembourg located in Europe Tax transparent structureEurope Europe Operational companies Real Estate Financial assets 73 Real estate
  • 74. Structuring acquisition of European companies / real estate through Luxembourg Saudi Arabia Saudi Corporate or institutional Investors 3- Option 1: At the level of the SICAR SICAR is established as a resident company which is fully liable to Luxembourg 3 income taxes Tax neutrality SICAR Luxembourg Dividends Effective tax rate might be close to 0 Luxembourg (under certain conditions) SOPARFI No withholding tax on income distributed by the Luxembourg SOPARFI If a SICAR is established in the form of atarget country Company located in limited partnership, the SICAR will be Europe Tax transparent considered as tax transparent entity inEurope structure Europe Luxembourg. Operational companies Real Estate Financial assets 74 Real estate
  • 75. Structuring acquisition of European companies / real estate through Luxembourg Saudi Arabia Saudi Corporate or institutional Investors 3- Option 2: At the level of the SPF • SPF (The Family Wealth Management No withholding tax on income distributed by 3 Tax neutrality SPF Luxembourg SOPARFI Luxembourg Hybrid instrument Luxembourg SPF is exempt from Luxembourg income SOPARFI taxes Annual subscription tax of 0,25% on its share capitaltarget country Company located in Europe Tax transparentEurope structure Europe Real Estate Real Estate 75
  • 76. Structuring acquisition of European companies / real estate through Luxembourg Saudi Arabia Saudi Corporate or institutional Investors Dividends 4- Repatriation of income to the Saudi 4 Liquidation proceeds 4 investors •Income distribution from SICAR or SPF SICAR No withholding tax on dividends distribution Luxembourg or No withholding tax on liquidation proceeds SPF •At the level of the Saudi investors Luxembourg SOPARFI The structuring could be realised pursuant to the Shari’ah law Efficient investmenttarget country Company Periodic income flows located in Europe Tax transparentEurope structure Europe Real Estate Real Estate 76
  • 77. Summary: Luxembourg is the leading wealth management center in Eurozone 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 network Legal and regulatory flexibility (attractive vehicles for High Net Worth Individuals and Family Offices) Tax neutrality and certainty in Luxembourg Tax efficiency at the level of target country77
  • 78. Thank you! www.lff.lu

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