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

1. Luxembourg, a global
financial centre for asset
and wealth management
services
Riyadh, May 17, 2010

2. Luxembourg, an
international 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
companies
3

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 1’128
Source: 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, 2006
6

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…)
290
Source: CSSF, CAA
7

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 estate
9

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
30,000
Source: 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 vehicles
11

12. Luxembourg: highly international
… in terms of origin of banks
Others
Figures as at March 31, 2010, Source: CSSF
12

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 :CSSF
13

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
Other
Source: 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 EU
Source: 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 2008
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
17

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 53
04. Brazil 06. Canada 71 26
29. Mexico 47. Trinidad & Tobago 65 39
18
51. United States 59
4 20
60. 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 Pension
adminstration funds SPF Intellectual
property
Microfinance
Covered Venture
Philanthropy
bonds Capital
SIF
2005 2010
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
20

21. The Luxembourg
Investment Fund
Sector
Pierre Oberlé, Business Development Officer
ALFI – Association of the Luxembourg Fund Industry
Bishr Shiblaq, Head of Representative Office in Dubai
Arendt & Medernach
Pierre Weimerskirch, Partner
Ernst & Young
Marc Theisen, Lawyer
Theisen 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: CSSF
22

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: CSSF
23
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 2008
25

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 2008
26
26

27. Luxembourg
investment funds:
particular focus on
UCITS
Bishr Shiblaq, Head of Representative Office in Dubai
Arendt & 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 HNWI
Source: ALFI
28

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 and
alternative investment strategies:
□ Short positions through use of derivatives
29

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 providers
30

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 Luxembourg
31

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: CSSF
32

33. Current main development at EU
level
UCITS IV
33

34. Luxembourg –
Centre of Choice for
Alternative Funds
Pierre Weimerskirch, Partner
Ernst & 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 supervision
35

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 regulation
36

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
AUM
37

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 Funds
38

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
FoHF
39

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”
Distribution
41

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 Funds
Marc Theisen, Lawyer
Theisen 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 products
49
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 Luxembourg
50
Islamic products to be set up within the existing
legal and tax framework of Luxembourg
Mudaraba Ijara Wakala Murabaha Sukuk
50

51. Conclusion
51
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
solutions
Atman Haloui, Head of MENA Markets
Banque de Luxembourg
Amran Ansar, Tax Adviser and Consultant in Islamic Finance
KPMG 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 Luxembourg
53

54. INTRODUCTION
54

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, insurance
55

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 Investments
56

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 Europe
57

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 Structuring
58

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 favorable
59

60. 1. Shari’ah compliant investment
vehicles available in Luxembourg
60

61. Shari’ah compliant investment vehicles
Regulated Semi-regulated Unregulated
Investment 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
Vehicle
61

62. 2. Selection of the appropriate
investment vehicle
62

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/FCP
63

64. 3. Benefit from Luxembourg as a
platform
64

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 Europe
65

66. 3.1 Investing in Europe through a
SIF
66

67. Investing in Europe through a SIF
vehicle
Saudi 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
investors
68

69. SIF a necessary vehicle for wealth
management
Client 1 Bank X 100% of RE
Saudi 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 Luxembourg
70

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 efficient
Europe
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 on
target country
Companies
located in 1 real estate are taxed in the European
1 Europe Tax transparent
target country
Europe
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 by
target country
Company Luxembourg
located in
Europe Tax transparent
structure
Europe
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 a
target country
Company
located in limited partnership, the SICAR will be
Europe Tax transparent
considered as tax transparent entity in
Europe
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 capital
target country
Company
located in
Europe Tax transparent
Europe
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 investment
target country
Company
Periodic income flows
located in
Europe Tax transparent
Europe
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 country
77

78. Thank you!
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