The Legal 500

nf.15.04.2013The law of 6 April 2013 introduces substantial changes to Luxembourg's securities legislation.

Welcome to our quarterly tax update dedicated to the main changes which have occurred over the last 3 months with regard to Luxembourg and international tax law.

Legal Update March 2013.

On 15 March 2013 ESMA published a set of questions and answers giving further details on the content of its guidelines on ETFs and other UCITS issues (ESMA/2012/832) which entered into force on 18 February 2013, subject to certain transitional provisions for existing UCITS.

On 7 March 2013, the Court of Justice of the European Union (“CJEU”) rendered its decision in the “GfBK” case (C-275/11), dealing with the question of whether investment advisory services in the fund industry benefit from a VAT exemption.

On 18 February 2013, the Luxembourg regulator (the CSSF) published Circular 13/559 on the implementation into Luxembourg law of ESMA guidelines 2012/832 on ETFs and other UCITS issues.

Overview of the key changes for private banking suggested in the Council's Compromise in relation to both the Parliament's Position and the MiFID II Proposal.

On 21 December 2012, Luxembourg has adopted a law on the activity of Family Offices (the “Law”). Luxembourg is thus one of the first countries to implement a specific and coordinated legal and regulatory framework for the activity of Family Offices. Within this new framework, the activity of a Family Office will be reserved to specific Luxembourg professionals, which will have to comply with additional professional obligations.

The Regulation (EU) No 648/2012 of the European Parliament and the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (the so-called European Market Infrastructure Regulation; "EMIR") entered into force on 16 August 2012.

Welcome to our quarterly tax update dedicated to the main changes which have occurred over the last 3 months with regard to Luxembourg and international tax law

As of 1 October 2012 the index applicable to employees’ remuneration will increase from 737.27 to 756.27. This raise implies a mandatory salary increase of 2.5% in gross salaries paid under Luxembourg employment contracts.

On 13 August 2012 the CSSF issued Regulation no. 12-01 implementing the new provisions on risk management and conflicts of interest recently introduced into the law of 13 February 2007 on specialised investment funds (the SIF Law).

On 8 November 2012, the Advocate General (“AG”) released his conclusions before the Court of Justice of the European Union (“CJEU”) in the “GfBk” case (C-275/11) which deals with the question of whether investment advisory services in the fund industry benefit from a VAT exemption.

As mentioned in our newsflash of last week, in order to support the 2013 budget, an ACIT is also introduced as from 1 January 2013 for all companies whose financial assets, transferable securities and cash deposits do not exceed 90% of their total balance sheet. The minimum ACIT due by such companies, varying from EUR 500 to EUR 20,000, depends on the closing balance sheet total of the company (lower than EUR 350,000 to higher than EUR 20,000,000).

Welcome to our quarterly tax update dedicated to the main changes which have occurred over the last 3 months with regard to Luxembourg and international tax law.

nf.law.21.07.12Luxembourg has recently extended its squeeze-out and sell-out regime as a result of the adoption of the law of 21 July 2012 on squeeze-outs and sell-outs of securities of companies admitted or formerly admitted to trading on a regulated market or which have been the object of a public offer.

While the proposal for a directive of the European Parliament and of the Council on markets in financial instruments repealing Directive 2004/39/EC of the European Parliament and of the Council (recast) (“MiFID II”) is currently under discussion with the European Parliament, on 6 July 2012, the European Securities and Markets Authority (“ESMA”) released two sets of guidelines (final reports), one on certain aspects of the MiFID compliance function requirements and the other one on certain aspects of the MiFID suitability requirements (the “Guidelines).

Two recent decisions of the Court of Justice of the EU (CJEU) (Judgments of 6 September 2012 in Case C-190/11, Mühlleitner and of 7 December 2010 in Joined Cases C-585/08 and C-144/09, Pammer e.a) increase the risk run by professionals established in Luxembourg and offering their products and services via internet that they will have to defend themselves in proceedings initiated by consumers in other EU Member States or in Norway, Switzerland or Iceland and that they will see their agreements with consumers partly governed by the laws of such foreign States.

nf.26.10.12We would like to inform you that the Commission de Surveillance du Secteur Financier (the "CSSF") has released today a new circular CSSF 12/546 on the authorisation and organisation of Luxembourg management companies subject to Chapter 15 of the law of 17 December 2010 on undertakings for collective investment ("UCIs") and investment companies which have not designated a management company (i.e. self-managed investment companies or sociétés d'investissement autogérées, also known as "SIAG").

nf.05.12.12On 4 December 2012 ESMA published its final guidelines on repurchase and reverse repurchase agreements for UCITS funds (ESMA/2012/722). The guidelines were adopted further to the industry consultation launched by ESMA in July 2012 on the recallability of repurchase and reverse repurchase agreements.

nf.12.12.12On 10 December 2012 the Middle East and Islamic Funds Working Group of the Association of the Luxembourg Fund Industry (ALFI) published its final collection of best practices for setting and servicing Islamic funds in Luxembourg.

nf.18.12.12On 18 December 2012 ESMA published its final and consolidated set of guidelines on ETFs and other UCITS issues (ESMA/2012/832) together with their translation into the official languages of the European Union. This publication consolidates the Guidelines on ETFs and other UCITS issues (ESMA/2012/474) and the Guidelines on repurchase and reverse repurchase agreements (ESMA/2012/722), respectively adopted in July and December this year. 

nf.19.12.12Today the European Commission adopted a Delegated Regulation supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (the “Delegated Regulation”).

On 13 December 2012, the Luxembourg Parliament (Chambre des Députés) adopted bill No. 6497 on the new tax measures drawn up to support the 2013 budget.The main amendments affecting corporate entities relates to the introduction of a minimum advance corporate income tax, the increase of the solidarity surcharge and a 1% reduction of the investment tax credits. The new measures are applicable to companies as from 1 January 2013.

Further to the publication on 24 October 2012 of the new CSSF circular (the “Circular”) on the authorisation and organisation of Luxembourg management companies subject to Chapter 15 of the law of 2010 (“Chapter 15 management companies”) and investment companies which have not designated a management company ("SIAGs"), the CSSF published on 31 October 2012 a press release on the concept of promoter, in which it repeals the requirement of a promoter as from 30 June 2013 for UCITS which have designated a Chapter 15 management company or which are self-managed:

On 26 October 2012, the European Parliament has voted amendments (the “Parliament’s Position”) to the initial proposal for a directive of the European Parliament and of the Council on markets in financial instruments repealing Directive 2004/39/EC of the European Parliament and of the Council (recast) that the European Commission released on 20 October 2011 and that we presented to you during our seminar on MIFID II of 8 March 2012 (the “MiFID II Proposal”).

Please be informed of the following legal and regulatory developments in Luxembourg:
AIFMD - bill of law submitted to Luxembourg Parliament
Luxembourg Limited Partnership - bill of law submitted to
Luxembourg Parliament

You may have been informed via our Newsflash of 5 July 2012 that the European Commission adopted three long-awaited legislative proposals on Packaged Retail Investment Products (PRIPS), the review of the insurance mediation directive (IMD) and UCITS V, which together form the so-called “Consumer Retail Package”. The main objective of the legislative package is to raise standards and remove loopholes with a view to providing effective protection for European retail investors and restoring confidence lost in financial markets during the financial crisis.

This legal update will provide you with a detailed overview of the content of these proposals and of the services which our firm may offer in these areas of expertise.

On 24 July 2012, the UAE Security and Commodities Authority (SCA) issued its long awaited investment funds regulation. As anticipated the responsibility for the authorisation and supervision of investment funds has been transferred from the UAE Central Bank to SCA. This is the first step towards the setting up of a twin-peaks regulatory model in the Emirates.

Publication of the document "Questions and Answers: Risk Measurement and Calculation of Global Exposure and Counterparty Risk for UCITS" by ESMA and clarification from the CSSF in order to take it into account.

consultation paper on repurchase and reverse repurchase agreements (ESMA/2012/475).

Luxembourg News - Latest Luxembourg case law on exchange of information

International News - French withholding tax on national soured dividends can be recovered by non-resident UCITS (ECJ Case C-338/11)

On 3 July 2012 the European Commission adopted three long-awaited legislative proposals on Packaged Retail Investment Products (PRIPs), the review of the insurance mediation directive (IMD) and UCITS V, which together form the so-called “Consumer Retail Package”. The main objective of the legislative package is to raise standards and remove loopholes with a view to providing effective protection for European retail investors and restoring confidence lost in financial markets during the financial crisis.

On 9 July 2012 the CSSF published circular CSSF 12/540 on dormant sub-funds (unlaunched sub-funds, sub-funds awaiting reactivation and sub-funds in liquidation). The circular sets out that unlaunched sub-funds or sub-funds awaiting reactivation following full redemption have 18 months to be launched or reactivated from the date of the letter of authorisation of the sub-fund (for a new sub-fund), or from the date of the full redemption (for a sub-fund awaiting reactivation), or from the date of publication of the circular for existing dormant sub-funds.

After almost three years of operation in Asia, Arendt & Medernach, Luxembourg's largest law firm, announced expansion plans in response to growing demand from Asian based clients for Luxembourg legal advice.

The Law of 26 March 2012 amending the Luxembourg law of February 13 2007 on specialised investment funds (the "New SIF Law") officially entered into force on 1 April 2012 after having been adopted by the Luxembourg Parliament on 6 March 2012.

Seeking to improve the efficiency of its Competition authority, the Grand Duchy of Luxembourg adopted last 23 October 2011 a new competition law.

On 23 April 2012, the Grand Duchy of Luxembourg and the Federal Republic of Germany signed a new double tax treaty (the "New Treaty") which will replace the double tax treaty currently in force dated 23 August 1958. The New Treaty basically follows the provisions of the OECD Model Tax Convention, but certain specific provisions have been added.

Our April tax update highlights the latest important changes in Luxembourg tax law, including the enactment of the law relaxing the conditions to be met in order to benefit from the SPF tax status. Other topics include inter alia recent case law on the exemption of income deriving from the sale of preferential subscription rights and the first decisions of the Luxembourg administrative courts relating to the exchange of information upon request based on the law of 31 March 2010.

The law of 26 March 2012 amending the law of 13 February 2007 relating to specialised investment funds (“SIFs”) was published today in the Mémorial A-063 and will enter into force on 1 April 2012. 

On 30 January 2011 ESMA released its consultation paper on draft guidelines for ETFs and other UCITS issues (ESMA/2012/44).

Les SIEG jouent un rôle majeur dans la cohésion sociale, économique et territoriale et dans le développement durable de l'Union Européenne (« UE »). Qu'ils soient assumés par des opérateurs publics ou privés, les services d'intérêt économique général ne peuvent pas être fournis dans des conditions économiquement acceptables sans compensation financière, compte tenu des obligations de service public (tarif abordable, service universel, ...) imposées par les autorités. Peuvent constituer des SIEG notamment les services postaux, l'approvisionnement en énergie, les télécommunications, les transports publics, les services sociaux (soins aux personnes âgées, ...). En outre, selon la Commission européenne (« Commission »), « la notion de SIEG est évolutive et est fonction, entre autres choses, des besoins des citoyens, des évolutions techniques et commerciales et des préférences sociales et politiques propres à chaque État membre »

On 6 March 2012, the Luxembourg Parliament passed bill of law No. 6318 (the "Law") amending the Luxembourg law of 13 February 2007 on specialised investment funds. The Law foresees several important changes to the regime governing specialised investment funds or "SIFs", one of Luxembourg's most popular collective investment schemes among fund initiators and sophisticated investors, as evidenced by the almost 1,400 structures currently in existence. The SIF's success is based on the product's features which combine prudential supervision with a multipurpose and flexible legal and regulatory regime.

Luxembourg has traditionally been a hub for intra-group financing transactions. In 2011, new transfer pricing guidelines, following the OECD standards, were introduced in order to clarify the administrative practise and further strengthen Luxembourg's position in this respect.