Securitisation Vehicles in LuxembourgUpdated on Friday 10th June 2016
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Luxembourg is the main investment market chosen by local and foreign investors, as it offers a very stable market and a powerful legislation regulating the investment environment. Businessmen interested in setting up a fund in Luxembourg should know that they can benefit from the securitisation method, which represents a structured financing entity that can transfer financial assets from an originating company to a Special Purpose Vehicle. The vehicle assumes financial risks by issuing transferable securities (such as shares or bonds). Foreign investors interested in securitisation vehicles in Luxembourg can receive an in-depth presentation on the matter from our experts.
Securitisation Law in Luxembourg
Securitisation vehicles operate under the Securitisation Law, which provides the legislative framework for their legal form, incorporation, minimum capital, taxation and other aspects related to the activity of a corporate entity.
According to this legislation, a securitisation vehicle can be set up as a company or as an investment fund.
Investors interested in setting up a securitisation vehicle as a company can incorporate it under the following types of companies:
• public limited liability (PLC);
• limited liability company;
• partnership limited by shares;
• cooperative in the form of PLC.
Securitisation vehicles incorporated as a fund do not have a legal entity and require to be managed by a Management company; our financial specialists can provide you with further details on the advantages provided by the above mentioned types of incorporation.
Taxation of a securitisation vehicle
Taxation of securitisation vehicles is done in accordance with the legal structure chosen by the investor. If the vehicle has been incorporated as a company, then the local authorities will impose the following taxes:
• corporate tax – applicable at the rate of 29.22%;
• corporate income tax – applicable at the rate of 20% if the company’s income is below EUR 15,000, or at the rate of 21%, if the income is above EUR 15,000.
Such companies can also be the beneficiary of the provisions stipulated in the agreements for the avoidance of double taxation.
Vehicles set up as funds are not liable to taxation, but taxes can be applied to the income received by the shareholders of the fund.
If you need further information on the securitisation vehicles in Luxembourg, please contact our financial experts, who can provide you with advice and assistance on this matter.