Taxation of SICAV in LuxembourgUpdated on Friday 24th March 2017
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Investors who are interested in opening an investment fund in Luxembourg as a SICAV structure (which represents an investment company with variable capital) may incorporate the structure as an UCITS fund or as a SIF. A SICAV fund in Luxembourg is taxed following a specific taxation scheme, which offers a set of tax exemptions and deductions, on which our team of financial experts can provide an in-depth presentation.
Taxation system of SICAV structures in Luxembourg
Luxembourg represents a top investment destination for businessmen who want to open a SICAV in this country. The local taxation system provides numerous advantages in this sense, as the vehicle will not be liable to pay the income tax or the corporate tax.
However, as mentioned above, a SICAV in Luxembourg can be set up as a SIF (specialized investment fund), in which case, the company will be liable to paying the subscription tax at the rate of 0.01% of its net value.
For other types of legal entities, the SICAV will also be liable to the subscription tax, imposed at the rate of 0.05%, paid on an annual basis.
An important aspect when opening an investment fund in Luxembourg as a SICAV refers to the fact that the investors will not be imposed with the withholding tax on its distributions, which also take into consideration the redemption of shares. Our team of financial representatives can offer more information on the manner in which such taxes must be paid at the local institutions.
It is also necessary to mention that SICAVs can benefit from the provisions of the double taxation treaties signed by the local authorities, as long as the vehicles are set up as SIFs.
Tax exemptions for SICAV in Luxembourg
Luxembourg also provides private wealth management services, but the net wealth tax which can be imposed on various investment structures is not applicable in this situation.
As a general rule, services carried out under a SICAV are imposed with a standard value added tax (VAT) applicable at the rate of 15%, but the services provided by a management company in Luxembourg are exempted from the VAT.
Investors are invited to contact our team of financial consultants, who can offer advice on other tax advantages available for the SICAV in Luxembourg.