Taxation of SIF in LuxembourgUpdated on Monday 06th March 2017
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Foreign investors who want to open an investment fund in Luxembourg are allowed to start a specialized investment fund (SIF) in this jurisdiction. A SIF in Luxembourg is addressed to institutional and qualified investors, who can run various investment strategies though this type of vehicle. However, when registering a SIF in Luxembourg, investors should also take into consideration the initial investment required in this case, as well as taxation matters imposed by the applicable law. Our team of financial representatives can provide an in-depth presentation on the tax system applicable to SIFs structures in Luxembourg.
SIFs in Luxembourg
Those who want to register a SIF in Luxembourg can set up two main structures:
• SIFs registered as SICAV vehicles;
• SIFs incorporated as SICAF funds.
Taxation of SIFs structures in Luxembourg
When opening a SIF in this country, the investors should know that the SICAV in Luxembourg is not imposed with a tax on the fund’s profits.
A SIF in Luxembourg is required to pay the capital duty which is imposed on the capital contributions. However, the regulation is applicable to SIFs established as corporations and non-trading companies.
Further on, the SIF is also imposed with a subscription tax paid annually at the rate of 0.01% of the net assets (calculated at a quarterly basis). It is important to know that the SIFs which invest in other funds, that are required to pay the subscription tax, are exempted from paying this tax, on which our team of financial agents can offer more details.
SIFs which undertake management services are also exempted from paying the value added tax and it is necessary to mention that certain SIF structures (registered as investment companies) can benefit from the provisions of the double taxation treaties signed by Luxembourg.
Exemption from dividend tax for Luxembourg SIFs
An investment fund in Luxembourg registered as a SIF is exempted from paying the withholding tax on dividends. The regulation is applicable for non-resident investors and it refers to the following situations:
• dividends paid by a FCP – SIF structure for the distribution of units;
• dividends paid by a SICAV – SIF in terms of the company’s shares.
We invite investors to contact our team of financial experts for more details on the tax requirements imposed for SIF vehicles in Luxembourg.