Michel Bulach, a partner in the law firm of Wildgen & Partners, and Vincent Maurel, a partner in the law firm of Cabinet Fidal, International Division

“Luxembourg is an internationally recognised label”

le 14/06/2013 L'AGEFI Hebdo

What advantages are there for asset managers wanting to expand internationally to register their funds in Luxembourg?

Whereas the French asset management industry has been constructed, as in other European countries, on the development of its domestic market, Luxembourg has developed its international dimension for more than twenty years. It is a country which has developed expertise in all aspects of services intended to facilitate the international distribution of funds (in particular IT systems). It is an internationally recognised label.

Do tax criteria come into play?

Since 2011, tax regimes have been harmonised in Europe, but depending on the nature of the fund, the investor’s country of origin, the jurisdiction of the underlying assets, differences can exist as regards, for example, the taxation of dividends distributed or capital gains. In this regard, a comparison of the double taxation treaties signed by France and Luxembourg with the jurisdictions concerned can tilt the balance when it comes to choosing the fund’s domicile. But this applies on a case by case basis and is not, on its own, a sufficient reason for deciding whether or not to register a fund in Luxembourg. On the other hand, the tax treatment of assets varies significantly between Luxembourg and France and, since last year, we note that asset managers are considering domiciling their company in Luxembourg, in particular for tax reasons.

Is France lagging behind in terms of international development?

The French Financial Markets Authority (AMF) and the French Asset Management Association (AFG) are increasingly aware of the competition and are cooperating to promote Paris as a financial centre, but Luxembourg and Ireland have forged ahead. Without counting the proposed financial transactions tax (FTT), which has now been added to the equation. This merely confirms the opinion of many players that there are too many risks and question marks hanging over funds incorporated under French law.

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