Luxembourg corporate and investment structures for private equity and real estate investments

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Luxembourg corporate and investment
structuresfor private equity and real estate
investments

• Presentation at the Romania-Luxemburg Business
  Forum asbl.

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Agenda

• About Experta Luxembourg
• Activity of our clients relating to Romania
• Private Equity and Real Estate investments
  through Luxembourg companies
• Soparfi, a SPV for cross-border investments
• How to choose the right Luxembourg investment
  vehicle?
• Case study on the use of Luxembourg companies as
  investment vehicle into Romania

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About Experta Luxembourg

• Fully owned subsidiary of Dexia Banque
  Internationale à Luxembourg
• 70 employees and a share capital of EUR 2,500,000
• Licensed as asset manager, advisor on financial
  transactions and domiciliation agent by the
  Luxembourg Banking Supervisory Authority (CSSF)
• Member of the Association of the Luxembourg Fund
  Industry (ALFI), the International Fiscal
  Association (IFA) and the Luxembourg
  International Management Services Association
  (LIMSA)

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Private Equity and real estate investments

• Private Equity
• Emergence of private equity transactions in
  Europe since the early 80s
• Growth of private equity industry enhanced by
  geopolitical developments in Europe
• Real estate investments
• Investments in European real estate as mainstream
  investment alternative attracting both individual
  and institutional investors
• More real estate investment vehicles started in
  Luxembourg than in other European countries
  trend expected to continue in the future
• Wealth Management services to HNWIs
• Private equity and real estate are the asset
  classes that HNWIs include in their investment
  portfolio
• In exit situations, potential of high influx of
  liquid assets for treasury management

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Soparfi, a SPV for cross-border investments

• Definition
• Soparfi is recognised by international investors
  as a flexible investment vehicle that may be used
  in various investment schemes due to its wide
  scope of activities
• Scope of activities
• hold participations in resident or non-resident
  companies
• perform any type of commercial or industrial
  activity in relation with the object specified in
  its articles of incorporation
• purchase, sell and exploit patents, grant
  licenses
• acquire shares in real estate companies, or own
  real estate property itself
• Eligible to the participation exemption for
  dividends, capital gains and net wealth tax under
  certain conditions
• Benefits from the Luxembourg double taxation
  treaty network and qualifies for the application
  of EU-Directives

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How to choose the right Luxembourg investment
vehicle?
SPF Soparfi Sicar SIF
Purpose of the vehicle private wealth management holding of participating interests creation of an investment platform (fund structure) creation of an investment platform (fund structure)
Control level unregulated unregulated lightly regulated lightly regulated
Target investments financial assets only (no active management of investments) unrestricted, mainly participating interest in unlisted and listed companies all types of private equity and venture capital investments (including real estate private equity) temporary investments in other assets during limited time period unrestricted
Investor type limited to individual investors and private estate management vehicles unrestricted institutional investors professional investors well-informed investors institutional investors professional investors well-informed investors
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Luxembourg companies for investments in
RomaniaCase study - Repatriation of profit

• Dividends distributed by the Romanian
  subsidiaries
• No withholding tax in Romania provided
  the Luxembourg company holds at least 15 of the
  capital of RomanianCo for at least 2 years
  (domestic law implementing the Parent-Subsidiary
  Directive)
• Dividends received from the Romanian subsidiaries
• In principle, taxation at 29.63, but full
  exemption provided the conditions of the
  Luxembourg participation exemption are met
• Minimum shareholding requirement of 10 or
  acquisition price of EUR 1,200,000
• Minimum holding period of 12 months (or
  commitment to hold)

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Luxembourg companies for investments in
RomaniaCase study - Exit strategies

• Treatment of capital gains from the alienation of
  the Romanian subsidiaries
• Based on the Double Taxation Treaty concluded
  between Luxembourg and Romania, the right to tax
  capital gains is attributed to the country of the
  seller, i.e. Luxembourg
• Treatment of capital gains at the level of the
  Luxembourg company
• In Luxembourg, in principle, taxation at 29.63,
  but full exemption provided the conditions of
  the Luxembourg participation exemption on capital
  gains are met
• Minimum shareholding requirement of 10 or
  acquisition price of EUR 6,000,000
• Minimum holding period of 12 months (or
  commitment to hold)

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Luxembourg companies for investments in
RomaniaCase study - Exit strategies

• Liquidation proceeds paid to the shareholder
• No withholding tax under article 146 ITL (no
  condition required)

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Disclaimer

• This presentation has been prepared based on the
  laws, regulations and administrative and judicial
  interpretations in force as of today
• All given information regarding foreign tax
  systems are indicative
• No structure should be put in place without
  prior advice from Experta Luxembourg
• This presentation should not be understood as a
  fiscal or legal advice

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Contact us

• Experta Luxembourg
• 180, rue des Aubépines
• L-1145 Luxembourg
• www.experta.lu
• E-mail experta_at_experta.lu
• Tel [phone]
• Fax [phone]
• Your Experta Advisor

Gabor Kacsoh Member of the Executive Board Head
of Business Development Tel [phone]
95Fax [phone]gabor.kacsoh_at_experta.l
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