LUXEMBOURG Law and Practice Contributed by: Claudia Hoffmann, Daniel Krauspenhaar, Stefanie Samosny and Sascha Wiemann, Luther
ELTIFs For ELTIFs, additional disclosure and reporting obliga - tions may apply. 2.4 Tax Regime for Funds Part II Funds, SIFs and RAIFs (SIF-type) Part II Funds, SIFs and RAIFs that follow the SIF regime are generally exempt from corporate income tax, municipal business tax and net wealth tax. Instead, these funds are subject to an annual sub - scription tax ( taxe d’abonnement ) calculated on their net asset value: 0.05% for Part II Funds and 0.01% for SIFs and RAIFs. Certain exemptions apply, notably a full exemption for AIFs or individual compartments being authorised as ELTIFs in accordance with the SICARs and RAIFs that opt for the SICAR regime are generally fully subject to income taxes at ordinary rates if established in corporate form, but are entitled to a tax exemption in respect of income and capital gains derived from transferable securities relating to investments in risk-bearing capital. SICARs or RAIF- SICARs are generally not subject to subscription tax, but are subject to the minimum net wealth tax if estab - lished in corporate form. Unregulated AIFs (SCS/SCSp) amended Regulation (EU) 2015/760. SICARs and RAIFs (SICAR-type) Unregulated AIFs are generally tax-transparent for Luxembourg tax purposes. Investors are, therefore, deemed to realise the income and gains of the unregu - lated AIFs based on a look-through approach. Unreg - ulated AIFs may, however, be subject to taxation in Luxembourg if they carry out a commercial activity (which is unlikely given their AIF status), if their general partner holds a participation of at least 5%, or as a consequence of the application of anti-abuse rules such as the ATAD II anti-hybrid mismatch rules. No subscription tax, net wealth tax or withholding tax is generally levied at fund level, and investors are taxed according to their own tax status in their home juris - diction. VAT Treatment Fund management services provided to Luxembourg AIFs are generally exempt from Luxembourg VAT.
However, the supply of other services may be subject to Luxembourg VAT. Withholding Tax Generally, no withholding tax is levied on distributions made by Luxembourg AIFs to their investors. Double Tax Treaties Tax-transparent vehicles such as SCSs or SCSps generally do not benefit from double taxation trea - ties, while Luxembourg corporate vehicles might have access to Luxembourg’s extensive double tax treaty network. 2.5 Loan Origination Luxembourg-domiciled AIFs may originate loans. The CSSF has long acknowledged loan origination as a permissible activity for AIFs, subject to compliance with the Luxembourg law of 12 July 2013 on alter - native investment fund managers (the “AIFM Law”); AIFMD II now also establishes a dedicated European framework for loan origination at EU level (see 2.10 Anticipated Changes for Funds ). Each AIFM managing AIFs that originate loans (or the AIF itself if internally managed) should include and provide proper organisational and governance struc - tures (processes and procedures). It should have the necessary expertise/experience in origination activ - ity combined with appropriate technical and human resources, with a focus on credit and liquidity risk management (within an overall adequate risk manage - ment process), concentration and risk limitation, clear policies regarding assets and investors (eg, loan and investor categories, avoidance of conflicts of interest), proper disclosure and transparency. ELTIFs may grant loans to qualifying portfolio under - takings within the meaning of the ELTIF Regulation. 2.6 Non-Traditional Assets Virtual Assets Luxembourg AIFs marketed only to professional and well-informed investors may generally invest directly (and indirectly) in virtual assets. The CSSF contin - ues to adopt a cautious approach, exploring ways to facilitate institutional and professional investor access to crypto-assets, while maintaining protective meas -
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