LUXEMBOURG Law and Practice Contributed by: Claire-Marie Darnand, Victorien Hémery, Johan Léonard and Benjamin Marthoz, Stibbe
share capital.
unitary value of real estate assets is determined based on the value of the property or of a simi - lar property in 1941, which is then multiplied by a communal rate) on 1 January each year at a rate of 0.5% up to EUR500 million of unitary value, and 0.05% for any unitary value exceed - ing EUR500 million. These entities are able to recognise tax-deduct - ible depreciation based on the asset’s expected useful life. Business expenses such as manage - ment fees are deductible under certain condi - tions. Arm’s length borrowing costs can also be deducted annually, up to EUR3 million or 30% EBITDA (with exceptions), whichever is higher. Furthermore, under certain conditions Luxem - bourg tax law allows a Luxembourg company to defer capital gains realised upon the disposal of a real estate asset if an amount corresponding to the sale proceeds realised is reinvested into another fixed asset. A common limited partnership and a special limited partnership can be incorporated by way of either a notarial deed or a deed under a pri - vate seal. While the special limited partnership is deprived of legal personality, the common lim - ited partnership will acquire its legal personal - ity from the day of execution of the partnership agreement, thus allowing for maximum flexibility. The constitutive document of each such partner - ship will be published by way of extracts only. The relevant extract will include the following: • the precise designation of the unlimited mem - bers; • the name of the entity, its object and the place of its registered office; • the designation of the managers as well as their signatory powers; and
• RAIFs: (a) are not subject to the ongoing supervi - sion of the CSSF but have to be either internally managed or managed by a duly authorised external alternative invest - ment fund manager in accordance with the AIFMD so as to offer a certain level of protection to investors through the indirect supervision of the investment management of the RAIF; (b) are more attractive and quicker to market than regulated funds, due to the absence of regulatory supervision and pre-approv - al requirements; (c) are flexible investment vehicles that may mirror the features of either the SIF (well- informed investors only, any asset class and risk diversification requirement) or the SICAR (well-informed investors only, “risk capital” qualifying assets and no risk diversification); and (d) may be established as standalone structures or with multiple compartments under a corporate or contractual form. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity A public limited liability company, a private lim - ited liability company and a partnership limited by shares may only be incorporated by way of a special notarial deed. Each of these company types will acquire its legal personality from the date of the relevant notarial deed. The incorpo - ration deed of each such company form will be published in its entirety. These entities are subject to corporate income tax and municipal business tax at a combined rate of 23.87% in Luxembourg City for 2025, and to net wealth tax on their unitary value (ie, adjust - ed net asset value, it being understood that the
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