LUXEMBOURG Law and Practice Contributed by: Stefanie Ferring, Oliver Zwick and Geoffrey Scardoni, Clifford Chance
4.5 Non-Bank Status There are no particular additional tax consid - erations necessary for non-bank lenders (other than the ones depicted under 4.2 Other Taxes, Duties, Charges or Tax Considerations and 4.3 Tax Concerns for Foreign Lenders ).
• any entity in which the taxpayer has a sig - nificant influence in the management, or an entity that has a significant influence in the management of the taxpayer; • any entity (including a partnership), resident or not, in which the taxpayer holds directly or indirectly a participation in terms of voting rights or capital ownership of at least 50%, or is entitled to receive at least 50% of that entity’s profit; or • an individual, or any entity (including a part - nership), resident or not, that holds directly or indirectly a participation in terms of voting rights or capital ownership in the taxpayer of at least 50%, or is entitled to receive at least 50% of the taxpayer’s profit. With respect to hybrid mismatches involving a hybrid financ - ing instrument, the 50% threshold is replaced by a 25% threshold. 4.3 Tax Concerns for Foreign Lenders The Luxembourg Non-Cooperative Tax Juris - dictions Law of 10 February 2021, as amended, could possibly restrict the tax deduction capac - ity of Luxembourg taxpayers, when interest/roy - alties payments are made to an affiliated entity which is (i) the beneficial owner of the interest/ royalties, (ii) a corporate entity, and (iii) resident in a country mentioned on the EU list of non- cooperative tax jurisdictions, unless these pay - ments are linked to a transaction which reflects economic reality. The current EU list of non- cooperative tax jurisdictions includes American Samoa, Anguilla, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad and Tobago, US Virgin
5. Guarantees and Security 5.1 Assets and Forms of Security
Typical security consists of a pledge over shares and various types of receivables (bank accounts, intercompany loans, etc). Other than security over real estate, which requires a notarial deed, there are limited formalities that apply to tak - ing security in Luxembourg and any applicable formalities are not particularly time-consuming. The perfection requirements are normally ful - filled upon closing or shortly thereafter. In Lux - embourg, to perfect a pledge over shares, the pledge must either be registered in the com - pany’s shareholders’ register or notified to the pledged company. For receivables, perfection is achieved by the execution of the pledge. Notification to the debtor makes the pledge enforceable against them. In the case of bank accounts, the pledge is perfected by notifying the bank where the account is held, and the bank’s acknowledgment/acceptance. 5.2 Floating Charges and/or Similar Security Interests It is not possible under Luxembourg law to take a floating charge over the assets of a company. A similar effect can however be created using a general business pledge under certain specific conditions.
Islands and Vanuatu. 4.4 Tax Incentives
There are no particular Luxembourg tax incen - tives available for foreign private credit lenders.
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