Luxembourg Funds Intelligence Briefing

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Luxembourg Funds Intelligence Briefing
14th September 2020

Luxembourg’s specialised investment fund regime has become a magnet for controversy in the grand duchy following claims that it is being used by property investors to avoid tax and that SIFs are fuelling speculation driving domestic real estate prices higher. A study by the Robert Krieps Foundation think-tank says beneficiaries include one of the country’s largest insurers, while the head of the county’s public employees trade union argues that the taxation of SIFs should be reviewed as the government seeks sources of revenue to pay for Covid-19 recovery measures.

— Simon Gray, Editor in Chief 

Fund Services
Axelle Ferey to head Luxembourg office of DLA Piper

Law firm DLA Piper has appointed Axelle Ferey head of operations at its Luxembourg practice. She joins from KPMG France, where she advised clients on regulatory and compliance issues related to asset management. Ferey has previously worked in Luxembourg for EY, Arkus Financial Services and Arendt & Medernach.

Best source: Paperjam (in French)

Emmanuel Gutton appointed legal and tax director at ALFI

Fund association ALFI has appointed Emmanuel Gutton as legal and tax director in succession to Marc-André Bechet, who has been named as deputy managing director. Bechet, who will oversee the communications, events and business development departments, occupies a position vacant since the departure of Anouk Agnes in June 2019. Gutton, who has been head of legal for Pictet Asset Management (Europe) since 2016, was previously a member of the Paris and Luxembourg bar and has previously been with Elvinger Hoss Prussen and Linklaters in the grand duchy.

Best source: Paperjam (in French)

Property developers abusing specialised investment fund rules: Robert Krieps Foundation

Real estate developers are misusing Luxembourg-based specialised investment funds to speculate on the property market without paying tax, according to Max Leners, author of a report for the Robert Krieps Foundation think-tank. He says more stringent regulation is required for SIFs, which were established as a vehicle for alternative investment that would not be subject to double taxation, but which the study says are now being used by Luxembourg residents to reduce their tax liabilities. Leners cites insurance company La Luxembourgeoise, which used SIF funds to invest €30.3m in two buildings in 2018. The investments yielded €300,000 in rental income last year but were subject only to the 0.01% subscription tax on the increase in fund assets instead of the 19% corporate income tax rate.

Best source: RTL 5 minutes (in French)
See also: Fondation Robert Krieps

Union leader questions low taxation of Luxembourg specialised investment funds

Romain Wolff, president of public employees’ trade union CGFP, says personal income taxes should not be raised to pay for measures taken to support the economy during the Covid-19 pandemic. Instead he has questioned the level of taxation levied on specialised investment funds domiciled in Luxembourg, saying the subscription tax of 0.01% on fund assets mainly benefits wealthy investors.

Best source: RTL Today
See also: RTL 5 minutes (in French)

Total CSSF financial penalties down by two-thirds in 2019

The CSSF imposed fines totalling €1.76m in 2019, down from €5.8m the previous year. Sanctions against banks fell from €4.67m in 2018 to €734,000, although penalties on investment companies of €420,000 were around four times the previous year’s total. Fines for support financial sector professional entities fell to €32,000, with three specialised PSF being fined a total of nearly €180,000 and fund managers nearly €250,000. At €124m, the regulator’s turnover remained stable, although after a net profit of €14.9m in 2018, it recorded a net loss of €4.5m, with staff costs increasing by 12% to €98.6m.

Best source: Paperjam (in French)

Financial regulator fines CGFP Epargne €30,000 over administrative irregularities

Luxembourg financial regulator CSSF has fined CGFP Epargne, the investment services business of the country’s public employees’ trade union,€30,000 for irregularities in the way the organisation was managed. Jos Daleiden, the union’s former secretary-general and chairman of its business arm CGFP Services, says the penalty has been imposed over a formality and is relatively insignificant. The CGFP has lodged an appeal against the decision with Luxembourg’s administrative court, which if it takes up the case is expected to rule on it next year. The union announced last December it would close down CGFP Epargne after 40 years.

Best source: Reporter (in French)

Fundsquare partners with fintech firm Kurtosys for data disclosure solution

Fundsquare has agreed a partnership with US-headquartered financial technology company Kurtosys to offer a solution for asset managers’ compliance with data disclosure requirements, combining the Luxembourg firm’s dissemination platform and the Kurtosys distribution cloud. The new offering will streamline the data integration process and expand the range of data dissemination options for customers, according to Kurtosys global head of sales Patrick McKenna, as well as reducing time to market for product launches and providing operational and IT cost savings.

Best source: InFinance (in French)

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