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19 December 2017 Luxembourg releases new guidelines on certificates of residence for UCIs The Luxembourg Tax Administration (LTA) has released a new administrative Circular1 (the Circular) providing details on the issuance of certificates of residence for Luxembourg undertakings for collective investment (UCIs). The new Circular now also covers Reserved Alternative Investment Funds (RAIFs) set-up in accordance with the provisions of the law of 23 July 2016. In general, the issuance of these residency certificates is key when determining whether a Luxembourg UCI may have access to a DTT's provisions and benefits. Regardless of the availability of such residency certificates, not all of the DTTs concluded by Luxembourg are applicable to UCIs. Accordingly, a case-by-case analysis of a DTT's application remains necessary.
Access to Luxembourg's DTTs may depend upon the legal form of a UCI i.e., whether it is: (i) a contractual vehicle without legal personality (fonds commun de placement or FCP); or (ii) an investment company with variable capital (société d'investissement à capital variable or SICAV) or with fixed capital (société d'investissement à capital fixe or SICAF). UCIs incorporated under the form of an FCP have no legal personality and are treated as transparent for tax purposes. Consequently, unless there are specific DTT provisions to the contrary, they are not considered as resident for treaty purposes and the tax administration cannot issue certificates of residence. Some of Luxembourg's recently signed DTTs specifically allow FCPs (or other transparent entities) to be treated as tax resident consequently a certificate of residence can be issued. These are DTTs with: Andorra, Brunei, Croatia, Estonia, Germany, Guernsey, Isle of Man, Jersey, Saudi Arabia, Seychelles, Tajikistan and Uruguay. In the particular case of the Luxembourg-Ireland DTT, it is worth noting that an FCP has direct access to the treaty provisions even without the issue of a certificate of residence. UCIs incorporated under the form of an investment company may choose between alternative legal forms, some being considered as opaque for tax purposes (e.g., public limited company or private limited company) and others as transparent (e.g., limited partnership or special limited partnership). Luxembourg takes the approach that a UCI in the form of a tax opaque company should qualify as a resident under Luxembourg domestic tax law, even if it is exempt from income tax by virtue of particular provisions. Therefore, Luxembourg tax residency certificates may generally be issued by LTA with respect to such UCIs.
In addition, Luxembourg's DTTs concluded with Bulgaria, Greece, Italy and the Republic of Korea remain unclear as to whether SICAVs or SICAFs are entitled to treaty benefits. Where any of the above cases applies, the LTA cannot issue a residence certificate unless it is possible under Luxembourg domestic tax law, as described in the final scenario below.
Requests for a certificate of residence are to be submitted to the relevant Luxembourg direct tax office. It must include, inter alia, the fiscal number of the company and be accompanied by a certificate from the Luxembourg Financial Sector Supervisory Commission (Commission de Surveillance du Secteur Financier – CSSF) confirming that the applicant has the form of a SICAV/SICAF and is subject to its supervision (except for the RAIF-SIFs which are not subject to CSSF supervision). For RAIFs the request should include the fiscal number, the date of incorporation and registered office. The taxation office may also generally request further information or supporting documents which it considers necessary for the issuance of the certificate of residence under the Luxembourg domestic tax law, such as the explicit reference to the relevant DTT provision or the documentation of the income derived by the UCI in relation to which the application of a specific DTT provision is requested. 1 Circular L.G. – A. n°61 of 8 December 2017, replacing Circular L.G. – A. n°61 of 12 February 2015. 2 RAIF-SIFs are subject to an annual subscription tax of 0.01% (based on the net assets value of the RAIF) and are exempt from Luxembourg corporate income taxes and net wealth tax (like a SIF). 3 RAIF-SICARs, incorporated as under the form of an SA (société anonyme), S.à r.l. (société à responsabilité limitée) or SCA (société en commandite par actions) are generally fully subject to Luxembourg corporate income taxes but, like a SICAR (risk capital investment company), benefit from an exemption of any income derived from securities.
Document ID: 2017-5045 |
