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LUXEMBOURG

LUXEMBOURG SECURITISATION COMPANIES

Purpose of a Luxembourg Securitisation Company

 

An originator sells and transfers the risk of any type of asset to a Luxembourg Securitisation Vehicle. The Luxembourg Securitisation Vehicle issues shares and/or bonds to investors by private placement or public offering and the cash flows generated by the assets serve to pay the investors. There is no risk diversification requirement.

 

 

Main Features of a Luxembourg Securitisation Company

 

A Luxembourg Securitisation Vehicle can take the form of an SA, SCA, SARL, SCSA or as a transparent fiduciary contract or co-ownership. The share capital of a Luxembourg Securitisation Vehicle depends on its corporate form.

 

Multiple compartments are normally created which are linked to different classes of shares providing protection to the shareholders in the event of bankruptcy. Each compartment is a legally separate entity which is not affected by transactions, assets and liabilities of any other compartment within the same company.

 

The shareholders can be companies or individuals resident anywhere.

 

There is no debt:equity ratio applicable.

A Luxembourg Securitisation Vehicle is not subject to authorisation and supervision by the Luxembourg Financial Regulator (CSSF) unless it issues shares to the public more than 3 times a year.

 

A Luxembourg Securitisation Vehicle does not require a depositary bank, administrative agent and independent auditor unless CSSF supervision applies.

 

 

Taxation of a Luxembourg Securitisation Company

 

The Luxembourg Securitisation Vehicle is subject to company tax at 28.59% and as such the company is protected by double tax treaties and European Union Directives. However all payments made by the company to the shareholders such as dividends and interest are deductible from the tax base. A Luxembourg Securitisation Vehicle is exempt from wealth tax. A one time capital duty of € 1,250 is payable.

 

Management services rendered to a Luxembourg Securitisation Vehicle are exempt from VAT.

Dividend and interest income received are exempt from withholding tax if received from European Union registered companies or subject to withholding taxes at source at reduced rates in accordance with the applicable double tax treaties.

 

Dividends and interest paid to a company or individual are not subject to withholding tax.