Transcript EXPERTA CORPORATE AND TRUST SA, Luxembourg

Presentation at the
Romania-Luxemburg Business Forum asbl.
Luxembourg corporate and investment structures
for private equity and real estate investments
27 February 2008
Agenda
 About Experta Luxembourg
 Activity of our clients relating to Romania
 Private Equity and Real Estate investments through Luxembourg companies
 Soparfi, a SPV for cross-border investments
 How to choose the right Luxembourg investment vehicle?
 Case study on the use of Luxembourg companies as investment vehicle into
Romania
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About Experta Luxembourg
 Fully owned subsidiary of Dexia Banque Internationale à Luxembourg
 70 employees and a share capital of EUR 2,500,000
 Licensed as asset manager, advisor on financial transactions and domiciliation
agent by the Luxembourg Banking Supervisory Authority (CSSF)
 Member of the Association of the Luxembourg Fund Industry (ALFI), the
International Fiscal Association (IFA) and the Luxembourg International
Management Services Association (LIMSA)
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Private Equity and real estate investments
 Private Equity
 Emergence of private equity transactions in Europe since the early 80s
 Growth of private equity industry enhanced by geopolitical developments in Europe
 Real estate investments
 Investments in European real estate as mainstream investment alternative attracting
both individual and institutional investors
 More real estate investment vehicles started in Luxembourg than in other European
countries; trend expected to continue in the future
 Wealth Management services to HNWIs
 Private equity and real estate are the asset classes that HNWIs include in their
investment portfolio
 In exit situations, potential of high influx of liquid assets for treasury management
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Soparfi, a SPV for cross-border investments
 Definition
 Soparfi is recognised by international investors as a flexible investment vehicle that
may be used in various investment schemes due to its wide scope of activities
 Scope of activities
 hold participations in resident or non-resident companies
 perform any type of commercial or industrial activity in relation with the object
specified in its articles of incorporation
 purchase, sell and exploit patents, grant licenses
 acquire shares in real estate companies, or own real estate property itself
 Eligible to the participation exemption for dividends, capital gains and net wealth tax
under certain conditions
 Benefits from the Luxembourg double taxation treaty network and qualifies for the
application of EU-Directives
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How to choose the right Luxembourg investment
vehicle?
Purpose of the
vehicle
Control level
SPF
Soparfi
private wealth
management
holding of participating
interests
unregulated
Target investments
financial assets only
(no active
management of
investments)
Investor type
limited to individual
investors and private
estate management
vehicles
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Sicar
SIF
creation of an investment platform (fund structure)
lightly regulated
unrestricted, mainly
participating interest in
unlisted and listed
companies
unrestricted
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all types of private equity
and venture capital
investments (including
real estate private equity)
temporary investments in
other assets during
limited time period
unrestricted
institutional investors
professional investors
well-informed investors
Luxembourg companies for investments in Romania
Case study - Repatriation of profit
 Dividends distributed by the Romanian
subsidiaries
Investor

Luxembourg
company
 Dividends received from the Romanian
subsidiaries
Dividends

RomanianCo
No withholding tax in Romania provided
the Luxembourg company holds at least
15% of the capital of RomanianCo for at
least 2 years (domestic law implementing
the Parent-Subsidiary Directive)
RomanianCo
In principle, taxation at 29.63%, but full
exemption provided the conditions of the
Luxembourg participation exemption are
met:


Real estate
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Industry
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Minimum shareholding requirement of 10%
or acquisition price of EUR 1,200,000
Minimum holding period of 12 months (or
commitment to hold)
Luxembourg companies for investments in Romania
Case study - Exit strategies
 Treatment of capital gains from the
alienation of the Romanian subsidiaries
Investor
 Based on the Double Taxation Treaty
concluded between Luxembourg and
Romania, the right to tax capital gains is
attributed to the country of the seller, i.e.
Luxembourg
Luxembourg
company
Capital gains
 Treatment of capital gains at the level of
the Luxembourg company

RomanianCo
RomanianCo
In Luxembourg, in principle, taxation at
29.63%, but full exemption provided the
conditions of the Luxembourg
participation exemption on capital gains
are met:


Real estate
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Industry
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Minimum shareholding requirement of 10%
or acquisition price of EUR 6,000,000
Minimum holding period of 12 months (or
commitment to hold)
Luxembourg companies for investments in Romania
Case study - Exit strategies


Investor
Capital gains
Luxembourg
company
RomanianCo
RomanianCo
Real estate
Industry
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Liquidation proceeds paid to the
shareholder
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No withholding tax under article 146 ITL
(no condition required)
Disclaimer
This presentation has been prepared based on the laws, regulations and administrative
and judicial interpretations in force as of today
All given information regarding foreign tax systems are indicative
No structure should be put in place without prior advice from Experta Luxembourg
This presentation should not be understood as a fiscal or legal advice
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Contact us
Experta Luxembourg
180, rue des Aubépines
L-1145 Luxembourg
www.experta.lu
E-mail: [email protected]
Tel: (+352) 26 92 55-1
Fax: (+352) 26 92 55-33 66
Your Experta Advisor:
Gabor Kacsoh
Member of the Executive Board
Head of Business Development
Tel: +352 26 92 55 40 95
Fax: +352 26 92 55 36 42
[email protected]
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