AIFMD adopted in Luxembourg

According to Luxembourg-based law firm Arendt & Medernach, the adoption of the AIFM law will strengthen the country's position as a hub for international investment funds.

While the country has long been a favourite of GPs for domiciling newcos, due to its prominent status as a tax haven, the AIFMD will in fact make Luxembourg more attractive to fund managers. Under the AIFMD, funds managed by Luxembourg-based managers will be exempt from Luxembourg taxation.

A lower income tax rate of 11% has also been introduced for carry received by fund managers, a notably favourable regime when compared with the previous law of taxing carried interest as ordinary income at a progressive income tax rate.

A new kind of investment vehicle has also been created under the AIFMD. The tax-transparent Société en Commandite Special (SLP) vehicle will be able to hold up to 5% interest without triggering a 6.75% business tax, as was the case with the previous Société en Commandite Simple (CLP) vehicle.

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• Topics
• Benelux
• Regulation
• Luxembourg
• AIFM Directive