The present newsletter aims at clarifying which type of certificates of residence can be obtained for Luxembourg Undertakings for Collective Investment (“UCI”).
The Luxembourg Tax Authorities (“LTA”) have issued Circular L.G.- A. n°61 providing an insight of the new rules on the issuance of Certificates of Tax Residence (“CoTR”) and the access to Double Tax Treaty (DTT) for Luxembourg UCIs (i.e. Funds established under the Law of 17 December 2010) and Specialized Invest Funds (established under the Law of 13 February 2007).
Issuance of Certificates of Residence
For SICAVs/SICAFs entitled to treaty benefits (Type 1 Certificate)
SICAVs/SICAFs may be entitled to treaty benefits pursuant to either (1) an express agreement between the two States, (2) a clear text, or (3) to the interpretation of the Luxembourg Tax Authorities.
The circular confirms that if a double tax treaty is applicable to a SICAV/SICAF, a CoTR can be issued on that ground.
A template of the “Type 1 Certificate” to be issued based on a DTT is enclosed to the Circular.
For SICAVs/SICAFs not entitled to treaty benefits (Type 3 Certificate)
SICAVs/SICAFs may not be entitled to treaty benefits pursuant to either (1) a refusal of the other contracting State to grant treaty benefit to foreign UCIs or (2) no DTT applies between Luxembourg and the source country.
In these cases, the Circular gives a new opportunity to obtain a CoTR based on Luxembourg domestic tax law when the statutory seat or central administration of the SICAV is located in Luxembourg. This certificate can especially be used for reclaiming taxes based on EU law or more specifically on the grounds of the ECJ decisions in the Aberdeen and Santander cases.
A template of the “Type 3 Certificate” to be issued based on Luxembourg domestic law is enclosed to the Circular.
For FCPs (Type 2 Certificate)
While SICAVs/SICAFs, under certain conditions, could already obtain a Luxembourg CoTR, those could usually not be issued for FCPs, as the latter have no legal personality and are not eligible, in principle, to DTT benefits.
The new circular provides an opportunity for FCPs to obtain such CoTRs in the context of some DTTs which consider them as individuals or residents. This includes the Isle of Man, Saudi Arabia, Seychelles, Jersey, Guernesey and Tadjikistan. In Germany the DTT applies to FCPs up to the percentage the unit holders are tax resident in Luxembourg.
A template of the “Type 2 Certificate” to be issued when a DTT is applicable to an FCP is enclosed to the Circular.
In order to request any of these 3 types of CoTRs, requests must be addressed to the Luxembourg Tax office “Sociétés VI” with a regulatory attestation from the Commission de Surveillance du Secteur Financier (“CSSF”), certifying the Fund status and supervision by the CSSF, in attachment.
Regarding the “Type 3 Certificate” which is based on Luxembourg domestic legislation, beside the above CSSF certificate:
In case it is introduced in relation to a future income, a description of the investment policy of the fund as well as the details of the income for which the CoTR is requested, must be provided to the LTA no later than 30 June Y+1.
This circular finally clarifies grey areas regarding the access to treaty benefits and the issuance of CoTRs for UCIs. It also gives the opportunities for UCIs to proof their tax residence in one country even though the latter are not eligible to DTT. This is important for EU law tax reclaims.
For further information, please do not hesitate to contact us.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.