Established in 1923

Copyright © 2013 | Wildgen, Partners in Law

Wildgen, Partners in Law, whose origins go back to

the 1920’s, is today one of the largest and best-

known law firms in Luxembourg.

Since the 1980’s, Wildgen has focused its activity on

business, corporate, tax, and financial law,

undergoing significant development together with the

upsurge in the Luxembourg financial market.

While remaining fully independent, Wildgen boasts

a wide network of foreign correspondents and

contacts, and collaborates with experts worldwide.

Wildgen is fully-committed to the success of its

clients and stresses the values of the profession in a

modern world: a sense of ethics and integrity, pro-

activity and responsiveness, a multilingual and

multicultural staff, and the utmost flexibility in meeting

our clients needs and adapting to the ever-changing

market.

Wildgen offers a wealth of experience and a strong,

long-standing track record in advising on cross

border transactions.

Over the years, Wildgen has acquired a strong client

base in Europe, C.I.S, U.S.A, Middle East, and Asia.

It represents a number of multi-national corporate

institutions, investment (mutual) funds, pension

funds, private equity funds, leading banking and

financial institutions, and insurance service providers.

Wildgen’s lawyers assist clients with regard to all

legal matters in the following practice areas:

Administrative Law, Aviation and Maritime,

Banking and Financial Law, Capital Markets,

Corporate Finance, Corporate Law, Employment

and Pensions, Insurance Law, Investment Funds,

IP/TMT, Islamic Finance, Litigation and

Arbitration, Real Estate, Securitisation, Tax,

Private Equity and Venture Capital.

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Table of Contents

New Law on Dematerialised Securities ..........................................................................4

Special Limited Partnerships (SLPs) Introduced in Luxembourg ....................................6

The Luxembourg Double Tax Treaties Network .............................................................8

Bill of Law on Exit Tax .................................................................................................. 10

Luxembourg as Precursor in Europe of “Paperless Office” Reform. The Electronic

Archiving Revolution is Underway ................................................................................ 11

Wildgen‘s News .......................................................................................................... 13

Recognition of Wildgen's Expertise in Energy Law....................................................... 14

New Brochure ............................................................................................................... 15

Upcoming Events ......................................................................................................... 15

Copyright © 2013 | Wildgen, Partners in Law

New Law on Dematerialised Securities

Corporate Practice Group - May 2013

The law of 6 April 2013 on dematerialised securities (the “Law”) has introduced

in Luxembourg law a flexible and secured legal framework for investors and

issuers of Luxembourg dematerialised securities.

A Pressing Environment

The introduction of the Law responds to a pressing need for a domestic legal

framework to this regard, while -- at the European and international level -- guidelines,

principles, and regulations have already been issued. It must also be noted, since

Luxembourg commercial and corporate laws are largely inspired by Belgian and

French law, that dematerialisation of securities has already been regulated in France

and Belgium years ago.

A Step Forward Standardisation: Integration of Existing Texts

The Law pursues a major objective: increasing the protection of securities holders and

safety of securities transactions, in particular concerning securities circulation. Such an

objective is of prime interest in an international context, where investors’ rights depend

upon a string of intermediaries who are not all located in the same jurisdictions.

To achieve this purpose, standardisation is unavoidable and urged the Luxembourg

legislative process. This has resulted in a flexible legal instrument in line with the

European and international economic and legal environment, without creating

unnecessary complexity for the investors, issuers of Luxembourg securities, and legal

practitioners.

The Law integrates most provisions of the Geneva Securities Convention1 (e.g.

investors’ rights to instruct intermediaries, segregation of investors’ patrimony, transfer

process, protection in case of insolvency of the account provider) and some of the

Securities Law Directive2

principles (e.g. supervision of the activity of securities

safekeeping and administration, investors’ protection in the event of an account

provider becoming insolvent). This, thereby, progresses towards harmonisation of the

conditions of issuance, conversion, and deposit of dematerialised securities with

1 Geneva Securities Convention (convention UNIDROIT sur les règles matérielles relatives aux titres

intermédiés) of 9 October 2009. 2 Draft directive SLD (Securities Law Directive) issued by the European Commission.

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European and international existing regulations and strengthens the legal certainty of

transactions involving Luxembourg securities.

Creation of a New Type of Securities v. Replacement of Existing

Ones

Rather than eradicating existing securities, the Law creates a new sui generis category

of securities that can be optionally chosen by investors, whether via issuance or

conversion process. Dematerialised securities can be:

existing registered or bearer shares converted into dematerialised shares;

shares newly issued under dematerialised form;

existing debt securities converted into dematerialised debt securities; and,

debt securities newly issued under dematerialised form.

With respect to equity securities, only shares from Luxembourg stock companies

(“sociétés par actions”, typically sociétés anonymes and sociétés en commandite par

actions), common funds (fonds communs de placement), and representative of share

capital can be issued or converted into dematerialised securities. As regards debt

securities, any Luxembourg law governed debt securities may be issued or converted

under the Law. The conditions under which issuance of dematerialised securities or

conversion of existing securities into dematerialised securities may take place will be

contractually agreed and shall be inserted, with respect to equity securities, in the

articles of association of the issuer.

The full article is available on our website

Copyright © 2013 | Wildgen, Partners in Law

Special Limited Partnerships (SLPs) Introduced

in Luxembourg

David Maria (Partner) & Jocelyn Hodebourg (Jurist) - May 2013

A New Hobby Horse

The Luxembourg limited partnership regime is being modernised to become more

attractive for private equity, venture capital and real estate transactions. The bill of law

which implements Directive 2011/61/ EU on Alternative Investment Fund (AIF)

Managers into Luxembourg domestic law is about to be adopted. Hence, the

Luxembourg authorities are killing two birds with one stone, seizing the opportunity to

introduce special limited partnership (société en commandite spéciale, SCSp or SLP),

which can be set up as regulated or unregulated vehicls. The SLPs have no reason to

envy the legal framework of the UK limited partnership (UKLP), as both companies are

like two peas in a pod.

An SLP is established by a contract – or ‘partnership agreement’ – between at least

one general partner who is liable for the SLP’s obligations on an unlimited basis, and

another or more limited partners whose liability is limited to their contribution. As with a

UKLP, there is no upper limit on the number of partners. A partner can be a limited and

general partner at the same time. But unlike with UKLPs, in SLPs the limited partners

can also make contributions in industry.

Flexibility

SLPs do not have separate legal entities for their partners, allowing a high level of

flexibility when structuring the partnership agreement. For example, the partnership

agreement can provide an exception from the basic Luxembourg ‘one share one vote’

principle. In addition, the bill does not provide a prohibition on return of capital. Capital

returned to partners by way of distribution of dividends or reimbursement of equity

interests cannot be recalled, which is not the case with the limited partners. Except for

some public rules, everything may be governed freely in accordance with the

partnership agreement as distribution of profits or clawbacks without any restrictions.

Confidentiality

The SLP ensures confidentiality regarding the identity of the limited partners, and the

partnership agreement must not be fully published in the official Luxembourg gazette,

whereas the UKLP registration involves giving full names of each partner with separate

lists for general and limited partners.

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Legal certainty

Basically, the management of a limited partnership is entrusted to one or more general

partners who can be authorised to delegate its powers. If the limited partners

participate in the management other than under the form of internal management’s

acts, the latter forfeit their limited liability. Defining the border between the acts of

internal and external management is sometimes sensitive. Hence, the Luxembourg bill

includes a non-exhaustive and vast list of acts in order to ensure a high degree of legal

certainty to the limited partners.

Favourable tax treatment

The SLP is similar to the tax-transparent companies located in England, Jersey,

Guernsey, the Cayman Islands and the State of Delaware. An SLP used as a regulated

vehicle is not subject to corporate income tax, municipal business tax (MBT) and

wealth tax. An SLP used as an unregulated vehicle is fully tax transparent without

giving rise to any Luxembourg tax exposure for its foreign limited partners and is

subject to MBT in limited cases only. Under the proposal’s provisions, it should be easy

to achieve exemptions for SLPs from any Luxembourg income taxes. SLPs are allowed

to obtain advance tax clearance from the tax authorities on a case-by-case basis like

the so called “Soparfi” for instance. The bill also gives a favourable tax treatment to the

carried interest regime. Profits paid to employees of a company managing an AIF and

gains realised by them on the sale of equity interests will be subject to a reduced rate

of approximately 10 per cent under conditions. Finally, the management fees provided

to a regulated or unregulated SLP will be exempt from Luxembourg VAT. Also,

investment advisory services have always been regarded in Luxembourg as part of

management services, which is not the case for some EU member states. Luxembourg

is the European leader regarding the regulated investment funds.

The government hopes that its new limited partnership will bolster its position in the

private equity industry. Luxembourg plans now more than ever to make ‘onshore’

investment funds its hobby horse.

The article is available on our website

The Luxembourg Double Tax Treaties Network

Tax Practice Group & Knowledge - May 2013

Latest updates

16 May 2013. Draft law 6501 voted by to the Luxembourg Parliament. This draft law

implements new tax treaties with Germany, Kazakhstan (protocol included), Laos (Lao

People's Democratic Republic), Macedonia, Seychelles, Sri Lanka and Tajikistan and

protocols to existing tax treaties with Canada, South Korea, Italy, Malta, Poland,

Romania, Russia and Switzerland. The international standard of exchange of

information upon request is integrated to all of these.

10 May 2013. A new tax treaty with Guernsey was signed. This new treaty will include

the international standard of exchange of information upon request.

07 May 2013. On the occasion of the Euromoney Conference taking place in Saudi

Arabia, Luc Frieden, Luxembourg Minister of Finance, signed a new tax treaty with the

Saudi Minister of Finance Dr Ibrahim Al-Assaf.

17 April 2013. A new tax treaty with Jersey was signed. This new treaty will include the

international standard of exchange of information upon request.

08 April 2013. A new tax treaty with Isle of Man was signed. This new treaty will

include the international standard of exchange of information upon request.

15 March 2013. A new treaty with Singapore was initialed. This new treaty will replace

the initial 1993 treaty when it will be applicable.

07 March 2013. Draft law 6552 implementing new tax treaty with Taïwan submitted to

the Luxembourg Parliament.

07 March 2013. The Finance Ministers of Luxembourg and the Czech Republic

signed on Tuesday 05 March an agreement on preventing double taxation which

replaces the agreement of 1991. This new treaty will include the international standard

of exchange of information upon request.

28 February 2013. In its 2012 Annual Report issued on 25 February, the Luxembourg

Direct Tax Authorities reported that they have negotiated new tax treaties with

Botswana, Brunei, Chili, Czech Republic, Guernsey, Jersey and Isle of Man and

protocol with Estonia. It is also reported that 592 exchange of information upon

request, spontaneous information exchange and automatic exchange of information

have been handled by the Luxembourg Direct Tax Authorities in 2012.

Week 04-08 February 2013. The Luxembourg President of Parliament had informed

Russian deputies that Luxembourg is close to the final vote of the protocol (signed on

21 November 2011).

30 January 2013. A new tax treaty with Sri Lanka was signed.

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25 January 2013. The Luxembourg Government adopted the draft law implementing

the new tax treaty with Taiwan (signed on 19 December 2011). This draft law has not

yet been submitted to the Parliament.

Update - List of double tax treaties in force and in negotiation as of 16 May 2013.

Situated at the crossroad of Europe, the Grand-Duchy of Luxembourg is based

on a dynamic and open economy which actively promotes the development of

cross border trade and investments. Its major role in matter of international trade

in the sectors of banking and finance, investment funds and holding companies

has for a consequence that a strong network of double tax treaties has been

developed over the years. To that end, Luxembourg has entered into 64

comprehensive double tax treaties based on the OECD model tax convention on

income and capital in order to mitigate the risks of double taxation for

businesses.

The Grand Duchy treaty partners are amongst the most industrialised countries with

inter alia all of the states in the European Union but Cyprus, the United States, Japan,

Brazil, China, Mexico, Hong Kong and Russia, Canada. Luxembourg tax treaties as

most bilateral agreements are designed and balanced to address a specific economic

context. Given their very nature, tax treaties are constantly negotiated and updated to

the latest international standards.

Another perspective to the steady expansion of Luxembourg tax treaties must be

added. Luxembourg endorsed on 13 March 2009 the international standard of

exchange of information upon request embodied in article 26-5 of the OECD model tax

convention. As a result, 23 treaties containing the said standard were concluded, 9

protocols and 3 new treaties are actually pending (draft law 6501 deposited on 21

November 2012 for examination and adoption by the Parliament).

The article is available on our website

Copyright © 2013 | Wildgen, Partners in Law

Bill of Law on Exit Tax

Laurent Mahaux (Senior Associate) & Jocelyn Hodebourg (Jurist) - April 2013

On 15 March 2013, the Luxembourg Government submitted to Parliament bill of

law n°6556. The purpose of the bill of law is to amend some of the Luxembourg

provisions regarding enterprise migration considered as not compliant with EU

law.

According to the European Court of Justice (“ECJ”), imposing taxes on unrealised

capital gains at such time and for the sole reason that a company transfers its

headquarters to another Member State of the European Economic Area (“EEA”) is a

restriction to freedom of establishment. The determination of the amount of tax due at

the time of such transfer can be justified by the preservation of the allocation of taxing

powers between Member States. Nonetheless, the ECJ stated that the immediate

recovery of the tax is disproportionate, and that a deferred recovery of tax would

achieve this preservation.

The current Luxembourg tax regime does not provide for an automatic possibility of tax

deferral on latent capital gains which are deemed realised upon migration.

The bill of law intends to:

amend Article 38 Luxembourg income tax law (“LIR”) so that taxpayers could

opt for a deferred payment of taxes upon a migration; in such a case, the

capital losses realised by the taxpayer after its migration would reduce the

Luxembourg taxable base if these capital losses are not taken into account in

the new host country;

abolish Article 44 LIR, which provides that the transfer of an asset between

Luxembourg companies owned by the same taxpayer could be done at book

value, avoiding any taxation on unrealised capital gains, because the Article

was not available for a transfer abroad; and,

amend Article 54 LIR in order to extend the scope of the roll-over relief upon

realisation of eligible assets and reinvestment of sale proceeds; this rollover

would also apply in situations where the reinvested asset is allocated to a

branch located outside Luxembourg but within the EEA.

The article is available on our website

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Luxembourg as Precursor in Europe of

“Paperless Office” Reform. The Electronic

Archiving Revolution is Underway

Emmanuelle Ragot (Head of IP/TMT) & Stéphanie Bonn (Knowledge Manager) - April 2013

After six years of preparation, a legal revolution began on 13 February 2013 in

Luxembourg with bill n° 6543 on electronic archiving3.

The system in force is almost a quarter of a century old and no longer fits with the

actual needs: this bill is the first step of a long-awaited reform strongly promoted by

businesses, professionals of the financial sector and administrations to reduce the use

of paper for economic, practical and logistic reasons. Bill n° 6543 introduces a new

Law4, amends the Law of 5 April 1993 on financial services and replaces the Grand

Ducal Regulation of 22 December 1986 by a new Grand-Ducal Regulation on the

dematerialisation and conservation5 of documents. This new reform is expected to be

implemented before the end of this year. On the European side, there is no EU

Regulation applicable to electronic archiving. Luxembourg appears to be the first EU

country that has initiated such a reform.

The electronic archiving reform’s main principles are

Recognition of the legal value of the dematerialised documents and

establishment of legal presumption of the copies’ conformity to the original.

This principle is the keystone of the bill. Following article 1333 of the Civil Code, a

judge may require the production of an original when a copy is provided by a party, and

may reject this copy for the sole reason that only an original is better evidence than an

electronic copy. The burden of proof lies with the party who wishes to establish that a

copy is in fact a copy of the original.

This could create an unfavourable situation for those professionals who have taken the

decision to store all their documents electronically and to destroy originals. Therefore,

the Luxembourg Financial Services Authority (CSSF) recommends to financial

3 Projet de loi 6543 relatif à l'archivage électronique et modifiant la loi modifiée du 5 avril 1993 relative au

secteur financier. 4 Hereinafter referred to as the « Future Law » Please note that amendments could be made to the draft law

during its legislative process. 5 Dematerialisation: replace paper documents by a system in which documents are stored electronically.

Conservation: keep a copy or an original digital guaranteeing its integrity.

Copyright © 2013 | Wildgen, Partners in Law

professionals “not to destroy documents commonly admissible as proof before the

courts and which remain principally in paper form6”.

The recognition of the legal value of paperless documents will be guaranteed by the

future Law and its Regulation to provide holders of stored and/or dematerialised

documents legal certainty and confidence in the development of electronic archiving. In

this context, two important points are listed in the bill. On the one hand professionals

who would be interested to obtain the presumption of the copies’ conformity to the

original for their stored and/or dematerialised documents will have to liaise with a new

type of provider created by the reform: “the dematerialisation and conservation provider

or PSDC7” . On the other hand, paperless documents maintained in accordance with

applicable legal and regulatory requirements will not be rejected by the judge for the

simple fact that they are in electronic form and there is still a paper original: article

1333 of the Civil Code will no longer apply to the electronic archives.

The full article is available on our website

6 CSSF 2008 Rapport p.158

http://www.cssf.lu/fileadmin/files/Publications/Rapports_annuels/Rapport_2008/RA08_full_eng.pdf 7 Prestataire de Services de Dématérialisation ou de Conservation

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Wildgen‘s News

Wildgen’s

News

Copyright © 2013 | Wildgen, Partners in Law

Recognition of Wildgen's Expertise in Energy

Law

We are proud to announce that Wildgen has been recognised as a Luxembourg

leading law firm in the energy industry by the Energy Law Group (ELG). Our firm,

invited as exclusive Luxembourg member by the ELG, is now part of this

extensive network of European experts in energy and natural resources law.

Thanks to the determination and high-level expertise of David Maria, Partner,

WILDGEN joined the Energy Law Group. This was officially announced during the

Spring meeting of Energy Law Group (ELG) held in Belgrade on 26 and 27 April.

Founded in 1993, this group of 220 constitutes the most extensive network of

European experts in energy and natural resources law belonging to independent

European law firms. The network’s coordination is such that it offers each client of a

member law firm access, in Europe and beyond, to legal services within the energy

and natural resources sectors.

With a strong background in transactional and regulatory work, WILDGEN offers

advice to local, regional, and international major companies active in various areas

such as renewable energy, nuclear, electricity, or heating.

David Maria, Partner at Wildgen, comments: “This platform provides a key opportunity

for the promotion and the development of the energy sector in Luxembourg. For our

clients, this is also a primary asset. We are able to offer them the collective expertise of

more than 220 lawyers representing more than 40 countries, all of whom specialize in

domestic and EU energy and natural resources law. “

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New Brochure

MAY 2013 - LUXEMBOURG, A DOMICILE OF CHOICE FOR DOING BUSINESS

This publication aims at focusing on some of the most

important factors contributing to the success of

Luxembourg.

Upcoming Events

MAY 2013 - 30TH

INTERNATIONAL FINANCIAL LAW CONFERENCE

Michel Bulach, Partner at Wildgen, attends the next IBA Conference organised from

22nd to 24th May 2013 in Copenhagen.

He is looking forward to meeting you in there.

Copyright © 2013 | Wildgen, Partners in Law

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L-2320 Luxembourg

Tel: +352 40 49 60 1

Fax: +352 40 44 09

lawyers@wildgen.lu

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----------------------------------- The present newsletter contains general information only. It is not intended to be, and should not be relied upon as, a

comprehensive statement of the law. Therefore, WILDGEN can not accept any liability for any errors, omissions or opinions contained herein and for the implementation of the principles set out without its active involvement.