luxembourg holdco more tax fraud by kpmg
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Is KPMG a firm of liars, thieves and murders?
The answer is unequivocally, Yes.
It is a fact, that KPMG has already plead guilty to committing tax fraud and paid massive fines, lies and thievery. It is a fact that KPMG is
continuously fighting lawsuits for accounting fraud, lies and thievery for $100s of millions.
It is a fact that KPMG even lied to the DOJ in crafting their statement of facts to the DOJ, Joseph Loonan KPMG’s Chief Counsel wrote an
email to Joseph Barloon of Skadden Arps (a lackey of Bob Bennett of Skadden) stating that the “statement of facts” given to the DOJ were
false, famously ending his email “freedom is just another word for nothing left to lose” on March 3, 2005.
Clearly the Loonan email (which is public information) proves KPMG to be massive liars and at a minimum a destroyer of lives, the lives
of all those they lied to the DOJ about since once the DOJ gets a hold of you it is ball game over, period, guilty or innocent, the U.S.
criminal justice system is a meat grinder that has no parallel in the universe.
In fact, several studies exist, more fully described below that emphatically state, the rate of suicide is SIGNIFICANTLY higher for anyone
having contact with the U.S. criminal justice system, guilty or innocent.
The study further provides that all that is necessary for someone to kill themselves at a significantly higher rate, is contact or involvement
with someone subject to the degradations provided by the U.S. criminal justice system.
“By RICK NAUERT PHD Senior News Editor Reviewed by John M. Grohol, Psy.D. on February 9, 2011
Men and women who have had contact with the criminal justice system appear to have a significantly higher
rate of suicide than the general population, according to a new study.
And the higher suicide rate occurs even if an individual has never received a jail or prison sentence or a guilty
verdict.
The report is posted online and will appear in the June print issue of Archives of General Psychiatry, one of the
JAMA/Archives journals.”
Keep in mind, the Feds are the ultimate masters of destroying the lives of anyone they deem unworthy (which in the professional context is
usually anyone who has not previously worked for the Feds (check it out the stats don’t lie)). It is perfectly legal for the Feds to say
anything they want in court with the full knowledge that the lying scum in the media will repeat what the Feds say as fact (like Lynnley
Browning of the NYT does). In fact, Jane might be alive today if Browning had one shred of decency or even honesty, but I digress we
know she doesn’t.
Again the Feds can say whatever they want with the one proviso that the Feds must not be absolutely certain what they say is false and then
even if what the Feds say is false, as long as no one can prove the Feds made false statements with bad intent, it is perfectly legal. We all
know the Feds never have bad intent, so in effect, the Feds can say and do whatever they want for the greater good/evil.
Of course all of the above is common knowledge, everyone knows how the system works.
In 2003 a DOJ study, link below, provides that 13% of the people in the U.S. prison system are butt raped and acknowledges in the study
this figure may be low (and several other studies provide that the butt raping that occurs in the U.S. prison system is significantly higher
especially in the higher security prisons or prisons with violent offenders). .
Okay, so it is a given, if you lie to the DOJ like KPMG did, KPMG knew the DOJ would use those lies to have people put in prison where
the probability was extremely high they would be butt raped (almost a certainty if they are locked up in a 100 square foot room with 23
black guys convicted of murder or worse, who hate Jews and are left unattended for days at a time).
See “the Prison Rape Elimination Act (PREA) 2003 states that 13 percent of all inmates have been raped in American prisons and jails}”.
It is also a given based on thousands of studies, see the link the link above, that those subject to the legal system have a significantly greater
chance of committing suicide:
Thus, it is clear when KPMG knowingly lied to the Feds, KPMG would be “causing” its former partners to be butt raped and potentially
“cause” the partners or their loved ones to commit suicide, the government studies all provide for this and everyone knows it.
Murder is defined in Webster’s as “the crime of unlawfully killing a person”. Kill is defined in Webster’s as “ to deprive of life : cause the death of”’ . We all know lying to the Feds is unlawful, right? Therefore, KPMG knew when it lied to the Feds, KPMG would be causing the death of those being lied about or their loved ones (all of the prison studies on suicide and rape are common knowledge) and the butt raping of those actually incarcerated. Thus KPMG knew when it lied to the Feds, KPMG would be killing people and committing the act of murder since lying to the Feds is unlawful, thus, KPMG is a firm of murders at least according to Webster’s.
I will say it again, if you work at KPMG or do business with KPMG if anything goes wrong, to save itself, KPMG will lie, steal and kill to save itself, it is really that simple. The other thing you can be sure of, any transaction you engage with KPMG is likely fraudulent, either tax or audit, I can take any financial statement audited by KPMG and find the Fraud in 5 minutes. In fact, even if the transaction is not fraudulent, KPMG will lie and say the transaction is fraudulent to save itself if it has other issues just like any low life murdering crack dealer would (of course, you may meet the low life crack dealer in prison by the time KPMG is done with you). Beware, KPMG is a firm of liars, thieves and murderers. Let me be absolutely clear, nothing in this post is untrue and no one is being threatened, the only thing any of you dopes have to fear is KPMG itself (and the U.S. Government when KPMG gets done lying to the Feds about you). Luxembourg Holding Companies Luxembourg Holding Companies/ MORE FRAUD BY KPMG
LuluzeLuxembourg tax opportunities
for US investors
Houston, 4 November 2010
International Corporate Tax
Luc Alexandre
Senior Manager, KPMG Tax Luxembourg
Today’s agenda
I. Overview
II. Typical structures
I. Holding
II. Financing
III. Licensing
IV. Trading
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I. Overview
Overview Luxembourg country facts
•At the heart of Europe and founding member of the European Union (member since 1951)
•A renowned international financial centre
4
Overview Luxembourg country facts
5
Overview A favourable tax environment
Statutory tax rate:28.59% in 2010
28.80% in 2011
Possible to maintain the ETR to a minimum for any type of activity through tax planning
Favorable IP tax regime:
• Effective tax rate of 5.72% for royalty income
• A tax ruling is in principle not required
Advance tax ruling system to secure upfront the tax treatment of transactions (prompt and
flexible tax authorities – written confirmation is obtained within 2 to 6 weeks): pragmatic
approach
No capital / stamp duties
Extensive network of tax treaties that helps reduce/eliminate withholding taxes on foreign
income receipts
• Almost 60 treaties currently in force incl. Mexico, Brazil, HK, etc.
• 14 treaties currently in negotiation
6
Overview A favourable tax environment (Cont’d)
No withholding tax on royalties, interest & liquidation proceeds (in principle)
No withholding tax on dividends paid to US corporations (subject to conditions)
Luxembourg participation exemption (incoming dividend and capital gain exempt)
No or minor taxation upon exit or refinancing strategy
Access to EU Directives (Parent/Subsidiary, Interest/Royalties, and Merger Directives)
No CFC rules
Bilateral Investment Treaties
7
Overview Hot topics in Luxembourg
Increase in aggregate corporate tax rate: from 28.59% (2010) to 28.80% (2011)
Transfer pricing studies for newly established back-to-back financing entities
Minimum flat tax of EUR 1,500 for corporate entities (SOPARFIs)
• Of which financial assets (including transferable securities, receivables, bank deposit etc.)
exceed 90% of their total assets;
• That do not perform activities subject to a business license or approval of supervisory authority;
• in fiscal unity cases only applicable once at the level of the integrating Luxembourg parent
company or permanent establishment;
• But not before 2012
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II. Typical structures
Typical structures : Holding
EU subsidiaries or “high-taxed” non-EU subsidiaries
Benefits
• Full exemption on incoming dividends and capital gains
(participation exemption regime):
• 10% ownership or acquisition price of EUR 1.2m
(dividends) / EUR 6m (capital gains)
• 12 months holding period
• “Subject to tax” requirement (except for EU subsidiairies)
No Luxembourg withholding tax on dividends paid to USCo under
domestic rules
In principle, no foreign withholding tax on incoming dividends
from EU/non-EU subsidiaries pursuant to EU Directive and tax
treaties
Other Considerations
• Luxembourg tax clearance
• Luxembourg substance requirements
USCo
LuxCo
EU / non-EU
Dividends
•
•
Dividends Capital gains
Typical structures : Holding
Luxembourg
Benefits
• Upon disposal of participations in OpCos to LuxCo2,
crystallisation of write-downs into permanent tax losses at the
level of LuxCo1
• The tax losses of LuxCo1 becoming permanent, may be used
against income deriving from e.g. financing, trading… activities
• Losses at the level of OpCos remain tax deductible
Other Considerations
• Luxembourg tax clearance
• Change of control at OpCos level
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Utilisation of tax losses in
LuxCo2
USCo
LuxCo1
OpCos
OpCos
Typical structures : Holding
“Low-taxed” non-EU subsidiaries (tax havens)
Benefits
• No or low taxation on incoming dividends and capital gains from
“low-taxed” subsidiaries (e.g. Tax havens) that do not benefit from
the Luxembourg participation exemption regime
• No Luxembourg withholding tax on the accrual (or payment) of
yield on TPECs (Tracking Preferred Equity Certificates)
Tax analysis
• TPECs are a hybrid and are treated as debt for Luxembourg tax
purposes – accrual yield treated as tax deductible interest
expense
• TPECs bear (i) a fixed interest rate equal to 0.1% of the nominal
value of the TPECs and (ii) a variable interest rate calculated as
99% of LuxCo’s net income
• LuxCo taxed on margin between the dividends/capital gains and
the yield on TPECs – effective taxation can be as low as 0.3%
Other Considerations
• Luxembourg tax clearance
• For US purposes, TPECs are treated as equity under certain
conditions – as long as the yield is accrued but not paid there is
no taxation in the US (no Luxembourg requirement to pay the
yield before exit)
USCo
LuxCo
ow-taxed non-EU
TPECs Dividends
Dividends
Capital gains
L
Typical structures : Holding
Utilisation of foreign tax treaty PE losses
Background
The tax rate applicable to income realised by a LuxCo in
Luxembourg, should be determined as if LuxCo’s worldwide
(i.e. domestic & foreign) income were subject to tax in
Luxembourg (Circular on article 134 of Luxembourg Income
Tax Law).
This applies to the extent that foreign income is realised in a
tax treaty country
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•
Foreign •
tax treaty PE
USCo
LuxCo
Typical structures : Holding
Utilisation of foreign tax treaty PE losses (Cont’d)
Example (simplified)
Assumptions
Luxembourg profit/(loss):
Foreign PE profit/(loss):
Step 1
Worldwide profit/(loss):
Tax rate computed thereon: Foreign
tax treaty PE Step 2
Luxembourg income:
Step 3
Luxembourg income:
Applicable tax rate (see step 1):
Luxembourg corporate tax due:
USCo
LuxCo
100 million
(120 million) (20 million)
0% (due to
negative result) 100 million 100 million
0%
-
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structures : Holding
Foreign tax credit
Benefits
• USCo is in excess of FTC carry forward and incurs an important
annual interest expense. USCo apportions interest expense using
an asset method (Treas. Reg. 1.861 – 9T)
• USCo subscribes to PECs issued by LuxCo and contributes its
foreign subsidiaries to LuxCo (Sect 351)
• Reduction of interest expense to be apportioned to foreign source
and increasing USCo’s FTC limitation
• From US tax point of view, PECs treated as equity, not subject to
US tax until repatriation
• Luxembourg participation exemption on OpCos dividends, capital
gains, liquidation proceeds at the level of LuxCo.
Other Considerations
• Luxembourg tax clearance
• Terms/conditions of PEC (term of years, fixed interest, etc.) to
confirm hybrid treatment (US: equity / Lux: debt)
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PECs
Typical
US
USCo
LuxCo
OpCos
Typical structures : Holding
Background
• Existing HavenCo will re-domicile to Luxembourg
Benefits
• Access to EU Directives, extensive tax planning
opportunities, absence of CFC rules
• Tax capital for dividend distribution free of Luxembourg
withholding tax
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HavenCo LuxCo
GroupCos GroupCos
Typical structures : Holding & Financing
Luxembourg holding/financing company (CPECs)
Benefits
• Taxation on a small margin in Luxembourg
• No Luxembourg withholding tax on accrual (or payment) of yield on
CPECs (Convertible Preferred Equity Certificates)
• Due to the hybrid nature of CPECs, USCo can push debt down to the
ForeignSubs to obtain local country interest expense deduction without
incurring any additional US taxable income CPECs A CPECs B
Tax analysis
• CPECs are a hybrid and are treated as debt for Luxembourg tax
purposes – accrual yield treated as tax deductible interest expense
• Taxable margin between 3bp and 25bp
Loans Shares
Other Considerations
• Luxembourg tax clearance
• For US purposes, CPECs are treated as equity under certain conditions
– as long as the yield is accrued but not paid there is no taxation in the
US
• When financing activities are combined with holding activities in
Luxembourg, there is no effective taxation in most cases as the interest
expenses on the tranche of CPECs relating to the acquisition of shares
(CPECs A) allows to offset the taxable margin left on the back-to-back
financing activity. In this case, recapture should apply except in case of
liquidation (disposal) of ForeignSubs
USCo
LuxCo
ForeignSubs
Typical structures : Financing
Luxembourg back-to-back hybrid
Benefits
• Luxembourg participation exemption on OpCos’ dividends, capital
gains and liquidation proceeds at the level of LuxCo
• From US point of view, PECs treated as equity, not subject to US
tax until repatriation
• Interest income taxes on a margin in Luxembourg
• No Luxembourg withholding tax on dividends (subject to
conditions) paid to USCo
Other Considerations
• Luxembourg tax clearance
• Terms/conditions of PEC (term of years, fixed interest, etc.) to
confirm hybrid treatment (US: equity / Lux: debt)
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PECs
Loan
USCo
LuxCo
OpCos
Typical structures : Financing
OpCos financing using reverse hybrid entities
Benefits
Interest deduction in OpCos with no corresponding pick up in the US
(deferral) or in Luxembourg
No withholding tax on interest (i) paid by OpCos to LuxCo (tax treaty,
EU Directive) and (ii) from LuxCo to Lux SNC/SCS
Small net margin left in LuxCo on financing activity
No withholding tax on dividends paid to LuxCo (tax treaty, EU
Directive)
Participation exemption on dividends, capital gains, liquidation
proceeds from OpCos
No withholding tax on dividends paid by LuxCo and Lux SNC/SCS
(subject to conditions)
Dividends and interest received by Lux SNC/SCS can be lent through
LuxCo (facility agreement)
Lux SNC/SCS has legal body (checkable)
One single holding and financing structure and cost reduction
No anti-debt creation rule
Points of attention
• Luxembourg tax clearance.
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•
•
•
•
•
•
Lux SNC/SCS
Loan
LuxCo
USCo
OpCos
• Loan
•
•
•
Typical structures : Financing
UK LLP: Same country exception
Summary of Tax Consequences
• UK OpCo deducts interest paid to LuxCo
• UK – Lux tax treaty eliminates UK withholding tax
• Interest paid by UK OpCo qualifies for same country exception
(since LuxCo is disregarded)
• Minimum fully taxable margin left in Luxembourg
• No Luxembourg withholding tax on interest paid to UK LLP (under
Luxembourg domestic law)
Benefits
• Interest deduction in UK; no corresponding UK . Deferral of US
taxes
• Only minimal tax in Luxembourg, which should be creditable
Other Considerations
• Luxembourg tax clearance
•Can use Scottish Partnership instead of UK LLP
• UK thin capitalization, worldwide debt cap and transfer pricing
rules 20
UK financing using
Equity
UK LLP
Loan Loan
LuxCo
USCo
UK OpCo
Typical structures : Financing
Canada financing using Can LP: Same country exception
Summary of Tax Consequences
• Can Opco deducts interest paid to Can LP
• Interest subject to 10% Canadian withholding tax under Canada –
Luxembourg tax treaty
• Interest paid by Can OpCo qualifies for same country exception
• Minimum fully taxable margin left in Luxembourg
Benefits
• Net tax savings in Canada (interest deduction, less 10%
withholding tax); no corresponding US taxes
• Only minimal Luxembourg tax
Other Considerations
• Luxembourg tax clearance
• Canadian thin cap limitation (2:1)
•Fifth Protocol to US-Canada tax treaty
•Can LP: Permanent establishment
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PECs
LuxCo
Can LP
Loan
USCo
Can OpCo
Typical structures : Financing
Cash & treasury management
Benefits
LuxCo taxed on a margin between (i) its net interest income
and (ii) the yield on TPECs – effective taxation approx. 0.3%
No foreign exchange exposure on short-term loans in
multiple currencies in the context of treasury management
and cash pooling activities
No Luxembourg withholding tax on the accrual (or payment)
of yield on TPECs (Tracking Preferred Equity Certificates)
Other Considerations
• Luxembourg tax clearance
USCo
LuxCo
•
•
• Intra-group short-term
loans out
TPECs
Intra-group
short-term
loans in
Cash pooling
activities
Typical structures : Financing
LuxBranch of a Hungarian company
Benefits
• Financing and holding activities can be located at the level of
the LuxBranch including FX and derivatives
• Small Hungarian tax
• Luxembourg effective tax rate approx. 1.2% – 1.5%
Other Considerations
LuxBranch • Luxembourg tax clearance
• Substance
Loans
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USCo
HungCo
GroupCos
Typical structures : Financing
Beneficial ownership test
PECs
0% MRPS
LuxCo2 LuxCo2
IB Loan
OpCo OpCo
US branch
IF Loan or
IB Loan
IB Loan
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USCo USCo
LuxCo1 LuxCo1
Typical structures : Licensing
Luxembourg IP tax regime
Benefits
• 80% exemption is granted for income and gains deriving from a wide
range of qualifying IP assets (software copyrights, patents, trademarks,
domain names, designs & models) resulting in an effective taxation of
approx. 5.72%
• Connected or third party acquisition, or self-developed
• R&D of IP can be carried out in Luxembourg or abroad (e.g. US) by
means of cost-sharing agreement – also Law of 5 June 2009 on
Research, Development and Innovation providing State-backed
financial incentives for R&D activities carried out in Luxembourg
• No capital or stamp duties due on the injection of cash by USCo to
LuxIPCo for incorporation or future financing of the activities
USCo
LuxIPCo
ForeignSubs
IP Licensing
Royalties
Typical structures : Licensing
TPEC structure for licensing activities
Benefits
• LuxIPCo taxed on a margin equal to the difference between its net
royalty income and the yield on the TPECs – effective taxation between
approx. 0.5% and 1.5%
Tax analysis
• No Luxembourg withholding tax on accrual (or payment) of yield on the
TPECs
Other Considerations
• Luxembourg tax clearance
USCo
LuxIPCo
ForeignSubs
TPECs
IP
Licensing Royalties
Typical structures : Licensing
Migration of IP – Lux/Swiss hybrid
Background
• Migration of TaxHavenCo from TaxHaven to Luxembourg
• Immediately thereafter, incorporation by LuxCo of SwissCo
and transfer of IP thereto against a hybrid instrument
• SwissCo performs licensing activities with the IP it owns
against royalty income
Benefits
• Hybrid instrument should qualify as equity for Luxembourg
corporate tax purposes, and as debt in Switzerland
• Income should qualify for the Luxembourg participation
exemption at LuxCo level.
• Expenses should be deductible at Swiss level
Other considerations
• Safe harbour thin cap rules
• Apply to related party debt
• 30% equity for IP
• Luxembourg tax clearance
• Arm’s length interest rate
Hybrid
SwissCo
IP
Licensing
IP
USCo USCo
LuxCo TaxHavenCo
27
Typical structures : Trading
Background
• USCo plans to reorganise part of its business, with the
creation of a Luxembourg company, and the migration of
profit from the US to a Luxembourg company
• Currently, most of the Group’s operations, personnel and
intangible value is in the US. Outside the US, its activities are
mainly limited to a Mexican manufacturing plan
Fact pattern
MexBranch • USCo incorporates LuxCo, and contribute the shares in
MexCo to LuxCo against share capital/share premium
• USCo sells existing equipment to LuxCo at book value
• LuxCo enters into service agreements with MexCo, e.g.
•MexPlant agrees to make available personnel to LuxCo to
work under the control of the latter
•A plant manager, controller... will perform their services
under the supervision, direction and control of LuxCo and
shall be granted authority to represent and act on behalf of
the latter in Mexico
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Maquiladora structure
Sale of
equipment at
book value
Services
agreements
USCo
LuxCo
MexCo
Typical structures : Trading
Luxembourg tax treatment
The sale of the Mexican assets to LuxCo should be made at
book value. However, if the fair market value of the assets
exceeds the book value, the difference should be considered
non-taxable informal capital contribution at the level of LuxCo
As a result of the activities realised by LuxCo in Mexico
through the secondment and services agreements, LuxCo
has a permanent establishment in Mexico within the meaning
of the Luxembourg – Mexico double tax treaty
An arm’s length margin of 8% – 12% of the costs (i.e.
operating charges incurred in connection with the activities of
the head-office, but not current or future interest expenses
accrued on debt attributable to the holding or financing
activities of LuxCo) in connection with the head-office’s
commercial activity should be left at the level of the latter and
fully taxable in Luxembourg, leading to a very low ETR in
Luxembourg.
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equipment at
book value
Services
agreements
USCo
LuxCo
MexCo
•
MexBranch
•
Maquiladora structure (Cont’d) Sale of
•
Typical structures : Trading
Background
LuxCo is incorporated to acquire carbon dioxyde emission
allownces (also called Carbon Credits), for resale on public
markets
LuxCo to be financed 99% with CPECs and 1% with equity
Benefits
CPECs to be considered debt for Luxembourg corporate tax and
net wealth tax purposes.
Yield due under the CPECs to qualify as interest (and in principle
free of Luxembourg withholding tax)
Minimum net taxable margin to be left in Luxembourg, measured
on the total outstanding annual average outstanding principal
amount of CPECs.
Other considerations
• Luxembourg tax clearance
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Carbon Trading
Funds
1% equity
LuxCo
•
99% CPECs
•
Purchase from
third parties CO2 emission
allowances
•
•
Resale
•
Typical structures : Trading
Trading structure – Assumption of risks
TPECs
CV
NL BV Risk assumption agreement
TPECs
LuxCo
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USCo USCo
LuxCo
OpCos OpCos
Typical structures : Trading and Forex
Background
• A notional deduction at LuxBranch level to offset
interest income by LuxCo on its loan portfolio under the
fiscal unity regime
• LuxBranch and LuxCo file a fiscal unity
Benefits
• Net wealth tax computed at LuxBranch and LuxCo
levels
• Arm’s length margin
• Currency gain/losses effectively neutralised
• Withholding tax at ForeignCo level may be reduced
where tax treaty applies
Other consideration
• Luxembourg tax clearance
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LuxBranch / LuxCo
LuxBranch
0% PEC
Foreign
currency loans
ForeignCo
USCo
LuxCo
Contact Details
Luc Alexandre
Senior Manager
Tel: ++352 22 51 51 – 5464
Mobile: ++352 621 87 – 5464
E-Mail: luc.alexandre@kpmg.lu
10, rue Antoine Jans
L-1820 LUXEMBOURG
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Disclaimer
• This presentation provides for several tax planning ideas that may be implemented via Luxembourg.
• Even though the information given in this presentation reflects the tax treatment as experienced in
implemented structures, the facts and circumstances of certain cases need to be analysed
beforehand.
• As regards the tax treatment in foreign jurisdictions, our description should be understood as purely
indicative. Should a restructuring be envisaged, the foreign tax treatment would have to be analysed
by foreign tax advisors.
• The Luxembourg tax treatment of a structure has to be confirmed by the Luxembourg tax authorities
– a common practice in Luxembourg with respect to important restructurings.
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