Fund Taxation Alert 2025-01
Luxembourg – Updated Circular on Certificates of Residence for Collective Investment Funds
Luxembourg – Updated Circular on Certificates of Residence for Collective Investment Funds
Background
On 8 December 2017, the tax administration for direct taxes in Luxembourg published Circular L.G. – A. No. 61, clarifying the granting of a certificate of residence (CoTR) to collective investment funds. It mainly addressed the funds taking the form of a contractual fund (FCP), an investment company with variable capital (SICAV) or with fixed capital (SICAF) and reserved alternative investment funds (RAIF).
Current situation
A new Circular L.G.-A. No. 61 of 24 December 2024, which was published on 27 December 2024, replaces the Circular L.G.-A. No. 61 of 8 December 2017. Access to it can be found here (PDF, 0.9MB) (in French only).
There were no changes regarding the conditions to request or obtain CoTR but, the list of DTTs for which it is possible or not to obtain a CoTR has been updated as follows for SICAV and SICAF:
- New Double Tax Treaty (DTT) for which a DTT CoTR can be delivered:
Botswana, Cyprus, Ethiopia, France, Hungary, Kosovo, Rwanda, and the United Kingdom
- New DTT for which a DTT CoTR cannot be delivered:
Senegal
Another update was made on the appendix of the Circular to include the extract of relevant DTTs that had not been added since 2017.
KPMG comment
The updated circular is a welcome development, providing a more up-to-date process and certainty when requesting the necessary CoTR to benefit from reduced withholding tax rates under the applicable DTT’s.
However, we would expect that other countries would also be reflected in the DTT for which it is possible to obtain a CoTR, like South Korea, where in 2020, the South Korean Supreme Court ruled that a Luxembourg SICAV is entitled to benefit from reduced withholding tax rates under the South Korea-Luxembourg tax treaty.
Additionally, it would be useful to have more details regarding the countries for which an FCP or SICAV could apply for a certificate of exemption from withholding tax or refund based on domestic law or under Article 63 of the Treaty on the Functioning of the European Union, as well as the specific conditions under which FCPs can request a CoTR to file EU law claims.
Should you have any questions/comments, do not hesitate to contact us.
