10 reasons to choose Luxembourg as a hub for AIFs or AIFMs - Alfi
10 reasons to choose Luxembourg as a hub for AIFs or AIFMs - Alfi
10 reasons to choose Luxembourg as a hub for AIFs or AIFMs - Alfi
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about alfi<br />
The Association of the <strong>Luxembourg</strong> Fund<br />
Industry (ALFI), the representative body <strong>f<strong>or</strong></strong><br />
the <strong>Luxembourg</strong> investment fund community,<br />
w<strong>as</strong> founded in 1988. Today it represents over<br />
a thousand <strong>Luxembourg</strong>-domiciled investment<br />
funds, <strong>as</strong>set management companies and a wide<br />
variety of service providers including depositary<br />
banks, fund administra<strong>to</strong>rs, transfer agents,<br />
distribu<strong>to</strong>rs, law firms, consultants, tax advisers,<br />
audi<strong>to</strong>rs and accountants, specialist IT providers<br />
and communications agencies.<br />
<strong>Luxembourg</strong> is the largest fund domicile in<br />
Europe and its investment fund industry is a<br />
w<strong>or</strong>ldwide leader in cross-b<strong>or</strong>der fund<br />
distribution. <strong>Luxembourg</strong>-domiciled<br />
investment structures are distributed in m<strong>or</strong>e<br />
than 70 countries around the globe, with a<br />
particular focus on Europe, Asia,<br />
Latin America and the Middle E<strong>as</strong>t.<br />
ALFI defines its mission <strong>as</strong> <strong>to</strong> “Lead industry<br />
ef<strong>f<strong>or</strong></strong>ts <strong>to</strong> make <strong>Luxembourg</strong> the most<br />
attractive international centre”.<br />
Its main objectives are <strong>to</strong>:<br />
Help members capitalise on<br />
industry trends<br />
ALFI’s many technical committees and<br />
w<strong>or</strong>king groups constantly review and<br />
analyse developments w<strong>or</strong>ldwide,<br />
<strong>as</strong> well <strong>as</strong> legal and regula<strong>to</strong>ry changes in<br />
<strong>Luxembourg</strong>, the EU and beyond,<br />
<strong>to</strong> identify threats and opp<strong>or</strong>tunities <strong>f<strong>or</strong></strong> the<br />
<strong>Luxembourg</strong> fund industry.<br />
Shape regulation<br />
An up-<strong>to</strong>-date, innovative legal and fiscal<br />
environment is critical <strong>to</strong> defend and<br />
improve <strong>Luxembourg</strong>’s competitive position<br />
<strong>as</strong> a centre <strong>f<strong>or</strong></strong> the domiciliation,<br />
administration and distribution of<br />
investment funds. Strong relationships with<br />
alfi | <strong>as</strong>sociation of the<br />
luxembourg fund industry<br />
B.P. 206<br />
L - 2012 <strong>Luxembourg</strong><br />
regula<strong>to</strong>ry auth<strong>or</strong>ities, the government and<br />
the legislative body enable ALFI <strong>to</strong> make an<br />
effective contribution <strong>to</strong> decision-making<br />
through relevant input <strong>f<strong>or</strong></strong> changes <strong>to</strong> the<br />
regula<strong>to</strong>ry framew<strong>or</strong>k, implementation of<br />
European directives and regulation of new<br />
products <strong>or</strong> services.<br />
Foster dedication <strong>to</strong> professional<br />
standards, integrity and quality<br />
Inves<strong>to</strong>r trust is essential <strong>f<strong>or</strong></strong> success in<br />
collective investment services and ALFI thus<br />
does all it can <strong>to</strong> promote high professional<br />
standards, quality products and services,<br />
and integrity. Action in this area includes<br />
<strong>or</strong>ganizing training at all levels, defining<br />
codes of conduct, transparency and good<br />
c<strong>or</strong>p<strong>or</strong>ate governance, and supp<strong>or</strong>ting<br />
initiatives <strong>to</strong> combat money laundering.<br />
Promote the <strong>Luxembourg</strong> investment<br />
fund industry<br />
ALFI actively promotes the <strong>Luxembourg</strong><br />
investment fund industry, its products and its<br />
services. It represents the sec<strong>to</strong>r in financial<br />
and economic missions <strong>or</strong>ganised by the<br />
<strong>Luxembourg</strong> government around the w<strong>or</strong>ld<br />
and takes an active part in meetings of the<br />
global fund industry.<br />
ALFI is an active member of the<br />
European Fund and Asset Management<br />
Association, of the European Federation<br />
<strong>f<strong>or</strong></strong> Retirement, of the International<br />
Investment Funds Association and of<br />
the Global Impact Investing Netw<strong>or</strong>k.<br />
F<strong>or</strong> m<strong>or</strong>e in<strong>f<strong>or</strong></strong>mation, visit our website at<br />
www.alfi.lu and follow ALFI on<br />
Tel: +352 22 30 26 - 1<br />
Fax: +352 22 30 93<br />
May 2013<br />
© ALFI 2013. All rights reserved.<br />
info@alfi.lu<br />
www.alfi.lu<br />
<strong>10</strong> <strong>re<strong>as</strong>ons</strong> <strong>to</strong> <strong>choose</strong> <strong>Luxembourg</strong><br />
<strong>as</strong> a <strong>hub</strong> <strong>f<strong>or</strong></strong> <strong>AIFs</strong> <strong>or</strong> <strong>AIFMs</strong><br />
The Alternative Investment Fund<br />
Managers (AIFM) Directive will<br />
significantly impact the structures,<br />
strategies, operations, rep<strong>or</strong>ting and<br />
distribution and fundraising methods of<br />
alternative investment fund managers.<br />
Whether you are an EU <strong>or</strong> a non-EU manager<br />
of <strong>AIFs</strong> distributed <strong>to</strong> EU professional<br />
inves<strong>to</strong>rs, adequately selecting your<br />
gateway <strong>to</strong> Europe is key.<br />
From July 2013, EU Alternative<br />
Investment Funds (<strong>AIFs</strong>) will need <strong>to</strong><br />
appoint an AIFM. Choosing the right<br />
setting at manager level is equally <strong>as</strong><br />
imp<strong>or</strong>tant <strong>as</strong> selecting the right structure<br />
<strong>f<strong>or</strong></strong> your <strong>AIFs</strong>.<br />
<strong>Luxembourg</strong> offers a flexible approach<br />
which allows you <strong>to</strong> efficiently accommodate<br />
possible legacy structures and limit<br />
the impact of changes required by the<br />
same <strong>to</strong>ken.<br />
A self-managed AIF solution is available<br />
<strong>as</strong> well <strong>as</strong> the possibility <strong>to</strong> turn an<br />
existing ManCo in<strong>to</strong> an AIFM <strong>or</strong> appoint<br />
a separate legal entity <strong>as</strong> the AIFM.<br />
M<strong>or</strong>eover, by domiciling your AIFM in<br />
<strong>Luxembourg</strong>, you will be eligible <strong>f<strong>or</strong></strong> the<br />
management p<strong>as</strong>sp<strong>or</strong>t introduced by the<br />
AIFM Directive.<br />
Leveraging upon:<br />
Its UCITS track rec<strong>or</strong>d <strong>f<strong>or</strong></strong> operating<br />
regulated Management Companies;<br />
Its recognised position <strong>as</strong> the leading<br />
pan-European distribution plat<strong>f<strong>or</strong></strong>m<br />
<strong>f<strong>or</strong></strong> UCITS;<br />
Its status <strong>as</strong> a growing <strong>hub</strong> <strong>f<strong>or</strong></strong> Hedge<br />
Funds, Alternative UCITS, Real Estate<br />
and Private Equity.<br />
<strong>Luxembourg</strong> h<strong>as</strong> decided <strong>to</strong> take a<br />
pragmatic and business-<strong>or</strong>iented<br />
approach <strong>to</strong> the implementation of the<br />
AIFM Directive.<br />
AIFMD<br />
As part of this approach, the current<br />
<strong>to</strong>olkit available <strong>to</strong> alternative industry<br />
players <strong>f<strong>or</strong></strong> setting up their funds in<br />
<strong>Luxembourg</strong> h<strong>as</strong> been enhanced with the<br />
introduction of the new Special Limited<br />
Partnership regime. This new regime is<br />
tax transparent and offers great<br />
contractual freedom.<br />
<strong>Luxembourg</strong> now offers a comprehensive<br />
and consistent product range <strong>f<strong>or</strong></strong><br />
alternative players willing <strong>to</strong> distribute<br />
their products across Europe and fully<br />
benefit from the AIF marketing p<strong>as</strong>sp<strong>or</strong>t<br />
introduced by the AIFM Directive.<br />
Given <strong>Luxembourg</strong>’s track rec<strong>or</strong>d,<br />
supp<strong>or</strong>ting environment <strong>f<strong>or</strong></strong> alternative<br />
industries and leading position <strong>as</strong> an<br />
alternative investment funds domicile,<br />
there are many good arguments in favour<br />
of <strong>Luxembourg</strong> being your preferred EU<br />
<strong>hub</strong> <strong>f<strong>or</strong></strong> structuring your <strong>AIFs</strong> and<br />
establishing your AIFM <strong>f<strong>or</strong></strong> a pan-<br />
European reach.
<strong>Luxembourg</strong>, your gateway <strong>to</strong> Europe and beyond<br />
Gateway <strong>to</strong> Europe: establishing an AIFM in<br />
<strong>Luxembourg</strong> means benefiting from the marketing p<strong>as</strong>sp<strong>or</strong>t<br />
so <strong>as</strong> <strong>to</strong> grow your business with EU<br />
1<br />
professional inves<strong>to</strong>rs from July 2013 <strong>f<strong>or</strong></strong> your EU <strong>AIFs</strong><br />
The leading pan-European and global distribution plat<strong>f<strong>or</strong></strong>m:<br />
- EUR 2.5 trillion fund <strong>as</strong>sets under management (AUM)<br />
- 75% of the w<strong>or</strong>ld’s cross-b<strong>or</strong>der funds are<br />
<strong>Luxembourg</strong> funds<br />
A renowned brand:<br />
- <strong>Luxembourg</strong> UCITS are distributed in m<strong>or</strong>e than<br />
80 countries, including the most imp<strong>or</strong>tant markets<br />
in Asia, the Middle E<strong>as</strong>t and Latin America<br />
- Longstanding trusted relationship between the<br />
<strong>Luxembourg</strong> regula<strong>to</strong>r and regula<strong>to</strong>rs from<br />
distribution countries<br />
<strong>10</strong><br />
272 venture capital investment companies (SICAR)<br />
Benefiting from a unique <strong>to</strong>olkit of investment products<br />
Nearly 1,500 specialised investment funds (SIF)<br />
32 regulated Securitisation vehicles<br />
New onsh<strong>or</strong>e <strong>Luxembourg</strong> limited partnership regime,<br />
offering equivalent features <strong>to</strong> Anglo-Saxon limited<br />
partnerships while benefiting from the EU AIFM p<strong>as</strong>sp<strong>or</strong>t<br />
<strong>as</strong> of July 2013<br />
9<br />
Leveraging on a favourable tax environment<br />
Competitive tax and social security regime<br />
Outstanding netw<strong>or</strong>k of double tax treaties: tax<br />
treaties available with all key target jurisdictions of PE,<br />
RE and HF players<br />
Numerous possibilities <strong>to</strong> optimise VAT treatment of<br />
management services<br />
Surfing the steady growth in alternative<br />
investment sec<strong>to</strong>rs over the p<strong>as</strong>t decade<br />
Real Estate, Private Equity and Hedge Funds have an<br />
accelerating presence in <strong>Luxembourg</strong>, now representing<br />
20% of <strong>to</strong>tal fund AUM<br />
The number of <strong>Luxembourg</strong> Real Estate Fund Units h<strong>as</strong><br />
grown from 13 in 2003 <strong>to</strong> 244 in 2012<br />
2<br />
The number of <strong>Luxembourg</strong> Private Equity Fund Units<br />
h<strong>as</strong> grown from 39 in 2003 <strong>to</strong> 129 in 2012<br />
In addition, <strong>as</strong> at March 2013, there are 272 venture<br />
capital investment companies (société d’investissement en<br />
capital à risque, SICAR) in <strong>Luxembourg</strong><br />
F<strong>or</strong> <strong>Luxembourg</strong> Hedge Fund Units administered in<br />
<strong>Luxembourg</strong>, the number h<strong>as</strong> grown from 46 in 2003<br />
<strong>to</strong> 519 in 2012. F<strong>or</strong> Fund of Hedge Funds Units administered<br />
in <strong>Luxembourg</strong>, the number h<strong>as</strong> grown from<br />
319 in 2003 <strong>to</strong> 1,176 in 2012<br />
A jurisdiction already trusted by the maj<strong>or</strong> players in<br />
PE, RE and Hedge: 9 of the <strong>to</strong>p <strong>10</strong> PE houses already<br />
present in <strong>Luxembourg</strong>, 8 of the <strong>to</strong>p <strong>10</strong> Hedge Fund<br />
Service providers already present in <strong>Luxembourg</strong>, 14 of<br />
the <strong>to</strong>p 15 Real Estate Fund Managers already present<br />
in <strong>Luxembourg</strong><br />
3<br />
Leveraging existing UCITS experience <strong>f<strong>or</strong></strong> operating an AIFM<br />
Operational requirements imposed on <strong>AIFMs</strong> are similar<br />
<strong>to</strong> those applicable <strong>to</strong> existing UCITS management<br />
companies and service providers, notably in terms of<br />
substance and operating conditions.<br />
Dual licensed <strong>AIFMs</strong> allowed <strong>to</strong> manage both UCITS<br />
and <strong>AIFs</strong>; key advantages are cost efficiency and<br />
streamlining of operations.<br />
5<br />
Very active investment fund industry <strong>as</strong>sociation (ALFI)<br />
Enjoying a stable and trusted jurisdiction<br />
Founding EU Member State with sound public finances<br />
and fiscal stability<br />
AAA credit rating<br />
Political ambition and supp<strong>or</strong>t <strong>to</strong> establish <strong>Luxembourg</strong> <strong>as</strong><br />
a leading alternative fund centre<br />
Excellent public and cultural infr<strong>as</strong>tructure, social<br />
services and low crime rate<br />
4<br />
To accommodate various legacy structures and limit<br />
changes required, the <strong>Luxembourg</strong> legislation provides<br />
<strong>f<strong>or</strong></strong> three key AIFM structuring options:<br />
- Self-managed AIF/AIFM<br />
- Existing Management Company becomes the AIFM<br />
- A new external AIFM is established <strong>or</strong> appointed<br />
Structuring options<br />
7<br />
351 management companies<br />
Benefiting from established experience in servicing<br />
alternative <strong>as</strong>sets<br />
M<strong>or</strong>e than 25 years of experience in fund administration,<br />
cus<strong>to</strong>dy services, regula<strong>to</strong>ry, financial and tax rep<strong>or</strong>ting,<br />
delegation arrangements, multi-cl<strong>as</strong>s funds, global distribution<br />
6<br />
66 depositary banks with w<strong>or</strong>ldwide sub-cus<strong>to</strong>dian netw<strong>or</strong>ks<br />
New license available <strong>to</strong> provide depositary services <strong>f<strong>or</strong></strong><br />
alternative sec<strong>to</strong>rs including RE and PE<br />
Local presence of all maj<strong>or</strong> global players in fund administration<br />
with proven track rec<strong>or</strong>d in all types of alternative <strong>as</strong>set<br />
State-of-the-art technology and expertise <strong>to</strong> accommodate<br />
new products and ever widening distribution of funds<br />
Relying on a pragmatic legal and supervis<strong>or</strong>y framew<strong>or</strong>k<br />
Flexible and understandable 8clear legal framew<strong>or</strong>k <strong>f<strong>or</strong></strong><br />
structuring and operating alternative investment funds<br />
Proactive, accessible and multilingual regula<strong>to</strong>r<br />
(application files and all communication accepted in<br />
English, French and German, e-filing) ensuring<br />
efficient approval process<br />
Established relationship between the government, the<br />
regula<strong>to</strong>r and the alternative investment industries in<br />
<strong>or</strong>der <strong>to</strong> design an efficient and first-cl<strong>as</strong>s operating<br />
framew<strong>or</strong>k in the alternative sec<strong>to</strong>r<br />
Advantages of an international multilingual environment<br />
44,000 professionals employed in regulated financial<br />
services companies<br />
141 banks from 23 countries<br />
M<strong>or</strong>e than 300 regulated financial services companies<br />
Central location in Europe attracting a highly educated<br />
pool of labour <strong>f<strong>or</strong></strong>ces from neighbouring countries, the<br />
rest of the EU and the w<strong>or</strong>ld: multitude of nationalities<br />
(176) and languages spoken in <strong>Luxembourg</strong>