VCL Luxembourg Flash Tax News – January 2022

Real estate levy for investment vehicles

On 20 January 2022, the Luxembourg Tax Authorities (LTA) issued an administrative circular (Circular L.I.R. n° PRE_IMM n° 1, Circular) regarding the new real estate levy so-called prélèvement immobilier as introduced by article 4 of the Luxembourg Budget law for 2021 dated 19 December 2020 (Budget Law for 2021) and applicable to real estate income or gains realized by certain investment vehicles.

The Circular gives some guidance regarding the scope of the new real estate levy and particularly with regard to the reporting obligations which must be completed by the investment vehicles.

  1. Reminder of the new real estate levy for investment vehicles

Since the 1st of January 2021, Specialized Investment Funds (SIFs) established under a corporate form, Reserved Alternative Investment Funds (RAIF) subject to the SIF regime[1] and established under a corporate form or an Undertaking for Collective Investment (UCI) established under a corporate form and governed by part II of the law of 17 December 2010 (collectively, Fund Vehicles) are subject to a 20% real estate levy on income and gains derived from real estate located in Luxembourg, which must be declared by 31 May of the subsequent calendar year (for instance, income and gains derived from real estate located in Luxembourg must be reported in 2021 must be reported by 31 May 2022 at the latest). For more details about the scope of this tax measure, please refer to our Tax News published in October 2020.

  1. Reporting obligations

As regards the reporting to be done by 31 May 2022, Fund Vehicles must inform the LTA through a dedicated form (Form) [2] in the following cases:

  1. Fund Vehicles which have held Luxembourg real estate assets directly or indirectly during the calendar years 2020 and 2021. This includes Luxembourg real estate assets held by Fund Vehicles through one or more partnerships/common funds (FCP); or
  2. Fund Vehicles which have not held Luxembourg real estate assets directly or indirectly during the calendar years 2020 and 2021. This includes Luxembourg real estate assets held by Fund Vehicles through one or more partnerships/FCP; or
  3. Any Fund Vehicle which has changed its legal form during the calendar years 2020 and 2021 and became a tax transparent entity[3] to the extent that such Fund Vehicle has held directly or indirectly (i.e. through a partnership or FCP) at least one Luxembourg real estate asset at the time of the change of tits legal form.

Fund Vehicles must file the Form at the latest by 31 May 2022 via the LTA website (MyGuichet.lu), as otherwise they might be exposed to a penalty of up to EUR 10,000. Furthermore, the real estate levy for calendar year 2021 must be paid by 10 June 2022 at the latest.

We can assist you to assess how the reporting obligation applies to your Fund Vehicle and if needed, assist with the filing of the Form.

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We trust you find this publication useful and welcome the opportunity to answer any questions or comments you may have with respect to its contents. Kindly note that this publication does not constitute any legal or tax advice.

Raffaele GargiuloRaffaele Gargiuolo

Partner

E: raffaele.gargiulo@vancampenliem.com

T: +352 691 205 340

Andrew de Vries

Andrew de Vries

Partner

E: andrew.devries@vancampenliem.com

T: +352 691 20 5768

Eduardo Trancho

Eduardo Trancho

Counsel

E: eduardo.trancho@vancampenliem.com

T: +352 691 20 5349

Gabriel Amar

Gabriel Amar

Senior Associate

E: gabriel.amar@vancampenliem.com

T: +352 691 205 709

 

Christina StrauvenChristina Strauven

Associate

E: christina.strauven@vancampenliem.com

T: +352 691 205 165

Diego Gonzalez Manso

Diego Gonzalez Manso

Associate

E: Diego.GonzalezManso@vancampenliem.com

T: +352 691 20 5080

Assia SadkiAssia Sadki

Associate

E: assia.sadki@vancampenliem.com

T: +352 691 205 167

 

[1] Article 45 of the RAIF law.

[2] «ACD (Prélèvement immobilier) : Déclaration informative sur la détention ou l’absence de détention d’un bien immobilier sis au Grand-Duché de Luxembourg et sur le changement de forme juridique».

[3] Transparent entities within the meaning of Article 175 of the Luxembourg income tax law (LITL) or FCP.

Gender diversity in top management positions

14 January 2022

On January 1, 2022, the legislative proposal on balanced gender diversity at the top of large companies (the “Act“, in Dutch: Wetsvoorstel inzake evenwichtige man/vrouwverhouding in de top van het bedrijfsleven), came into effect.

Diversity quota for listed companies

As set out in our previous blogs (links below), the Act introduced a diversity quota (the “Diversity Quota“) of at least one-third for both women and men for supervisory boards of Dutch entities listed at Euronext Amsterdam (irrespective of whether they are a two-tier board company and/or subject to the so called “large company regime”). The Diversity Quota is only applicable to new appointments. There is no obligation to change current board compositions to meet the Diversity Quota.

The Diversity Quota furthermore does not apply to the reappointment of a supervisory board member (within eight years after its first appointment). This means that a current supervisory board member may be reappointed without taking the Diversity Quota into account. Such person may be re-appointed once for a term of four years, followed by a reappointed for a term of two years, which term may be extended once more for a maximum of two years (this in conformity with the best practice provision 2.2.2 of the Corporate Governance Code). After these three terms, a new supervisory board member should be appointed who does contribute to the male/female ratio, except when the supervisory board only consists of one person, in which case it is not possible to determine a Diversity Quota.

Calculation example of equal division supervisory board

Number of supervisory board members

Diversity Quota

1

No Diversity Quota can be set

2 or 3

At least 1 female and 1 male

4, 5 or 6

At least 2 females and 2 males

7, 8 or 9

At least 3 females and 3 males

Non-compliance

If a listed NV or BV does not meet the Diversity Quota and chooses to appoint a supervisory board member of the overrepresented gender, such appointment will be null and void. The same applies to the appointment of non-executive directors in case of a one-tier board model. In order to avoid legal uncertainty this will, however, not impact the legal validity of the board decisions taken. Such decisions are legally valid until the nullity of the appointment has been established in court to stand.

Target Figure and Target Plan for large NVs and BVs

As set out in our previous blogs, the Act additionally introduced the obligation for large NVs and BVs to set an appropriate and ambitious self-determined target figure (the “Target Figure“) and to prepare a plan of action (the “Target Plan“) in order to promote gender diversity on the management board, supervisory board and within senior management.

For Dutch listed companies, the abovementioned Target Figure only applies to the management board and senior management, as the Diversity Quota already applies to the supervisory board of listed companies.

Appropriate and ambitious self-determined Target Figure

An appropriate and ambitious Target Figure depends on (i) the size of the management board, supervisory board and senior management and (ii) the existing balance between men and women in the company.

If there is a corporate body, consisting of only one member, a Target Figure cannot be set. In case the management board and supervisory board both consist of one person, the Target Figure could be set jointly for both corporate bodies. A calculation example is set out below.

Calculation Target Figure

Number of management board members

Number of supervisory board members

Target Figure

1

0

No Target Figure can be set.

1

1

Joint Target Figure: 1 female and 1 male.

1

2

Management Board: no Target Figure can be set.

Supervisory Board: aim for 1 female and 1 male.

2

1

Management Board: aim for 1 female and 1 male.

Supervisory Board: no Target Figure can be set.

2

2

Management Board: aim for 1 female and 1 male.

Supervisory Board: aim for 1 female and 1 male.

2

3

Management Board: aim for 1 female and 1 male.

Supervisory Board: aim for at least 1 female and 1 male.

Focus point large companies

The abovementioned reporting requirements apply to the financial year starting on or after January 1, 2022. Effectively this means that large companies will have to monitor their progress during the new financial year and will account for this in their directors’ report to the annual accounts of such financial year. The companies must also report their progress to the Social and Economic Council (SER).

For more detailed information with regard to the Act, we refer to our previous blogs on this topic:

https://vancampenliem.com/blog/legislative-proposal-on-balanced-gender-diversity-at-the-top-of-large-companies/

https://vancampenliem.com/blog/dutch-senate-passed-the-act-for-balanced-gender-diversity-at-the-top-of-large-companies/

 

For more information, please contact:

Rachelle Giller

Rachelle Giller

Anna Zhu

Anna Zhu