Thought Leadership

Substance in Luxembourg

A genuine and adequate substance is a key point to be checked on the list of matters to be considered when implementing international structures.

In Luxembourg, regulated investment vehicles are, by the mere need of satisfying their regulatory, reporting and compliance obligations, obliged to maintain an adequate level of local activity and substance in Luxembourg.

The question of genuine substance is particularly taken into account when it comes to unregulated companies holding cross border portfolio investments that expect to enjoy double tax treaties and EU Directives and not to fall into foreign CFC (Controlled Foreign Corporation) or anti-avoidance regulation.
PwC substance survey has been presented during the PE forum on 12 March 2011.

Publication: Substance: Aligning international tax planning with today's business realities

Contacts:

Vincent Lebrun, Partner, vincent.lebrun@lu.pwc.com, +352 49 48 48 2225
Fiona Monsen, Partner, fiona.monsen@lu.pwc.com, +352 49 48 48 5707
Luc Trivaudey, Partner, luc.trivaudey@lu.pwc.com, +352 49 48 48 5055

Foreign Account Tax Compliance Act (FATCA)

The US Foreign Account Tax Compliance Act (FATCA), enacted on 18 March 2010, will have a substantial impact on certain foreign accounts held at foreign financial institutions (FFIs). This new legislation is focused on strengthening information reporting and withholding compliance for US persons that invest through or in non-US entities and will have specific significance for the private equity industry.

Contacts:

John Parkhouse, Partner, john.m.parkhouse@lu.pwc.com, +352 49 48 48 2582
Kerstin Thinnes, Partner, kerstin.thinnes@lu.pwc.com, +352 49 48 48 2537
Olivier Carré, Partner, olivier.carre@lu.pwc.com, +352 49 48 48 4174
Marianne Spanos, Director, m.spanos@lu.pwc.com, +352 49 48 48 3011

Click here for more information about FATCA.

Dodd-Frank Wall Street Reform and Consumer Protection Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Obama on July 21, 2010, is one of the most complex pieces of legislation ever written. This sweeping legislation will significantly impact every aspect of the financial services sector. As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act many hedge fund and private equity fund advisers (private fund advisers) will be required to register with the Securities Exchange Commission (SEC). Financial service firms and other impacted organizations are just beginning to understand the Act's many facets and its full impact.

Contacts:

Michael Delano, Partner, michael.delano@lu.pwc.com, +352 49 48 48 2582
Marie-Elisa Roussel-Alenda, Partner, marie-elisa.roussel-alenda@lu.pwc.com, +352 49 48 48 5738

Click here for more information about Dodd-Frank.

Alternative Investment Fund Managers Directive (AIFMD)

The final text of the Alternative Investment Fund Manager Directive (AIFMD) was adopted on 11 November, 2010 and member states will be required to transpose the directive in their national laws within two years (i.e. early 2013 at the latest). The Alternative Investment Fund Managers Directive (AIFMD) subjects managers of alternative investment funds (AIFs) to compulsory regulation in the EU and will require significant modifications to the structures, strategies and operations of fund managers and funds in the non-UCITS sphere and will also directly and materially affect those who service this industry.

Contacts:

Olivier Carré, Partner, olivier.carre@lu.pwc.com, +352 49 48 48 4174
Michael Daemgen, Director, michael.daemgen@lu.pwc.com, Tel: +352 49 48 48 2615

Click here for more information about AIFMD.

Solvency II

Solvency II is a regulatory project will apply from 2013 that provides a risk-based, economic-based and principle-based framework for the supervision of insurance and reinsurance undertakings.

The solvency capital requirement will be determined on the basis of the risks of the undertakings derived from their assets and liabilities, as well as on the way in which such risks are managed.

Solvency II will change the way that regulatory capital is calculated and assets/liabilities are evaluated. Both aspects may have an impact on asset allocation and could generate lower allocation to investments perceived as riskier.

Under solvency II, the world of Private Equity Investment will have to manage performance, risk, capital charges and transparency requirements taking into account the risk appetite of the (re)insurance undertakings.

Contacts:

Paul Neyens, Partner, paul.neyens@lu.pwc.com, +352 49 48 48 4011

Click here for more information about Solvency II.

Specific knowledge on energy, ethical and biomass funds

PwC works to solve complex business issues, locally and globally, and when it comes to matters of sustainability, we have been adapting ourselves to the concerns of our clients, including very specific ones. To help us respond to our client’s requirements effectively and efficiently, PwC has built a sustainability practice which offers a wide range of solutions.

Thanks to the recent acquisition of the Luxembourg leading engineering consulting firm specialised in environment and sustainable development as well as project management, PwC has now the technical and the financial skills your organisation needs.

This new team, made up of financial strategy specialists, environment/energy experts and engineers is already effective and can offer you a broad service offering, notably in PE by:

Setting up your sustainability strategy:

Strategy and management of carbon risk, gap analysis between your targeted investments and your sustainability strategy,
Carbon footprint assessment (Bilan carbone®),
Lifecycle assessment on cost and environmental impact (ELODIE, LEGEP, ENVEST);

Providing assurance on your current situation and your future strategic decisions:

Initial due diligence report on your products and sustainability objectives, foreseen procedures and reporting, environmental and social due diligence,
Fighting portfolio obsolescence (due diligence, risk valuation, portfolio rationalisation...),
ROI calculation of green investment opportunities;

Reporting and monitoring

methodological assistance for sustainability reporting using GRI (Global reporting initiative) or other standards (protocol set up, KPI definition, data process management),
third-party assurance on sustainability reports (using ISAE3000, AA1000 or others principles),
Real-estate CSR technical audit (environmental, social and economic impact).

Contacts:

Valérie Tixier, Partner, valerie.tixier@lu.pwc.com, +352 49 48 48 5797
Laurent Rouach, Partner, laurent.rouach@lu.pwc.com, +352 49 48 48 5731
Jean-François Champigny, Partner, jean-francois.champigny@lu.pwc.com, +352 49 48 48 5762

Click here for more information.

Click here to visit our global sustainability website to download our brochures or order hardcopies for your convenience.

Click here for more information about the Sustainability Day (15 December 2010).