Tax and fund structuring

Tax and fund structuring
The global tax landscape continues to change rapidly as the world’s tax authorities focus on efforts to increase transparency and combat tax avoidance. This results in more complex rules that need to be considered when making cross-border investment decisions, as well as an increase in tax compliance obligations and disclosure requirements. Since the choice of an investment fund structure is driven by tax and regulatory requirements, our dedicated teams work closely together to bring you the best solutions.

Our solutions include:

Fund structuring services

We are able to provide you with tailor-made fund structuring advice to help you select the most suitable fund vehicle for your investors and investments, taking into account factors such as:

  • Preference for regulation;
  • Need to access EU marketing passport;
  • Efficient repatriation/ distributions to investors;
  • Nature of investments;
  • Corporate governance and operational efficiency (e.g. whether compartments are required);
  • Taxation of the vehicle: subscription tax, corporate income tax, municipal business tax, net wealth tax, VAT, WHT on distributions to investors etc;
  • Consideration of potential impact (if any) of investors’ profiles on the fund and/ or the underlying investment holding vehicle;
  • Regulatory constraints.

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Mergers & Acquisition (M&A) Tax

For organisations and advisers involved in a deal, maximising value is always paramount. PwC has commercially focused tax specialists who consistently deliver innovative cross border solutions and can support you at every stage of the deal cycle, including the following transactions:

  • Acquisition or disposal of assets/ investments
  • Public to private initiatives
  • Management buy-out/in
  • Refinancing
  • Restructuring of investments

Our M&A tax services include:

  • Tax due diligence services
  • Tax support on financial modelling
  • Review of legal documentation from a tax perspective
  • Advice on appropriate investment holding and financing structures, taking into consideration cross-border tax, accounting and regulatory requirements
  • Advice on cash/ profit repatriation strategies
  • Advice on exit strategies
  • Management incentive planning
  • Carry structuring

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Transfer pricing

Transfer pricing is increasingly an area of focus as countries push for tax transparency.  We can support you as follows:

  • Advise you on the key transfer pricing matters to consider when entering into related party transactions. In the case of intercompany debt, we can advise you on the impact of Luxembourg transfer pricing regulations around intra-group financial transactions as well as assist you in the review and development of a transfer pricing policy for all your financial transactions including loans, cash pooling arrangements, guarantees, etc.
  • Develop new transfer pricing policies and/ or perform risk reviews on your current transfer pricing policies and subsequently documenting those policies in line with local and OECD requirements.
  • Support you in the execution of your transfer pricing policy by helping you reinvent your E2E (End-to-End) strategy and processes, leading to a more streamlined approach, reduction in workload, increased accuracy of charges, significantly enhanced transparency, and - not least - well-positioned documentation to support future reviews, including local statutory audits.
  • Assist in obtaining Advance Pricing Agreements (APAs) from the tax authorities in Luxembourg to reduce uncertainty on a prospective tax position. In addition, where a multi-country approach is more appropriate, we can assist in obtaining multi-lateral APAs.
  • Work closely together with our Tax Controversy and Dispute Resolution team to assist you in dealing with transfer pricing disputes, tax audits or information requests that involve two or more territories through the various dispute resolution procedures.

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Tax Controversy and Dispute Resolution

While taxpayers are under constant competitive pressure to structure their operations efficiently, fiscal demands on developed and emerging countries have placed considerable pressure on governments to raise revenue and prevent the erosion of their tax bases.

Governments worldwide are cooperating to share taxpayer and industry information, assist other countries with document and information requests, and participate in separate multi-country audits. This has resulted in a substantial increase in the number and depth of audits, assessments and disputes with fiscal authorities worldwide, who are engaged in enforcement activities across the entire tax spectrum including international structuring, transfer pricing, direct tax and indirect tax matters.

Our Tax Controversy and Dispute Resolution team assists clients to prevent, and/ or efficiently manage and favourably resolve tax audits and disputes. Integrated in a worldwide network, our specialists not only focus on the Luxembourg aspects, but also integrate cross-border risks and impacts, deriving for example from claims of dual residency / permanent establishment, conflicts of qualification under a treaty and exit charge claims in relation to a transfer of functions to Luxembourg.

Examples of the support we can render at each stage of a tax controversy/ dispute are as set out below:

  • Pre-audit prevention services, which may include:
    • reviewing your transfer pricing policies;
    • reviewing your transfer pricing or VAT supporting documentation;
    • submitting Advance Pricing Agreements;
    • reviewing your operational model and processes;
    • coordinating "course of conduct" reviews to ensure that post-structuring operations align with initial implementation plans;
    • assisting in transactional due-diligence to identify tax audit and controversy risks and exposures;
    • carrying on pre-audits to identify transfer pricing and tax audit impacts;
    • once risks are identified, develop and implement other option to the current business model to mitigate your company's risk profile; and
    • training your company personnel.
  • Assistance during the audit/ examination phase, including providing support on the following matters:
    • Managing and responding to investigations, audits and examinations initiated by tax authorities, including dealing with routine and complex management of audit information requests;
    • Document production; and
    • Discussions with the tax authorities.
  • Post-audit settlement/ resolution services in case tax disputes are unresolved, including:
    • Submission of pre-litigation claims with the tax authorities;
    • Preparation of litigation support for court proceedings;
    • Assistance in mediation;
    • Advance Pricing Agreement negotiations using "roll-back" features to resolve pre-existing disputes; and
    • Assess if there is any opportunity to use Competent Authority and Mutual Agreement Proceedings to resolve international tax disputes, i.e. cases of double taxation, as well as inconsistencies in the interpretation and application of a double tax treaty and assistance to negotiations in these proceedings.

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Contact us

Vincent Lebrun

Alternatives Leader, Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 3193

Thierry Braem

Alternatives Tax Leader, PwC Luxembourg

Tel: +352 49 48 48 5106

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