MOLITOR focuses on tax on inbound investment in Luxembourg

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In ‘Getting the Deal Through — Tax on Inbound Investment 2013’, Aurélie Budzin-Dang, senior associate at MOLITOR Avocats à la Cour, focuses on Luxembourg.

In a share deal, the acquirer acquires only the ownership of the shares. Therefore, only the newly acquired shareholding will be booked in the acquirer’s accounts. If the shareholding is acquired in consideration for cash, it will be booked at the acquisition cost value that will be used for the computation of the future capital gains on the sale of the shareholding by the acquirer. If it is acquired in the framework of a share-for-share exchange, the shares received in exchange for the shares disposed of are booked at the initial book value of the shares disposed of (see question 4). The accounts of the target company itself remain unchanged and its business is deemed to be continued. If the target company was part of a consolidated tax group, the sale of the target within five years of its entry into the tax group triggers clawback issues. If the target is a partnership owning real estate in Luxembourg, the acquirer will pay a transfer tax upon the date of the transfer at a rate of 7 per cent (ie, 6 per cent of registration duty and 1 per cent of transcription tax) to which is added a municipal surcharge of 3 per cent if the real estate is located in Luxembourg City, in the same way as if he or she had acquired real estate directly. There are no VAT consequences, as the VAT taxpayer remains the same without transferring any assets…

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