Why Luxembourg?
Luxembourg is the second largest investment fund center directly after the United States with a long-lasting and thorough experience as well as a major fund industry, with above EUR 2,000.- billion AUM for regulated undertakings for collective investment, 149 banking institutions, over 26,000.- bank employees and another 14,000.- employees of other professionals of the financial sector1.
The success of Luxembourg as a major investment hub is based on its very stable economy, with a comparatively good public deficit management and no important tax reform foreseen within the next years.
Its success is also founded on it's social and political stability, and an extremely modern legal/regulatory framework, continuously updated and prompted by an open dialogue between the government and the business community. The government is very proactive and reactive to the needs of the financial center.
Luxembourg's financial center is further renowned for its investor protection-based philosophy, and quite firm anti money-laundering procedures, which contribute making it a safe investment environment and is often found attractive by fund initiators, managers and investors.
In short, Luxembourg's legal and regulatory framework, combined with its financial sector's extensive practice offer, inter allia:
- a pragmatic and flexible environment, constantly following trends and evolutions;
- an effective protection for investors (in the context of regulated entities mostly);
- an attractive and competitive tax configuration, access to over 60 double tax treaties;
- a strategic domicile to (privately or publicly) distribute funds world-wide;
- an abundance of service providers cumulating a tremendous knowledge, experience and skills;
- efficient and pro-active regulatory authorities;
- multilingual working and tailored work force and generalized use of English;
- financial expertise and extensive knowledge of the needs of an international clientele
Luxembourg is also generally speaking one of the first (if not the first) European member states to implement all European directives relating to the investment sphere, as it was the case, for instance, for the "UCITS” Directive, and much recently, for the "UCITS IV” directive, evidencing Luxembourg"s eagerness to evolve, and the fast and efficient cooperation between the fund industry, the government and the state authorities.
Finally, an important point to note is that before the AIFM Directive is even supposed to be implemented in member states’ laws, Luxembourg already benefits from a rather adequate overall system, which will make it much easier to conform to the changes brought by this Directive.