Luxembourg Government's proposal to exempt Microfinance Funds from subscription tax

15 March 2010 | Press Releases  

ALFI welcomes the Luxembourg Government's proposal to exempt Microfinance Investment Funds from subscription tax.

In its proposal for the State Budget 2010, to be adopted by the Luxembourg Parliament in December, the Luxembourg Government has included an exemption from subscription tax for Microfinance Investment Funds. It hereby follows a recommendation issued by the Association of the Luxembourg Fund Industry (ALFI) which has considered for a long time that the elimination of the subscription tax will encourage the development of this fund type in Luxembourg. In addition, as ALFI Chairman, Claude Kremer, stated in a press conference on 18 September: “These funds accomplish an important social and philanthropic role that complements public action and cooperation efforts. Clients investing in these funds will react favorably to this decision.”
This initiative, in line with the government program, reflects the willingness of the Luxemburgish Government to develop Microfinance amongst the financial centre and to make Luxembourg the most attractive financial centre for a transparent and responsible Microfinance industry. In order to drive industry efforts, ALFI has recently set-up a dedicated Microfinance Working Group who recently published a brochure titled “Luxembourg Centre of Excellence for Microfinance Investment Vehicles”. Thomas Seale, Chairman of this ALFI Microfinance Working Group remarks “This leaflet highlights the growing demand for investments in Microfinance and Luxembourg’s ambition to become a leader in the domiciliation of Microfinance Investment Vehicles”.
Indeed, the Grand Duchy offers a wide range of product structures, such as Part II funds under the 2002 Law, SICARs, SIFs, securitization vehicles and structured products. Luxembourg’s expertise in Microfinance is also evidenced by a growing community of professionals familiar with Microfinance Investment Vehicles, actively collaborating to develop a world class service. These features help explain why 45% of worldwide Microfinance Investment Vehicles (MIVs) assets are based in Luxembourg1. In order to raise awareness of this growing asset class, ALFI, in association with the Luxembourg Fund Labelling Agency (LuxFLAG), have announced the organization of a major Microfinance conference to be held on 25 March 2010 at the Chamber of Commerce of Luxembourg, and that will focus on key Microfinance themes.

1 Excluding securitisation vehicles