Luxembourg Approves UCITS IV Bill

by Ulrika Lomas, Tax-News.com, Brussels

05 August 2010

The Luxembourg government has recently approved the draft bill transposing the latest UCITS (Undertakings for Collective Investment In Transferable Securities) directives into national law.

The main changes worthy of note under the new UCITS IV structure include the introduction of master-feeder structures and the management company passport, enabling UCITS authorized in one European Union (EU) member state to be remotely managed by a management company located in another EU member state. Cross-border distribution procedures have also been simplified.

The Association of the Luxembourg Fund Industry (Alfi), the representative body of the Luxembourg investment fund community, welcomed the government’s latest announcement, emphasizing that UCITS IV “provides a unique opportunity for funds to work in a more resource and cost-effective environment, making Europe an attractive domicile for funds globally.”

Commenting on the government’s approval of the bill, Claude Kremer, the chairman of Alfi, stated that: “The Luxembourg authorities have taken a very proactive approach to the introduction of UCITS IV, including introducing new tax measures to remove uncertainties on the fiscal treatment of new UCITS IV freedoms such as master-feeder structures and the management company passport. The speed of the process and the introduction of these new measures clearly demonstrate once again Luxembourg’s vigorous support of the European Fund Industry.”

UCITS are investment funds that have been established in accordance with the UCITS Directive (adopted in 1985). Once registered in any one EU country, a UCITS fund can be freely marketed across the EU.

Luxembourg is the leading domicile for funds in Europe and ranks first globally in the cross-border distribution of funds. Investment vehicles domiciled in Luxembourg are distributed worldwide in over 50 countries, in particular in Europe, Asia, Latin America and the Middle East.

The draft bill is due to be adopted by parliament by the end of the year.

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