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Luxembourg’s New Carried Interest Tax Regime

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Luxembourg’s New Carried Interest Tax Regime

Carried interest tax regimes are under review across several countries in which major fund hubs are based. Policy trends diverge, with some jurisdictions tightening tax privileges in response to fairness and anti-avoidance debates, while others recalibrate to attract or retain fund talent and decision making substance within an investment fund context. Seeking to foster and strengthen its position as a major investment fund hub, the Luxembourg government proposed legislation to reform the existing carried interest regime. In his article, Adnand Sulejmani, a senior associate in the Luxembourg tax practice of Ashurst, explains that the existing law fostered inconsistent interpretations among practitioners regarding the taxation of carried interests and contained a sunset provision for the benefit. In comparison, the proposed legislation emphasizes tax certainty for participating investment management professionals and a permanent favorable tax regime. The proposed legislation is expected to be enacted before the end of January 2026, with an effective date as of January 1, 2026.

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Colombia: A Primer For Those Doing Business With or In The Local Market

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Colombia: A Primer For Those Doing Business With or In The Local Market

Colombia is a beautiful country, known for its unique biodiversity, natural landscapes, and cultural richness. It is the fourth largest economy in Latin America, and frequently serves as a regional operations platform for South America, Central America, and the Caribbean. However, tax rules in the country can be problematic. Foreign entrepreneurs providing consulting, technical, management, or administration services to local residents or businesses are subject to withholding tax at rates between 20% and 33%. Foreign providers of streaming services, online ads, data management, and digital goods may be subject to a gross tax based on sales that is triggered by reason of having a significant economic presence in the country. Other foreign companies may trip into worldwide tax exposure if Colombia is viewed to be the effective place of management of the company. The threshold for this risk is low as the risk potentially exists from short-term presence in Colombia by executives or employees. Finally, the standard under which an individual is viewed to be tax resident is not straightforward. In his article, Eric Thompson, a partner of attorneys Cañón Thompson, Bogota, identifies the various areas of risk and cautions that companies trading with Colombia or individuals who move to Colombia require careful advance planning.

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Investing in Vietnam: Key Legal and Tax Considerations for Foreign Investors

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Investing in Vietnam: Key Legal and Tax Considerations for Foreign Investors

Vietnam has emerged as one of Southeast Asia’s most dynamic investment destinations, supported by strong economic growth, a large and increasingly skilled workforce, and deep integration into the global trading system through numerous free trade agreements. Ho Chi Minh City plays a central role in attracting foreign direct investment, particularly in manufacturing, services, technology, logistics, and consumer-related industries. In their article, Nguyen Thi Quynh, the managing partner at Eruditus Legal, Ho Chi Minh City, and Nguyen Thi Hang Nga, a tax partner at Eruditus Legal, Ho Chi Minh City, provide a practical overview of the key legal and regulatory considerations that foreign investors should take into account before investing in the country. Topics covered address investment structures, licensing requirements, corporate income tax, value-added tax, special consumption tax, and import and export duties.

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What Goes Around Comes Around: The Multilateral Instrument is Signed by India But Held Not Yet Effective

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What Goes Around Comes Around: The Multilateral Instrument is Signed by India But Held Not Yet Effective

India has been at the forefront of implementing B.E.P.S. measures. It submitted a ratified M.L.I. with the O.E.C.D. in 2019, with effect from April 1, 2020. However, the Indian Parliament never enacted legislation amending all covered income tax treaties. Relying on a relatively recent Supreme Court of India case involving the relationship between income tax treaties and domestic law (Nestle SA), the Income-Tax Appellate Tribunal (“I.T.A.T.”) for Mumbai held that until Parliament enacts legislation adopting an income tax treaty, the treaty is not the law of the land (Sky High Appeal XLIII Leasing Company Ltd). Abbas Jaorawala, a Senior Director and Head-Direct Tax of Khaitan Legal Associates, Mumbai, discusses the interesting conundrum faced by the Indian tax authorities. On one hand, they can continue litigating the matter, but victory is uncertain and a favorable decision by the Supreme Court is not assured by reason of the Nestle SA case. On the other hand, legislation can be enacted quickly, but it is not clear it can be effective on a retroactive basis.

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Abolition of the Non-Dom Regime: The State of Tax Planning for U.S. Persons with U.K. Connections

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Abolition of the Non-Dom Regime: The State of Tax Planning for U.S. Persons with U.K. Connections

1.     For over 100 years, individuals who were domiciled outside of the U.K. benefitted from the non-dom tax regime. Its features are well known. Individuals who were resident but not domiciled in the U.K. could defer the imposition of U.K. tax on income and gains derived from sources outside U.K. until such time as proceeds were remitted to the U.K. It also meant that only U.K. situs assets of an individual domiciled outside the U.K would be subject to U.K. inheritance tax (“I.H.T.”). Also commonly known is that the non-dom tax regime was abolished earlier this year, being replaced with a new system based on residency. The new system came into effect on April 6, 2025, coinciding with the start of the new fiscal year. In their article, Alexa Collis, a partner of Harbottle & Lewis L.L.P., London, and Claire Walsh, an associate at Harbottle & Lewis L.L.P, London, explain the key features of the new regime. L.T.R.’s, I.H.T., Tails to I.H.T., F.I.G., C.G.T., Tails to C.G.T. and T.R.F. are explained in the context of two case studies. One case study relates to a new arrival and the other relates to a departing person. In this manner, tax buzzwords are placed into real life context. Very helpful.

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A.L.P. or B.L.T. for A.M.P.? Full Deductions for Advertising, Marketing, and Promotional Activity on Trial in India

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A.L.P. or B.L.T. for A.M.P.? Full Deductions for Advertising, Marketing, and Promotional Activity on Trial in India

Several Indian transfer pricing cases regarding the treatment of marketing expenses are teed up for consideration by the Supreme Court of India. The cases challenge the assertion made by the Indian tax authorities (“I.T.A.”) that advertising, marketing, and promotion (“A.M.P.”) expenditures by Indian affiliates of foreign headquartered multinational groups typically reflect an embedded service that is provided for the benefit of the foreign headquarters company. Having made database searches focusing on the relationship of A.M.P. expenditures to sales of certain business classes, the I.T.A. asserts that local affiliates of foreign companies tend to spend significantly more on A.M.P. than comparable independently-owned Indian companies when A.M.P. is measured as a percentage of sales. The I.T.A. characterizes the excess expenditure as a brand-building service that benefits the foreign-based headquarters company. A fee should be charged for the performance of that service. The fee would be equal to the deemed excess amount plus an arm’s length mark-up. Sanjay Sanghvi, a senior partner in the Direct Tax Practice of the Mumbai office of Khaitan & Co., and Ujjval Gangwal, a principal associate in the Direct Tax Practice of the Mumbai office of Khaitan & Co., take a deep dive into the cases before the Supreme Court. They caution that a decision in favor or the I.T.A. likely will expose multinational groups based in the U.S. and other O.E.C.D. countries to international double taxation.

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Tax Issues Faced by Foreign Persons Investing in Greek Commercial Real Estate

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Tax Issues Faced by Foreign Persons Investing in Greek Commercial Real Estate

Greece’s diverse real estate market has become an increasingly attractive destination for foreign investment. The Mediterranean climate, rich cultural history, and growing economy make the country particularly appealing to investors looking for residential and commercial properties. Greece’s investment landscape is further enhanced by favorable tax incentives, such as the Non-Dom tax regime, the tax regime for pensioners, the tax regime for employees and freelancers, the family office regime, and the Golden Visa program. In their article, Natalia Skoulidou, a Partner of Iason Skouzos Tax Law, Athens, and Aikaterini D. Besini, a Senior Associate at Iason Skouzos Tax Law, Athens, provide a comprehensive overview of the tax landscape for foreign investors investing in Greek commercial real estate. Their article outlines the key tax considerations at each stage of the investment process to help investors navigate the complexities of Greece’s tax system in order to make well-informed strategic decisions. The outcome can be quite favorable to investors from abroad.

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G.A.A.R. or S.A.A.R.? Effect of the Nordcurrent Decision in Belgium, the Netherlands, and Luxembourg

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G.A.A.R. or S.A.A.R.? Effect of the Nordcurrent Decision in Belgium, the Netherlands, and Luxembourg

Earlier this year, the C.J.E.U. issued its anticipated judgment in the Nordcurrent case (C-228/24). The judgment concerns the extension of the anti-abuse rule in the E.U. Parent-Subsidiary Directive (“‘P.S.D.”) to national participation exemption mechanisms. The ruling has significant implications and resonance in Belgium and the Netherlands, less so in Luxembourg, In their article (1) Werner Heyvaert, a Partner, and Yannick Vandenplas, an Associate, in the Brussels office of AKD Benelux Lawyers, (2), Jan-Willem Beijk and Anton Akimov, Partners in the Netherlands practice of AKD Benelux Lawyers, and (3) Maria-Clara Vassil, a Senior Associate, and Sanja Vasic, an Associate in the Luxembourg office of AKD Benelux Lawyers provide a clear summary and analysis of the case, explore its practical implications in their respective countries, and offer a perspective on its broader impact.

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Can the Shares of Companies Owning French Real Estate be Categorized as Real Estate? Some Keys to Solve the Riddle

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Can the Shares of Companies Owning French Real Estate be Categorized as Real Estate? Some Keys to Solve the Riddle

An immovable asset is a plot of land or a structure built on the land. Neither can be moved without being damaged or without damaging the land to which it is attached. Certain rights are also immovable due to their intrinsic link to immovable assets. An example would be real estate property rights, such as those embedded in a usufruct arrangement. In comparison, a movable asset can be transported from one place to another or is intangible by its nature. The French Civil Code expressly includes shares of companies in the concept of movable assets, even where such companies own real estate. The historical distinction between immovable and movable property is why French tax law created an autonomous concept of a “predominantly real estate company.” The definition of a predominantly real estate company varies depending on the tax being imposed. In their article, Xenia Lordkipanidze, a Partner in Overshield Avocats, Paris, and Clement Pere, an Associate in the Tax Department of Overshield Avocats, Paris, explain the inconsistency of French law and cases. The Cour de Cassation, the French Supreme Court for non-administrative matters, has jurisdiction over disputes relating to gift and inheritance duties and wealth tax has reached one conclusion – shares comprise movable property. The Conseil d’Etat, the French Supreme Court for administrative matters has jurisdiction over disputes relating to personal and corporate income tax, including capital gains tax, has reached a contradictory conclusion – shares of a predominantly real estate company comprise immovable property. The question posed by the authors is which Supreme Court reached the correct answer. Not surprisingly, the answer given is that it depends on relevant factors. 

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U.S. Investment in U.K. Real Estate Investment – Separated by a Common Language

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U.S. Investment in U.K. Real Estate Investment – Separated by a Common Language

It is common for U.S. individuals investing in commercial real estate in the U.K. to adopt a two-tier structure through which U.K. real estate is owned. It is also common to hold each property through a separate special purpose vehicle (“S.P.V.”) formed in the U.K. In their article, George Mitchel, a Partner in Forsters L.L.P, London, Heather Corben, a Partner in Forsters L.L.P, London, and Amy Barton, a Senior Associate in Forsters L.L.P, London, explain how this relatively simple structure (i) enables a U.S. resident investor to eliminate two levels of tax on distributed profits, (ii) creates foreign tax credit limitation in the U.S. allowing a U.S. resident investor to obtain an immediate foreign tax credit for U.K. taxes as gains are harvested at the time shares of a U.K. limited company are sold, and (iii) allows the estate of a U.S.-resident investor to obtain benefits under the U.K.-U.S. Estate Tax Treaty limiting death duties to taxes imposed in the U.S. They also caution about a particular risk if a structure is headed by a U.S. grantor trust having one or more U.K. residents as beneficiaries.

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Tax Issues Faced by Foreign Persons Investing in Italian Commercial Real Property

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Tax Issues Faced by Foreign Persons Investing in Italian Commercial Real Property

For nonresident investors, Italy contains many little known provisions to reduce or eliminate tax on income and gains arising from real property. A careful reading of domestic tax law, combined with the proper application of bilateral income tax treaties, reveals several planning opportunities that can significantly enhance the efficiency of cross-border real estate investment. In their article, Federico Di Cesare, a Partner of Lipani Legal & Tax (formerly Macchi di Cellere Gangemi), Rome, and Dimitra Michalopoulos, an Associate in the tax practice of Lipani Legal & Tax (formerly Macchi di Cellere Gangemi), Rome, explain that, inter alia, capital gains arising from the sale of the Italian real property are not subject to Italian income tax if the real property is held for more than five years. Similarly, capital gains arising from the sale of shares in an Italian corporation or its liquidation are not subject to tax for a nonresident investor even when the assets of the corporation consist mostly of real property. Other opportunities are available to reduce or eliminate capital gains taxation for a nonresident who qualifies as a minority shareholder or benefits from an income tax treaty. Nonetheless, it is Italy, and numerous regulatory pitfalls must be managed, including legal requirements, factual conditions, and holding period.

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Strategic Considerations for International Investors in Dutch Real Estate

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Strategic Considerations for International Investors in Dutch Real Estate

From an economic viewpoint, the Netherlands is a highly attractive destination for international real estate investors, thanks to its robust legal framework, transparent property market, and strategic location within Europe. From a tax policy viewpoint, however, the Dutch tax environment can be challenging, as it is subject to frequent legislative changes. Recent updates – including the partial discontinuation of the Dutch equivalent of a R.E.I.T., known as the F.B.I. regime, revised entity classification standards, and stricter interest deduction rules – have significantly impacted the landscape for cross-border investors. In his article, Anton Louwinger, a partner in CMS Netherlands, Amsterdam, explains the important issues at various points in the ownership period, including (1) R.E.T.T. or V.A.T. on purchases, (2) C.I.T. during ownership, (3) caps on deductions for interest expense and application of anti-abuse rules for payments to a foreign related party, (4) withholding tax on interest and dividend payments, (5) caps on the use of N.O.L.’s, and (6) taxation of capital gains upon sales.

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Dramatic Changes Proposed in the Definition of the Tax Term "Israeli Resident"

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Dramatic Changes Proposed in the Definition of the Tax Term "Israeli Resident"

Under current Israeli tax law, an individual’s tax residency status is determined primarily by the “Center of Life” test, which examines personal, economic, and social ties to Israel and another country. The test is supplemented by numerical presumptions that look to the number of days an individual is present in Israel over a period of time looking to one year or three years. A determination based on day count can be challenged by either the taxpayer or the Tax Authority. In 2023, a draft bill was published that provided an irrebuttable determination of tax residence or nonresidence in certain fact patterns. The draft bill was never enacted. In July, the Israeli Ministry of Finance announced draft legislation designed to modify existing rules. In his article, Boaz Feinberg, a Tax Partner of Arnon, Tadmor-Levy, Tel Aviv, explains the proposal in detail, including the new five-year rolling testing period and the weight given to days in each year of the testing period. He points out that days of presence in later years can affect the residence status in earlier years.

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Double Dutch: A Unique Approach in the Netherlands to U.S. L.L.C.’s Owned by U.S. Trusts

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Double Dutch: A Unique Approach in the Netherlands to U.S. L.L.C.’s Owned by U.S. Trusts

Trusts play a crucial role in U.S. estate planning. However, the use of a U.S. trust in an international context can create a multitude of challenges. The Dutch tax system’s approach to the taxation of trusts poses a number of concerns for U.S. trust fund beneficiaries living in the Netherlands benefitting from a testamentary trust. In the not unusual set of circumstance where an L.L.C. is established to hold investments of the trust, double taxation without the benefit of foreign tax credits is more than a theoretical problem. In her article, Mignon de Wilde, a partner and tax adviser in the Amsterdam office of Arcagna Tax Consultants and Notaries, cautions that only two solutions seem to be available. Advance tax planning during the lifetime of the settlor is the preferred alternative. Seeking Competent Authority relief under the Netherlands-U.S. Income Tax Treaty is available in principle. Favorable authority exists in the Netherlands, less so in the U.S.

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Are Holding Companies so 20th Century? A Look at Recent Developments in France

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Are Holding Companies so 20th Century? A Look at Recent Developments in France

Historically, holding companies have been used by corporate groups to place certain assets in certain locations to serve certain markets. They have also been used by individuals for wealth management and estate planning purposes. Today, holding companies located in an E.U. Member State or elsewhere are likely to face challenges when interacting with group members in France. Claims of treaty benefits are regularly challenged by French tax authorities. Whether the benefit is a tax treaty related withholding tax exemption on dividends or royalties or access to E.U. Directives such as the Parent-Subsidiary Directive, French tax authorities regularly challenge claims of an entitlement to the anticipated tax benefit. In her article, Emilie Lecomte, a Partner in the Tax Department of SQUAIR Law Firm, Paris, explains the risks faced by a foreign holding company that expects to benefit from favorable tax regimes for French-source income. Recent cases are discussed

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Tax Neutral or Caught in the Net? The World of Luxembourg Securitization Vehicles

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Tax Neutral or Caught in the Net? The World of Luxembourg Securitization Vehicles

The Luxembourg securitization vehicle (“Lux S.V.”), governed by the Securitization Law of 22 March 2004 remains a core pillar in structured finance and asset repackaging across Europe. As Luxembourg continues to implement E.U. directives such as A.T.A.D. I & II, D.A.C.6., and the O.E.C.D.’s B.E.P.S. action plan – Including Pillar Two and substance-driven anti-abuse frameworks – Lux S.V.’s face growing scrutiny. In their article, James T. O’Neal, Co-head of Maples and Calder (Luxembourg)‘s Tax Team, and Naima Bouzago Ouali, an Associate in Maples and Calder (Luxembourg)’s Tax Team, analyze how A.T.A.D. I & II’s Hybrid Mismatch Rules and A.T.A.D. I’s Interest Limitation Rules can be successfully navigated in the appropriate set of facts, thereby preserving their tax neutrality. Hybrid mismatch rules, investor payment tax treatment, and interest limitation rules that include the single company worldwide group exception are addressed.

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Prenuptial Agreements in the Context of an International Couple – Views from France and Spain

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Prenuptial Agreements in the Context of an International Couple – Views from France and Spain

Choosing a life partner is a complex decision. It becomes even more complex if the parties are not of the same nationality or if one of the parties moves to another country in order to avoid a two-city lifestyle. Many couples in France and Spain are unaware that, in the absence of a duly executed prenuptial agreement, the rules that determine how property will be distributed if the marriage is dissolved due to divorce or death will be the rules of the first country of residence after their marriage becomes official. Conversely, other couples believe that they are protected by the provisions of a prenuptial agreement signed in France or in Spain that generally provides for separation of property. However, the contract may not be followed in common law countries such as England and United States, meaning that each spouse is entitled to one-half of the marital assets. All this and more are explained in the article authored by Delphine Eskenazi, a Partner of Libra Avocats, Paris, and Maria Valentin, of Counsel to Libra Avocats, Paris. The takeaway is that life can be about more than tax planning.

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New Belgian Federal Government Announces Significant New Tax Measures

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New Belgian Federal Government Announces Significant New Tax Measures

The most recent general election in Belgium took place in June, but a new government was not sworn in until February, when the five-member coalition government agreed to a federal government agreement, a document of 200 pages in a single language containing many significant tax measures. Tax items addressed include, inter alia, (i) the replacement of a dividends received deduction by a simple exclusion, (ii) the modernization of the group contribution regime, the Belgian equivalent of group relief, making it more flexible and simpler to coordinate, (iii) the simplification of the investment deduction rules, the Belgian equivalent of investment credits in the U.S., (iv) the adoption of accelerated depreciation rules for CAPEX investments, (v) the adoption of a “solidarity contribution,” a 10% capital gains tax on financial assets held by individuals, allowing a basis step-up to current value as of the effective date of the tax, (vi) simplification of disallowed expense rules, and (vii) the adoption of carried interest rules for managers of investment funds. Werner Heyvaert, a senior international tax lawyer based in Brussels and a partner at AKD Benelux Law Firm explains these and other tax provisions. The takeaway is that Belgium is modernizing its tax rules.

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French Budget 2025 – Significant Provisions Affecting Individuals

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French Budget 2025 – Significant Provisions Affecting Individuals

The French Budget for 2025 reflects significant political instability reflecting two factors. The first is the fragmentation of the French Parliament after elections last summer. The second is a significant budgetary deficit. It was adopted with limited debate on February 14, 2025, after an earlier Finance Bill was rejected in December 2024, resulting in a change of government. Key measures to note include, inter alia, (i) Introduction of enhanced social contribution on high incomes, with an instalment that was due in December 2025, (ii) reform of the tax and social security treatment of management packages, including those already in existence, (iii) an overhaul of the tax framework for the B.S.P.C.E., one of the main employee shareholding tools, (iv) tax incentives for gifts received to acquire a new primary residence or to finance energy-efficient renovations, (v) Introduction of a special reassessment period in cases of misreported tax residence, (vi) clarification on the supremacy of treaty law in determining tax residency, (vii) additional social contributions for companies with revenues over a €1 billion, and (vii) a tax on capital reductions linked to share buybacks by companies with revenues exceeding a €1 billion. Philippe Stebler, the founder of Stebler Avocats, Paris, explains these and other provisions. The takeaway is that, if you thought French taxes in 2024 could not get any higher, you were mistaken.

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N.H.R. 2.0 in Portugal – a Better Regime for Skilled Workers and Their Employers

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N.H.R. 2.0 in Portugal – a Better Regime for Skilled Workers and Their Employers

Following the unexpected termination of the N.H.R. regime to newly arrived residents as of December 31, 2023, a new regime was offered, known as N.H.R. 2.0. The new regime attracts working individuals, investors and international groups planning on setting up Portuguese subsidiaries. N.H.R. 2.0 is now fully operational for those within scope of eligible activities, which is very wide. João Luís Araújo, a Partner in the Porto Office of Telles, and Sara Brito Cardoso, an Associate in the Porto Office of Telles, explain why N.H.R. 2.0 provides a better result for newly arrived skilled personnel and their employers. The takeaway is that Portugal is very much open for business and keen to attract talent, companies, and investment.

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