At the date of this Prospectus, the Company is not liable to any Luxembourg tax on profits or income. The Company is, however, liable in Luxembourg to a taxe d’abonnement of 0.05 % per annum of its Net Asset Value, such tax being payable quarterly on the basis of the value of the aggregate Net Asset Value of the Sub-Funds at the end of the relevant calendar quarter. No such tax is payable on the value of assets which consist of units or shares of other Luxembourg funds that have already been subject to such tax.
No stamp duty or other tax is payable in Luxembourg on the issue of Shares. No Luxembourg tax is payable on the realised capital appreciation of the assets of the Company.
A reduced taxe d’abonnement rate of 0.01% per annum or an exemption of the taxe d’abonnement will be applicable to certain Classes of Shares reserved to Institutional Investors within the meaning of article 174 (2) c) of the UCITS Law as well as to certain Sub- Funds investing exclusively in money market instruments.
The Company is liable to an initial capital tax of EUR 1,250 that was paid upon incorporation. Investments income from dividends and interest received by the Company may be subject to withholding taxes at varying rates. Such withholding taxes are not usually recoverable. The Sub-Fund may be subject to certain other foreign taxes.
In addition, the Company may be liable to certain taxes in countries where the Company carries out its investment activities. Those taxes are not recoverable by the Company in Luxembourg.
18.2. Taxation of Shareholders
Subject to the provisions of Section 18.3 below, shareholders are not subject to any capital gains, income or withholding tax in Luxembourg (exceptions may apply to (i) shareholders who are domiciled, resident or have a permanent establishment in Luxembourg, (ii) non- residents of Luxembourg who hold more than 10% of the Shares of the Company and who dispose of all or part of their holdings within six (6) months from the date of acquisition or (iii) in some limited cases, some former residents of Luxembourg who hold more than 10% of the Shares of the Company).
It is expected that shareholders in the Company will be resident for tax purposes in many different countries. Consequently, no attempt is made in the Prospectus to summarise the taxation consequences for each investor of subscribing, converting, holding or redeeming or otherwise acquiring or disposing of Shares in the Company. These consequences will vary in accordance with the law and practice currently in force in a shareholder's country of citizenship, residence, domicile and/or incorporation and with his personal circumstances. However, shareholders who are resident in countries where the Company’s shares are publicly offered are informed about these consequences in country-specific supplements. Investors should inform themselves of, and when appropriate consult their professional advisors on, the possible tax consequences of subscribing for, buying, holding, converting, redeeming or otherwise disposing of Shares under the laws of their country of citizenship, residence, domicile and/or incorporation.
18.3. EU Savings Directive 18.3.1 General principles
On June 3, 2003, the EU Council of Economic and Finance Ministers adopted a new directive regarding the taxation of saving incomes (the “EU Savings Directive”). The EU Savings Directive is applied by Member States as from July 1, 2005 and has been implemented in Luxembourg by the law of June 21, 2005 (the “Law”). Under the EU Savings Directive, each Member State is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a paying agent within the meaning of the EU Savings Directive to an individual or certain types of entities called “residual entities” resident(s) in that other Member State (or certain dependent and associated territories).
For a transitional period, however Austria and Luxembourg are permitted to apply an optional information reporting system whereby if a beneficial owner does not comply with one of the two procedures for information reporting, the Member State will levy a withholding tax on payments to such beneficial owner. The withholding tax system will apply for a transitional period during which the rate of withholding will be of 15% from July 1, 2005 to June 30, 2008, 20% from July 1, 2008 to June 30, 2011 and 35% as from July 1, 2011. The transitional period commences on July 1, 2005 and terminates at the end of the first fiscal year following agreement by certain non-EU countries to the exchange of information relating to such payments. See “European Union Directive on the Taxation of Saving Income in the Form of Interest Payments (Council Directive 2003/48/EC)”.
Also with effect from July 1, 2005, a number of non-EU countries (Switzerland, Andorra, Liechtenstein, Monaco and San Marino), and certain dependent or associated territories of certain Member State have agreed to adopt similar measures (either provision of information or transitional withholding) in relation to payments made by a paying agent within its jurisdiction to or collected by such a paying agent for, an individual or a residual entity in a Member State. In addition, Luxembourg has entered into reciprocal provision of information or transitional withholding arrangements with certain of those dependent or associated territories (Jersey, Guernsey, Isle of Man, Montserrat, British Virgin Islands, Netherlands Antilles and Aruba) in relation to payments made by a paying agent in Luxembourg to, or collected by such a paying agent for, an individual or a residual entity resident in one of those territories.
18.3.2 Rules applicable to Sub-Funds
In the context of the Luxembourg funds, the Law qualifies as interest (i) income distributed by the Sub-Funds or (ii) income realised upon the redemption, sale or refund of Shares.
The impact of the EU Savings Directive on income from distribution and redemption, sale or refund arising from Shares depends on two basic principles: (i) the asset test and (ii) the look-through principle.
The asset test provides that: (i) if a Sub-Fund invests 15% or less of its assets in debt claims, distribution and profits on redemption, sale or refund arising from Shares are out of the scope of the withholding tax (de minimis rule), (ii) if a Sub-Fund invests more than 15% and up to 40% of its assets in debt claims, distributions fall within the scope of the withholding tax (but not the redemption, sale or refund of Shares) and (iii) if a Sub-Fund invests more than 40% of its assets in debt claims, the profits realised upon distribution and redemption, sale or refund fall within the scope of the withholding tax. According to the Law, the asset test can be determined by reference to the investment policy of a given Sub-Fund and, failing which, by reference to the actual composition of its assets.
Following the look-though principle; when a given Sub-Fund falls within the ambit of the EU Savings Directive according to the asset test (see above), the withholding tax should be levied on the portion of the distribution or profit from the redemption, sale or refund deriving from the accumulated interest received by each Sub-Fund. When a paying agent has no information concerning the proportion of income, which derives from interest payments, the total amount of the income shall be considered as interest payment.
18.4. Prospective investors should inform themselves of, and whether appropriate take advice on the laws and regulations in particular those relating to taxation (but also those relating to foreign exchange controls and being Prohibited Persons) applicable to the subscription; purchase, holding conversion and redemption of Shares in the country of their citizenship, residence or domicile and their current tax situation (in particular with regard
to the EU Savings Directive) and the current tax status of the Company in Luxembourg.
18.5. Applicable Law
The Luxembourg District Court is the place of performance for all legal disputes between the shareholders and the Company. Luxembourg law applies. The English version of this Prospectus is the authoritative version and shall prevail in the event of any inconsistency with any translation hereof.
Statements made in this Prospectus are based on the laws and practice in force at the date of this Prospectus in the Grand Duchy of Luxembourg, and are subject to changes in those laws and practice.