Clifford Chance

Luxembourg’s financial sector has felt targeted by the European Commission’s tax policy. Three subsequent anti-tax avoidance directives - known as Atad 1, 2 and 3 – each added more reporting requirements or forced adjustments to tax structures. In July the Commission referred Luxembourg to the Court of Justice of the European Union over how it extended an exemption from interest deductibility limits to EU securitisation entities in implementing the first Atad directive. But Luxembourg feels it has a strong case and seems happy to settle it in court.

The Luxembourg government clarified its application of the reverse hybrid rule in the EU’s second anti-tax avoidance directive (ATAD-2) last November, in 2022. It made clear that tax-exempt investors are exempt from the application of the reverse hybrid rules and clarified when they do apply to other investors. With the “quite helpful” clarification bringing simplification in one area, the quest for certainty has moved to related issues, such as allocating the potential tax burden if a given investor triggers it.

The Luxembourg financial community is concerned that schemes such as ATAD-3, which targets shell companies or the Pillar II implementation on international corporate taxation could intentionally or unintentionally affect until now perfectly legal tax or investment fund structures.

Luxembourg is strongly enthusiastic about the prospects of the new Eltif 2.0 regime as experts here point to untapped demand for such a product in Europe. While acknowledging the oft-mentioned concerns about the lack of liquidity for retail investors, there was optimism at a recent investment event hosted by Clifford Chance that solutions could be found. Investors though would have to be open-minded, and some in-built tensions need to be addressed.

The European Investment Bank has issued its first natively digital bond denominated in British pounds. The EIB raised 50 million with the bond, which has a duration of two years and bears a floating rate of interest.

BNP Paribas, HSBC and RBC Capital Markets are the joint lead managers. The syndicate was advised by Allen & Overy. EIB was advised by Clifford Chance.

Law firm Clifford Chance has appointed Simone Schmitt as counsel in its corporate practice in Luxembourg.  Schmitt joins the firm from  Linklaters, where she had been for more than seven years.

Schmitt is a qualified lawyer in Luxembourg and has extensive experience in advising multinational clients on acquisitions, restructurings and joint ventures. She is an expert in managing transactions for private equity players in Europe and the United States, the firm said.

In Luxembourg, international law firm Clifford Chance this week announced the promotion of two of its counsel and the appointment of nine senior associates, while industry group Alfi has hired a new head of communications from PWC Luxembourg.