Investment Officer Luxembourg

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.

A recent European Central Bank study calling for a regulatory framework to address instability in the market for Real Estate Investment Funds, known as Reifs, has been downplayed by a growing number of real estate specialists contacted by Investment Officer in Luxembourg and London. 

As inflation has started to normalise, many market observers have started to find bond markets attractive again. Yields have risen to their highest levels in over a decade. Corporate debt has recovered, making bond investors comfortable after years of bad returns.

As many as 70% of the ETFs touted as the most sustainable in their class by the fund companies that offered them have been downgraded in one year. Rather than aiming for sustainable investment, passive funds were found to incorporate only one ESG factor.

Alternative investments strategies relying on limited bank financing appear to be well-placed to profit from the current crisis of confidence in the banking sector. And despite EU regulatory measures to deal with greenwashing, ESG products are seeing increased demand.

It was when the Netherlands, Belgium and Luxembourg signed the customs union that a geographical area at the heart of Europe was defined. The aim was to promote economic integration and cooperation between the three member states. 

Since then, Benelux has been one of the most successful regional integration models, both in terms of economic growth and political stability. This success is also rooted in the creation of a solid legal framework that provides a stable and transparent business environment.

If there’s one thing clear from recent months, it’s that Luxembourg is placing a major bet on the future of Eltifs, or European Long Term Investment Funds. The EU’s adoption of a major upgrade of the Eltif regulation is opening the doors to private markets for high-net-worth investors and wealth management clients.

Rising interest rates and the demise of Silicon Valley Bank and Credit Suisse have led to a paradigm shift in private equity and venture capital. Reji Vettasseri, lead portfolio manager at Swiss private finance group Decalia, believes investors now need to to be innovative with emerging strategies, carefully selecting ‘small cap’ firms to invest in instead of fleeing to the safety of larger ventures.