Therefore
all this income (interest, received dividends, profits, gain,
appreciation…) is taxable in full and makes up the positive
part of the tax base.
All of the expenses related to management of the underlying
activity are however deductible from this base.
The balance of these two amounts makes up what can be called
the tax base prior to allocation; this is the gross profit to
be paid to investors.
All payments allocated to investors – holders of securities,
shares, bonds or certificates issued by the securitisation vehicle
- are deducted from this tax base. Whatever their designation,
these payments are actually meant to be interest paid to investors.
On the whole, the securitisation vehicle is taxable on the balance
of what it actually keeps for itself according to the usual
rules for establishing the tax base for Luxembourg companies
(increase of reserves).
It is to be noted that securitisation vehicles cannot claim
exemption related to the collection of dividends or capital
gains on these same participation. This is in no way a SOPARFI
(SOciété de PARticipation FInancière, Luxembourg
Investment Company), although one could be used in tandem with
the securitisation vehicle).
DEBT RATIO
It is useful to indicate that the debt of the securitisation
vehicle is not limited or restricted by law. This means
that the securitisation vehicle can therefore be financed
without having to immobilise a minimum capital and that
gearing resulting from interest fees can be used more efficientl
WITHHOLDING TAX - DEDUCTION AT SOURCE
Interest paid by securitisation vehicles are not subject to
any withholding tax.
Payments allocated to holders of shares, bonds, securities
or certificates issued by the securitisation vehicle are not
subject to any withholding tax.
Royalties paid by the securitisation vehicle are not subject
to any withholding tax.
Dividends paid to holders of financing securities of the
securitisation vehicle as long as these give entitlement to
a proportion of the net income of the securitised asset are
not subject to any deductions at source.
TAXABLE BASIS OF securitisation
FUNDS
When securitisation vehicles are incorporated as funds, there
is no taxation on profits made by the Fund.
As regards withholding tax and taxation of income generated
abroad:
- either it is incorporated as a co-ownership, and in this
case, each investor is taxable on the part of income he
owns personally,
- In our opinion, the income derived from this fiduciary
asset must be considered as paid to the management company
(as the legal owner). The unit holders only have indebtedness
rights in regard to the management company.
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