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Luxembourg’s fund expertise quietly prospers

Date: 10 Jun 2015

Bumblebee Design

A country of just 550,000 people, nestled at the heart of Europe and landlocked by Belgium, Germany and France, Luxembourg is a nation known primarily for its financial services industry. But while desperately overshadowed by the much larger private banking centre that is Switzerland, where ski slopes and other natural wonders have long complemented the favourable tax regime to attract the world’s wealthy, this is a market where the high-net-worths are flourishing.

So why would a wealthy family move its assets to a tiny haven of bankers and Eurocrats? Adrian Leuenberger, head of wealth and investment management at Banque Internationale à Luxembourg (BIL), says Luxembourg has much to offer: “If you go out to some of the emerging markets, people don’t know where Luxembourg is. But we see that more as an advantage than a disadvantage, because in those markets the Luxembourg name has yet to be defined and selling the story is quite easy.”

So frequently compared to Switzerland, and misunderstood as a result, the Luxembourg story begins with the fact that it is one of the few triple-A rated countries in Europe, it is a founding member of the Euro, and it sits right at the heart of the continent with a people fluent in English, German, French and Luxembourgish.
The other thing is some phenomenal tax structuring competencies. Luxembourg boasts a specific skillset as the world’s second largest investment fund centre behind the US, and with more than €2.6 trillion in net assets under management has been dubbed “the back office to the global funds industry”. It is the largest investment fund centre in Europe, representing 67% of the European market.

As such, the skills needed for structuring investment vehicles abound in the jurisdiction, and high-net-worths who need structuring capabilities for corporate vehicles or to acquire yachts, aircraft or real estate around the world can find excellent advisers.

“For the very wealthy families that are organised institutionally through holding companies or investment funds, Luxembourg clearly remains a very attractive place,” says Quentin Rutsaert, a partner at Rutsaert Legal. “The year 2014 was a fantastic year for investment funds. There is still plenty of money around and people seem to like to invest that with a Luxembourg investment fund rather than…To read the full article, please subscribe to our e-magazine.