1. 1 Luxembourg – Tax news Chamber of Tax Consultants

2. 2 Corporations Thin capitalisation Concept of related parties in Luxembourg 15% equity / 85% debt (arms lenght ratio applied by tax administration) If not respected, excessive interest payments may be requalified as dividends (15% WHT) and are not deductible 1. Basics of Luxembourg tax law

3. 3 85/15 structure Adapted to Luxembourg thin cap requirements 85% interest bearing loans 15% equity / interest free loans No WHT on interest payments 15% WHT on dividends (may be reduced under applicable DTC) Suitable when low annual returns Lux HoldCo Investor Target 15% Equity & IFL 85% IBL DividendsInterest 2. Basic holding structures

4. 4 Profit extraction At the level of SubHoldCo 99% via PPL (no WHT / tax deductible) Remaining 1% = taxable (at 28.80%) And distributed via dividends (no WHT) At the level of HoldCo 100% via FTL (no WHT / tax deductible) Minus annual taxable spread (at 28.80%) Rest via Dividends (15% WHT) Lux HoldCo Lux SubHoldCo Investor Dividends Interest 100% of the profits minus annual spread Dividends Interest 99% of the profits 3. The double holding structure

5. 5 Circular 164/2 – 28 January 2011 Scope Most important changes Length of validity Transfer pricing report Substance Equity Circular 164/2 bis – 8 April 2011 Actions required? 5. The new circulars Greater substance => greater security for the tax payer

6. 6 Questions? nicolas.fermaud@allenovery.com Tel : +7 495 662 65 43 www.allenovery.com The content of this document presents reflections only and is not to be considered as a binding opinion of Allen & Overy. It should not be used as a legal basis for set-up, transformation, liquidation of an investment structure or any other financial transaction. Allen & Overy is not responsible for any consequences in relation to the content and the use of this document. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP's affiliated undertakings.