Investment Management News Update – April/May 2019
The Investment Management News Updates: an overview in which our Investment Management Team highlights recent developments.
Loyens & Loeff publications
- Legislative proposal for the Dutch implementation of the UBO-register submitted to parliament (the Netherlands)
On 4 April, 2019, the “Act on the registration of ultimate beneficial owners of corporate entities and other legal entities” (the UBO-register) was submitted to the Dutch parliament. The UBO-register is a register that contains certain personal details of ultimate beneficial owners (UBO’s) of Dutch corporate entities and other legal entities. The implementation of a UBO-register is one of the measures that are included in the (amended) fourth EU Anti-Money Laundering Directive. Click here to read this update.
New CSSF practice for PRIIPs KID filings for Non-UCITS (Luxembourg)
On 11 April 2019, the Commission de Surveillance du Secteur Financier (the CSSF) has updated its Frequently Asked Questions concerning the Luxembourg Law of 12 July 2013 on alternative investment fund managers (the FAQ). In this update the CSSF confirms that the PRIIPs KIDs will only have to be filed with the CSSF upon request. The same applies where AIFs chose to issue a UCITS KIID like document instead of the PRIIPS KID. The FAQ per 11 April 2019 can be consulted here. Click here to read this update.
- Publication of the Brexit Laws: Financial sector and investment funds laws amended (Luxembourg)
Whereas the day on which the United Kingdom (UK) will withdraw from the European Union (EU) (the Brexit Date) and the conclusion of an agreement between the UK and the EU are still unknown, the CSSF published a press release to draw the stakeholders’ attention to the publication of the laws of 8 April 2019 regarding measures to be taken in relation to the financial sector in the event of a withdrawal of the UK from the EU (the Brexit Laws). Click here to read this update.
- Derivatives update: recent developments with respect to EMIR and Brexit
This Quoted includes recent developments under EMIR, proposed changes under the EMIR II Proposal and the consequences of a potential hard Brexit with respect to:
• Clearing requirement.
• Risk-mitigation measures for non-cleared OTC derivatives.
• Reporting requirements.
• Practical tips.
Legislative dates for your diary
- ESMA consultation deadline: on draft guidelines on liquidity stress test for investment funds, 01.04.2019
- Entry into force: Beleidsregel toepassing richtsnoeren Europese toezichthoudende autoriteiten Wft 2019 (in Dutch only), 06.04.2019
- Effective date: Commission Delegated Regulation (EU) 2019/758 of 31 January 2019 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council with regard to regulatory technical standards for the minimum action and the type of additional measures credit and financial institutions must take to mitigate money laundering and terrorist financing risk in certain third countries, 03.06.2019
- ESMA consultation deadline: Working group on Euro risk-free rates launches consultation on EONIA to €STR transition, 12.06.2019
- AFM consultation deadline: AFM vraagt ondernemingen te reageren op Principes voor informatiebeveiliging (in Dutch only), 25.06.2019
- ESMA consultation deadline: on draft ELTIF technical standards, 29.06.2019
- Dutch legislative consultation deadline: Implementatiebesluit registratie uiteindelijk belanghebbenden van vennootschappen en andere juridische entiteiten (in Dutch only), 01.07.2019
- Effective date: Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (Prospectus Regulation), 21.07.2019
- Developments in Dutch case law – In the news
On 17 May 2019, the Court of Appeal in Amsterdam ruled on a Dutch acquisition structure for a French private equity fund, which judgement has been covered in the Dutch financial media. In the case at hand, the Dutch taxpayer had issued convertible debt instruments to the fund on which interest was tax deducted (among others against the operational profit of the target). At that time (financial year 2010/2011), no specific interest deduction limitation was applicable to the financing arrangement, mainly in view of the creditors each not reaching the related party threshold vis-à-vis the Dutch taxpayer. Nevertheless, under the general abuse of law doctrine (fraus legis), the Court of Appeal ruled that the interest payments should still not be deductible. It is not yet clear what the impact is of this decision and whether it should be applied in a broader context than just this specific case. For that reason, this is something to monitor, as it is now up to the Dutch Supreme Court to decide on the matter. Click here to read the judgement (in Dutch only).
- Developments in European case law – Danish cases
On 26 February 2019, the Court of Justice of the European Union (CJEU) issued its judgments in six cases which deal with the interpretation of the Parent-Subsidiary Directive (PSD) and the Interest & Royalties Directive (IRD, together the Directives). The CJEU stated that the term beneficial owner in the IRD, required to be able to benefit from the exemption from tax under the IRD, should be interpreted as the entity which benefits economically from the interest received and accordingly has the power to freely determine the use to be given to that income. The CJEU also broadened the EU definition of tax avoidance, in which case no protection from the IRD or the PSD can be invoked, and provided indicia as to the elements that may constitute abuse when using intermediate holding companies. It also added the important statement that even in the absence of anti-abuse provisions in national law or tax treaties, Member States should apply a general EU law anti-abuse principle in order to refuse the benefits of the Directives.
In the Netherlands, members of parliament have requested the Dutch State Secretary for Finance to comment on the (potential) impact of the Danish cases on Dutch holding and financing companies. The State Secretary has not yet responded thereon, but is expected to do so in the near future.
- EU Anti-Tax Avoidance Directive – Status of Dutch implementation
The Dutch State Secretary for Finance has recently indicated that the final legislative proposal for the Dutch implementation of the amended EU Anti-Tax Avoidance Directive (ATAD2) will be published before the Summer break (expectedly in June). The preliminary legislative proposal was published for public consultation purposes on 29 October 2018, which ended on 10 December 2018. ATAD2 targets double deductions of costs, or deductions of costs without a corresponding inclusion of income, insofar originated from a hybrid mismatch. Among others hybrid financial instruments, hybrid entities, hybrid permanent establishments and dual resident entities can constitute a hybrid mismatch. The ATAD2 rules should be implemented by the Member States on 31 December 2019, albeit that the rule targeting reverse hybrid entities (transparent for tax law purposes in the jurisdiction of registration but opaque for tax purposes in the residency states of the participants in the entity) may be implemented later, but at the latest on 31 December 2021. Click here to read more.
Data Protection & Privacy Updates
- For updates on the GDPR, please visit the webpage of the Loyens & Loeff Data Protection and Privacy Team.
Should you require any assistance in the field of Investment Management, please contact your trusted adviser of our Investment Management Team.
Although this publication has been compiled with great care, Loyens & Loeff N.V. and all other entities, partnerships, persons and practices trading under the name 'Loyens & Loeff', cannot accept any liability for the consequences of making use of this issue without their cooperation. The information provided is intended as general information and cannot be regarded as advice.