LUXEMBOURG. Key Accounting,Tax Compliance and Reporting Aspects of Unregulated Companies in Luxembourg

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1 LUXEMBOURG Key Accounting,Tax Compliance and Reporting Aspects of Unregulated Companies in Luxembourg December 2017

2 Profile Loyens & Loeff Independent and international As a fully independent law firm, Loyens & Loeff is excellently positioned to coordinate international tax and legal matters. We have our own network of offices in major financial centres, staffed with specialists in Dutch, Belgian, Luxembourg and Swiss law. Through these offices, our clients have access to Loyens & Loeff s full-service legal expertise in their own time zone. Our office network is complemented by our several country desks all of which are experienced in structuring investments all over the world. It s a winning combination that enables us to assist international clients in a very effective way. Moreover, we are on excellent terms with other leading independent law firms and tax consultants. That way, we can guarantee you top-level advice in every part of the world. Full-service practice Innovative and Pragmatic As a leading firm, Loyens & Loeff is the natural choice for a legal and tax partner if you do business in or from Luxembourg, Belgium, the Netherlands and Switzerland, our home markets. You can count on personal advice from any of our 820 advisers based in one of our offices in the Benelux, Switzerland, or in key financial centres around the world. Thanks to our full-service practice, specific sector experience and thorough understanding of the market, our advisers comprehend exactly what you need. Each problem requires a customised solution. Our pragmatic approach and drive to devise innovative solutions allow us to effectively address the demands of our clients domestic and international businesses. Thanks to the broad range of our legal experience, know-how and the size of our practices, we can offer you top-level advice, locally and internationally. We are committed to meeting your needs at the highest quality level in the most efficient way.

3 Accounting, Tax Compliance and Reporting Aspects 3 Key Accounting, Tax Compliance and Reporting Aspects of Unregulated Companies in Luxembourg This memorandum gives a high-level overview of the key Luxembourg accounting, tax compliance and reporting aspects of unregulated companies. The memorandum aims to serve as a helpful tool and quick reference guide. The information provided in this memorandum is general and the exact requirements that apply for a specific case must always be verified on a case-by-case basis with your dedicated Loyens & Loeff advisor. On behalf of the Luxembourg tax compliance team, Frank van Kuijk Tax Partner and Head of Tax Compliance Dominique Afink Team Leader Tax Compliance 1. Annual Accounts The Luxembourg rules on the preparation of annual accounts and the filing thereof are governed by the law of 10 August 1915 on commercial companies, as amended (the 1915 Law) and the law of 19 December 2002 on the Register of Commerce and Companies and the Accounting and Annual Accounts of Companies, as amended (the 2002 Law). These sets of rules, amongst other things, provide for the Luxembourg Generally Accepted Accounting Principles (Luxembourg GAAP). 1.1 Preparation of annual accounts and Luxembourg GAAP principles Under Luxembourg law, annual accounts (encompassing a balance sheet, a profit & loss account and explanatory notes to the accounts) can be prepared using the structure guidelines and valuation principles of Luxembourg GAAP. The standard chart of accounts for Luxembourg GAAP is set out in the Grand Ducal Decree of 10 June Luxembourg companies may also opt to draw up their stand-alone accounts using IFRS. Under the specific authorization of the Ministry of Justice, a company may use different accounting standards.

4 4 1.2 Accounting and valuation principles The valuation principles of Luxembourg GAAP lay down a set of general principles, such as the balance sheet continuity principle and the prudence principle. The key valuation principle of Luxembourg GAAP is the historical costs approach. An optional fair market value approach applies for certain types of financial instruments. 1.3 Audit of annual accounts A Luxembourg listed company must have its accounts reviewed and signed off by an independent auditor (member of the Institut des Réviseurs d Entreprises) who is appointed by the general meeting of the shareholders. A non-listed Luxembourg company must have its accounts audited if at least two of the following three thresholds are exceeded for two years in a row: 1. A balance-sheet total of at least EUR 4.4 million; 2. A net turnover of at least EUR 8.8 million; and/or 3. An average number of full-time staff employed during the financial year of at least Consolidated accounts, exemptions and scope of the consolidation A Luxembourg company must draw up consolidated accounts and a consolidated annual report if it: Has a majority of the shareholders or members voting rights in another undertaking; Has the right to appoint or remove a majority of the members of the administrative, management or supervisory body of another undertaking, and is at the same time a shareholder in or member of that undertaking; or Is a shareholder in or member of an undertaking, and, under an agreement with other shareholders in or members of that undertaking, has sole control over a majority of shareholders or members voting rights in that undertaking. Consolidated accounts comprise the consolidated balance sheet, the consolidated profit & loss account and the consolidated report. Consolidated accounts of listed companies must always be drawn up under IFRS.

5 Accounting, Tax Compliance and Reporting Aspects Exemptions for drawing up consolidated accounts A Luxembourg company is exempt from drawing up consolidated accounts if at least two of the following three thresholds are not exceeded at the end of the financial year: 1. A balance sheet total of at least EUR 20 million; 2. A net turnover (excluding dividends and interests) of at least EUR 40 million; and/or 3. An average number of full-time staff employed during the financial year of at least 250. The exemption does not apply if at least one or more of the companies to be consolidated is a company whose securities are listed on a stock exchange established in an EU Member State. Under certain conditions, a Luxembourg company may benefit from an exemption from drawing up consolidated accounts if it is, together with its subsidiaries, consolidated in the accounts of a parent company which are governed by the law of another EU Member State, or by the law of a third country whose provisions for the drawing up of consolidated accounts are equivalent to EU Directive 83/349/EEC (e.g., US GAAP) Scope of the consolidation As regards the scope of the consolidation, a subsidiary can be excluded if it is not considered material, i.e., if it is not significant with regard to the true and fair view principle. Also, any company investing in risk capital (e.g., venture capital / private equity) can under certain conditions exclude subsidiaries from the consolidation. 1.5 Filing of annual accounts Annual accounts for a given year (stand-alone and consolidated, if applicable) must be registered and filed with the Luxembourg Register of Commerce and Companies (the Trade Register). The filing shall be made within one month of the approval of the annual accounts. Approval needs to take place within six months after the end of the concerned financial year. Filing with the Trade Register also entails the publication of an excerpt from the filing in the Luxembourg Official Gazette Electronic Compendium and Associations. The annual accounts can be prepared in French, German or English, provided that any document that needs to be filed along with the annual accounts is prepared in the same language. The annual accounts filed with the Trade Register are made accessible to the public. A Luxembourg company which is consolidated in the accounts of a parent in another EU Member State may be exempt from the obligation to publish its stand-alone accounts under some conditions, notably if the parent company guarantees any commitment made by the subsidiary. 1.6 Chambers of Commerce fees A Luxembourg company is automatically a member of the Luxembourg Chamber of Commerce and subject to Chamber of Commerce fees. Luxembourg holding and financing companies are subject to an annual lump sum fee of EUR 350. Other companies are subject to variable fees calculated by multiplying the taxable profits before losses carried forward of year T-2 at a decreasing rate starting at 0.2%. For the first two years of their existence, companies are subject to a lump sum fee.

6 6 1.7 Consequences of late or non-filing of annual accounts Increased filing fees Fees for filing annual accounts with the Trade Register amount of EUR 19 per filing. Since 2017, increased fees are due in case of late filing of the annual accounts depending on the length of the delay in filing. These fees follow from Circular RCSL 16/03 of 11 November 2016 and are structured as follows: If annual accounts are filed during the 8th month after the closing date of the financial year EUR 50 If annual accounts are filed between the 9th and the 11th month after the closing date of the financial year EUR 200 If annual accounts are filed as from the 12th month after the closing date of the financial year EUR Criminal penalties The late or non-filing of the annual accounts or consolidated accounts of a Luxembourg company is a criminal offence for which the company s managers/directors may be fined EUR 500 to EUR 25,000 per offence. The penalties are only capped to these amounts when the failure was due to lack of diligence without fraudulent intent. A director/manager who does not file the annual accounts with fraudulent intent is liable to imprisonment for one month to two years and/or fined EUR 5,000 to EUR 125, Civil liabilities Late or non-filing of the annual accounts may also lead to civil liability of the managers/directors. Three situations can be distinguished: 1. Civil liability towards the company for faults committed by the managers/directors during the execution of their duties (breach of their internal duty of care to the company). The fault must have caused damages to the company. 2. Civil liability towards the company and third parties for faults arising from a violation of the 1915 Law or the company s articles of association. The managers may be ordered to pay the claimant damages for both foreseeable and unforeseeable damage as well as interest thereon. 3. Civil liability on the basis of the general principles of tort law in the Luxembourg Civil Code: if a manager s negligent behaviour does not fall within the scope of the above rules, the regulations under the general principles of law function as a safety net for the claimant Liquidation of the company The non-approval or non-filing of a company s annual accounts may ultimately lead to its judicial liquidation. The Luxembourg courts may, at the request of the public prosecutor, order the dissolution and the liquidation of any Luxembourg company which seriously contravenes the provisions of the Commercial Code or the laws governing commercial companies. Except for cases where the delay can be justified by an event beyond control, subsequent regularization by filing the annual accounts is impossible in this case.

7 Accounting, Tax Compliance and Reporting Aspects 7 2. Taxation of Luxembourg companies 2.1 Corporate income tax The Luxembourg income tax system consists of national corporate income tax (impôt sur le revenu des collectivités) at a rate of 19% for 2017 (21% prior to 2017) and municipal business tax (impôt commercial communal) at the rate of 6.75% (for companies established in the municipality of Luxembourg). In addition, there is a 7% surcharge for the employment fund calculated on the corporate income tax. The total combined tax head line rate (TCTR) including surcharge is therefore: 29.22% for the financial year 2016; 27.08% for the financial year 2017; and 26.01% for the financial year The below overview provides information on step-up rates for these years: Step up rates for 2016 Step up rates for 2017 Step up rates for 2018 Taxable income not exceeding EUR 15,000 -> Taxable income not exceeding EUR 25,000 -> 22.80% Taxable income not exceeding EUR 25,000 -> 22.80% Taxable income in excess of EUR 15,000 -> 29.22% Taxable income in excess* of EUR 30,000 -> 27.08% Taxable income in excess* of EUR 30,000 -> 26.01% *Specific rates apply for income between in excess of EUR 25,000 but not exceeding EUR 30, Net wealth tax rates and minimum net wealth tax General rules A Luxembourg company is subject to an annual net wealth tax (impôt sur la fortune or IF) levied at a rate of 0.5% on its worldwide net wealth (total fair market value of assets minus total fair market value of liabilities subject to certain exceptions for e.g. participations). As per 1 January 2016, a digressive scale of rates applies. For taxable net wealth up to EUR 500 million, net wealth tax will continue to be levied at a rate of 0.5%. A reduced rate of 0.05% will be applied to the portion of the net wealth exceeding EUR 500 million. The taxable net wealth is set on 1 January of each financial year Minimum net wealth tax A minimum net wealth tax has been introduced in 2016 to replace the minimum corporate income tax. This minimum net wealth tax is due in case the amount of net wealth tax due calculated by applying the rate to the taxable basis is less than the amount of minimum tax. The minimum net wealth tax amounts to EUR 4,815 for 2017 (EUR 3,210 in 2016) for holding and financing companies, provided there is no reduction applicable. A company is considered as a holding and financing company, if in a given year the taxable financial assets, e.g., participations, receivables and cash, exceed 90% of the total balance sheet and the value of those assets exceeds EUR 350,000. The relevant balance sheet to consider is the commercial balance sheet, except for cases where the commercial balance sheet differs from the fiscal balance sheet at the closing date. Furthermore, in case a company holds land and buildings through a transparent entity, these assets are considered as participations for the purposes of determining the minimum tax.

8 8 For a company that is not considered as a holding and financing company, the minimum net wealth tax is determined on the basis of its balance sheet total of the relevant financial year. A balance sheet total of less than EUR 350,000 results in a minimum tax due of EUR 535. The amount of minimum tax applicable for higher balance sheet totals is provided in the below table. Total balance sheet Minimum tax EUR 0 - EUR 350,000 EUR 535 EUR 350K - EUR 2 million EUR 1,605 EUR 2 million - EUR 10 million EUR 5,350 EUR 10 million - EUR 15 million EUR 10,700 EUR 15 million - EUR 20 million EUR 16,050 EUR 20 million - EUR 30 million EUR 21,400 Above EUR 30 million EUR 32, Automatic reduction of the minimum net wealth tax The minimum net wealth tax is automatically reduced by the corporate income tax due (including the surcharge for the unemployment fund and after deduction of tax credits) of the preceding year. If the reduction would result in amount of net wealth tax due which is less than the net wealth tax that would be due at regular net wealth tax rates, the actual net wealth tax due is set at these regular rates Optionnal reduction (i.e., reserve for net wealth tax) A company can opt to reduce its net wealth tax due (the actual net wealth tax or the reduced minimum net wealth tax) by setting up a non-distributable reserve for a period of five years and equal to five times the claimed reduction. The reduction is limited to the corporate income tax (including surcharge for the unemployment fund and before deduction of tax credits). If the net wealth tax reserve is released before the end of the five-year period, then net wealth tax will become due after all, subject to certain exceptions. 2.3 Functional currency: avoiding currency conversion results Luxembourg companies can denominate their share capital in a currency other than EUR and also draw up their annual accounts in that currency. According to the standard administrative procedure, the taxable result of a company needs to be calculated in EUR. Hence, the non-eur annual accounts have to be converted to EUR annual accounts for purposes of the tax returns, which may trigger taxable exchange results, due to exchange rate fluctuations over the year. By filing a request with the Luxembourg Revenue at least three months prior to the end of the financial year (or, for newly incorporated companies, prior to the end of the first financial year) for which application is requested, companies are allowed to apply the same currency for their tax filings as the currency in which their annual accounts are drawn up. This should, going forward, avoid currency exchange results as conversion is no longer required.

9 Accounting, Tax Compliance and Reporting Aspects No functional currency: temporary immunization of currency conversion results All companies which have their capital in foreign currency may opt for a temporary immunization of currency exchange results on certain assets. Such results would be triggered following the conversion of their value into EUR. Obviously this measure only applies to entities which do not benefit from the approval to use foreign currency for tax purposes (see section 2.3). This immunization is available on request. This request has to be filed at least three months before the end of the fiscal year for which the immunization is requested. 2.5 Fiscal unity A Luxembourg company can form a fiscal unity with other entities for corporate income tax and municipal business tax purposes. A request should be filed with the Luxembourg Revenue before the end of the first book year in which the fiscal unity should take effect. Consequently, the taxable result of the companies in the fiscal unity (subject to specific amendments, such as pre-fiscal unity loss compensation) will be transferred to and taxed at the level of the parent company of the fiscal unity. Each member of the fiscal unity can be held liable for the tax due and any interest or penalties related thereto incurred by any company included in the fiscal unity. The companies in the fiscal unity remain further liable to net wealth tax on a stand-alone basis, as no fiscal unity regime exists for net wealth tax purposes. Although each entity in a fiscal unity is liable to net wealth tax on a stand-alone basis, the net wealth tax reduction and credit are equally available. A reserve for credited net wealth tax can be formed by any of the companies in the fiscal unity. The applicable limits for reduction and credit are the corporate income tax due by the tax unity and the minimum net wealth tax due by each company in the fiscal unity (capped at an overall amount of EUR 32,100). 2.6 Losses carried forward Until 31 December 2016, tax losses incurred could be carried forward for an unlimited period of time. Following the 2017 fiscal reform, tax losses incurred as from 1 January 2017 can be, for corporate income tax and municipal business tax purposes, carried forward for a limited period of 17 years and can be used to offset up to 100% of yearly profits.

10 10 3. Tax compliance of Luxembourg companies 3.1 Tax return filings Luxembourg resident companies and non-resident companies with Luxembourg source income must file annual tax returns for corporate income tax, municipal business tax and / or net wealth tax. The requirements regarding the filing of tax returns and the payment of taxes are governed by the Luxembourg Income Tax Law the General Tax Law (Abgabenordnung, or AO). The tax returns for the year 2017 and going forward have to be filed electronically with the Luxembourg Revenue. 3.2 Penalties for late, non or incorrect filing of tax returns Filing deadlines and fines for late filing The statutory deadline for filing of the corporate income tax, municipal business tax and net wealth tax return is before 1 April of the following calendar year. For companies having a book year not coinciding with a calendar year, a deadline expiring three months after the end of the financial year may apply at the request of the Luxembourg Revenue. In order to prepare the tax filings, the signed and approved final annual accounts have to be available. Hence, this would mean in practice that the annual accounts for year T would need to be available before 1 April T+1. Most companies do not manage to finalize their year T annual accounts before 1 April T+1. This means that statutory deadlines for tax filings can often not be met, which may theoretically lead to fines. The Luxembourg Revenue has an eye for this situation and applies a practical approach to avoid immediate fines. This approach is inspired by the principle that fines for late filing can only be imposed on the basis of a written announcement addressed to the taxpayer which provides for the fine, subject to a reasonable deadline. Reminders for late filing are issued in Q4 of year T+1. These reminders do typically not stipulate a fine and thus, based on the above principle, do not give a basis to fine the taxpayer if the deadline is missed. If the deadline as stipulated in the reminder is missed, an injunction with a new, reasonable deadline (subject to a fine) is normally issued. The Luxembourg Revenue may fine up to an amount of EUR 25,000. Such injunction is typically issued in Q1 of year T+2; This Q1 injunction usually sets a final deadline (subject to a fine) in May of that year. In addition, the Luxembourg Revenue has the possibility to levy a fine of up to 10% of the tax due in case of late filing, unless the late filing can be justified. This type of fine is not subject to the principles of the above section. Note that it cannot be guaranteed that the Luxembourg Revenue will also follow the above approach for each and every tax year. They may apply stricter or more relaxed deadlines Fines for non or incorrect filing The filing of a deliberately incomplete or incorrect direct tax return and the failure to file direct tax returns is also subject to an administrative fine. The fine depends on the amount of the understated tax (or unduly reimbursed tax) and ranges between 5% and 25% of that amount, and such fine can be appealed.

11 Accounting, Tax Compliance and Reporting Aspects Advance payments for corporate income tax, municipal business tax and net wealth tax The Luxembourg Revenue may establish advance tax payments based on the most recent tax assessment (or the estimated taxable profit for the year concerned). A schedule of advance payments (tableau des avances) is issued in this respect. In practice it is usual for no advance payments to be established during a taxpayer s first years of existence. The amounts of the advances must be paid on the following dates: (i) for corporate income tax: 10 March, 10 June, 10 September and 10 December and (ii) for municipal business tax and net wealth tax: 10 February, 10 May, 10 August and 10 November. The amounts of the advance payments may be increased or reduced following a motivated request by the taxpayer, or automatically by the Luxembourg Revenue. If the amount is reduced, the excess payment may be used as a credit against advance payments not yet due. In the case of no or insufficient advance payments, or an increase in the amounts, the Luxembourg Revenue will send the company a statement of outstanding amounts (extrait de compte). Note that late payment interest at a rate of 0.6% per month starts accruing after for unpaid amount. See section 3.7. with regard to interest applicable in case of late or no advance payments. 3.4 Tax assessments: final assessment, selfassessment and ex-officio assessment The Luxembourg Revenue has to issue final tax assessments based on the returns filed by the taxpayer, within five years after the closing of the fiscal year. Alternatively, the Luxembourg Revenue may issue a tax assessment in accordance with the tax returns filed by the taxpayer (a self-assessment notice) without having reviewed the returns immediately.

12 12 The latter method is in practice most-often applied for assessing taxes. The self-assessment notice is not final and the Luxembourg Revenue has the right to review the return at any time before the end of the fifth calendar year after the end of the relevant fiscal year. If required, they may issue a final tax assessment after their review of the tax returns filed. If no additional or final tax assessment is issued by the end of the five-year period, the self-assessment notice automatically becomes final. Note that in practice, self-assessments may well defer from the tax return filed. A review of this type of assessments remains therefore absolutely necessary, to avoid that the right to appeal is lost. In case of failure to file a tax return, the Luxembourg Revenue may issue an ex-officio assessment. This means that the Luxembourg Revenue estimates tax due on the basis of annual accounts (if filed), or on a lump-sum basis. In such case, the burden of proof to demonstrate that the assessed profit is incorrect shifts to the taxpayer. 3.5 Objection against an assessment If the taxpayer disagrees with an assessment notice, a letter can be filed with the Office of Assessment (Bureau d imposition) that issued the notice explaining the reasons for disagreement, or alternatively an objection can be filed with the head of the Direction of the Luxembourg Revenue. A claim filed before the Office of Assessment does not open the door to a litigation procedure. The choice of filing a claim before the Office of Assessment is typically used if the assessment is based on a misunderstanding. This avoids that a simple fix has to be agreed upon in an official and time consuming objection process. In the absence of an answer from the Luxembourg tax office (i.e., a revised tax assessment) within three months following the issuance of the assessment, an official objection should be filed with the head of the Luxembourg Revenue if the taxpayer wishes to maintain its right to appeal against the assessment. A taxpayer can file an objection against a tax assessment within three months following the notification date of the assessment. The notification date is presumed to be three business days after the date stated on the assessment, and a three months timing should be computed as from that date. For example, an assessment received on Wednesday, 20 September 2017 is deemed notified on Monday, 25 September 2017, and the filing deadline is thus 25 December As 25 December 2017 is an official public holiday in Luxembourg, the deadline is pushed to 27 December Hence, if the last day to object is a non-business day, the deadline is postponed to the next business day. The filing of an objection does not suspend the effects of the decision, including the taxes due. Stalling payment and deferral of payment can however be requested, but are not easily granted. 3.6 Statute of limitation Under domestic rules, a tax debt (including fines, interest for late payment, etc.) may no longer be collected after the end of the fifth year following the end of the relevant tax period. However, a ten year limitation period applies in the case of additional taxation owing to failure to file a return, or for an incomplete or incorrect return (with or without fraudulent intent). The statute of limitation may be suspended or interrupted. The statute of limitation would be suspended in case litigation is introduced. The statute of limitation will be interrupted by the issuance of an order to collect taxes (contrainte) by the tax authorities. 3.7 Penalties for late payment of taxes In case of late payment of tax, default interest of 0.6% on the amount owed will be due for each month that the amount is not paid in full. The basis to calculate the interest is the amount of tax due on the deadline, i.e. including any fine for late filing. Interest for late payment is not capitalized a fine for late filing does not imply additional interest due. There is no maximum on the amount of interest for late payment. Interest starts accruing as from the issuance date of the assessment.

13 Accounting, Tax Compliance and Reporting Aspects 13 For the computation of interest, the month of issuance of the assessment is disregarded and the month of payment is considered as a full month. 3.8 Deferral or suspension of tax payment A taxpayer that cannot pay a tax debt may request the Luxembourg Revenue for a deferred payment or a suspension of payment. Such requests will be granted if there are serious reasons, and immediate payment of the taxes would cause the taxpayer serious and certain prejudice. Requesting a suspension of payment rather than a deferral may be advantageous for the taxpayer, as default interest does not accrue in the case of a suspension of payment, whereas it does in the case of a deferred payment. If the Luxembourg Revenue has expressly granted a deferred payment, then no interest will be charged if the deferral does not exceed four months, and interest of 0.1% per month will be charged if the deferral is between five and twelve months, and 0.2% per month if the deferral is more than twelve months, but not more than three years. 3.9 Collection of taxes The Tax Collection Office (Bureau des Recettes) benefits from specific privileges to enable it to recover unpaid taxes. In case of unpaid taxes, it issues an order to collect taxes (contrainte), which is executed by the direct or indirect tax authorities in the form of a summons to pay (commandement). The Tax Collection Office may also recover taxes through a third party, e.g., a bank, by issuing a summons to such third party. The Luxembourg Revenue benefits from a deemed mortgage on a taxpayer s Luxembourg real estate assets for a period of three years following the end of the fiscal year. In order to keep the mortgage ranking, the taxpayer may have the mortgage registered prior to the end of the above-mentioned threeyear period. A taxpayer (represented by a lawyer) may file an objection claim against the order issued by the Tax Collection Office with a Luxembourg civil court. There is no deadline for such claim to be filed, but it may only be made on formal grounds.

14 14 4. Reporting obligations On 1 December 2014, reporting requirements, introduced by the Luxembourg Central Bank (Banque Centrale du Luxembourg or BCL) by way of the Regulation No 2011/8 (amended by Regulation No 2014/17), for companies qualifying as financial companies came into effect. Financial companies are companies located in Luxembourg whose object includes at least one of the following elements: To invest in any company for any kind of investment; To acquire bonds, receivables, certificates of deposits and other debt instruments and in general all financial instruments issued by a public or private entity; To invest directly or indirectly in the acquisition and management of a real estate portfolio, of patents or other intellectual property rights, whatever the nature or the origin; To borrow in any form; or To lend funds to shareholders, subsidiaries, affiliated companies, and/or any other entity. If its quarterly balance sheet total exceeds EUR 500 million, the financial company must provide the BCL with its most recent annual accounts, if available, within one month after this threshold is exceeded. In addition, such a financial company must electronically send the BCL a quarterly statistical balance sheet report, a quarterly report on transactions and a monthly security by security report (for statistical purposes). Financial companies with a balance sheet of less than EUR 500 million are exempt from the statistical reporting obligations. The BCL may however impose specific reporting obligations on financial companies with a balance sheet of less than EUR 500 million. In addition, the BCL may exempt, via a reasoned decision, financial companies from some statistical reporting obligations, if the exemption is in the interest of sound administration and in accordance with the principle of equal treatment. In particular, financial companies currently subject to the data collection covering the inherent needs of external statistics such as credit institutions, collective investment undertakings, venture capital firms (SICARs), securitization vehicles and insurance and reinsurance companies are also exempt from any reporting obligations to the BCL. Reports must be filed with the BCL no later than 20 working days following the end of the period concerned. The BCL has made it very clear that the quality of the information provided is crucial and that it will report any failure to meet the reporting obligations and consequently establish a blacklist of companies which do not comply with the BCL regulation regime. The relevant BCL regulations and circulars do not provide for any fines for those financial companies or credit institutions which do not report on time.

15 Contact information Loyens & Loeff Luxembourg S.à r.l. Avocats à la Cour 18-20, rue Edward Steichen L-2540 Luxembourg T F Frank Van Kuijk Partner T E frank.van.kuijk@loyensloeff.com Pieter Stalman Partner T E pieter.stalman@loyensloeff.com Menno Maat Team Leader Tax Compliance T E menno.maat@loyensloeff.com Dominique Afink Senior Tax Compliance Adviser T E dominique.afink@loyensloeff.com Agnès Hédin Tax Compliance Adviser T E agnes.hedin@loyensloeff.com Sabrina Million Tax Compliance Adviser T E sabrina.million@loyensloeff.com Disclaimer Although this publication has been compiled with great care, Loyens & Loeff Luxembourg S.à r.l. 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.

16 LOYENSLOEFF.COM As a leading firm, Loyens & Loeff is the logical choice as a legal and tax partner if you do business in or from the Netherlands, Belgium, Luxembourg or Switzerland, our home markets. You can count on personal advice from any of our 900 advisers based in one of our offices in the Benelux and Switzerland or in key financial centres around the world. Thanks to our full-service practice, specific sector experience and thorough understanding of the market, our advisers comprehend exactly what you need. Amsterdam, Arnhem, Brussels, Hong Kong, London, Luxembourg, New York, Paris, Rotterdam, Singapore, Tokyo, Zurich