Subcription tax for ETFs and Microfinance funds to be abolished

On 5 May 2010, the Luxembourg Prime Minister Jean-Claude Juncker proposed various measures to Parliament as part of his annual state of the Union. In his speech, Mr. Juncker outlined the  possible tax measures for individuals and companies, which, if enacted, would be applicable as from tax year 2011. One of these measures concerns exchange traded funds and microfinance funds and more specifically the abolishment of the annual subscription tax (“taxe d’abonnement”) of 0.01% on the NAV that these funds must currently pay. These proposed exemptions are aimed to increase the competitiveness of Luxembourg compared to other financial centres and as such to promote  Luxembourg as a domicile for the establishment of ETFs and Microfinance funds. These changes are expected to be implemented by the end of this year through an amendment of the law of 20 December 2002 on undertakings of collective investment (the "Law of 2002") when the Law of 2002 will be amended to implement the measures provided for in the UCITS IV directive.