July 2010
Luxembourg: A European Hub for Islamic Finance
Further to the Circular letter dated January 12, 2010 of the Luxembourg direct tax authorities clarifying the scope of certain Islamic financing arrangements and their treatment under Luxembourg direct tax laws, the Luxembourg indirect tax authorities, Administration de l’Enregistrement et des Domaines, issued a Circular on June 17, 2010 (the “New Circular”) which aims at providing greater certainty on the indirect tax treatment of Murabaha and Ijara.
This legal memo defines Murabaha and Ijara arrangements and provides details of the various transfer taxes and VAT as laid out in the New Circular.
By Frédéric Feyten & Chokri Bouzidi
