Investment funds: Reduction of the subscription tax rate for funds investing in sustainable investments

Context and objectives

On 17 February 2021, the Administration de l’enregistrement, des domaines et de la TVA (the Administration) published Circular No. 804bis clarifying the new subscription tax rates for undertakings for collective investment (UCIs) or individual compartments of a UCI with multiple compartments.

This Circular follows the publication of the Law of 19 December 2020 on the State revenue and expenditure budget for the 2021 financial year (Budget Law 2021). Regarding UCIs, Article 9 of the Budget Law 2021 added four new subscription tax rates for UCIs, or individual compartments of a UCI with multiple compartments, by inserting a new paragraph 3 to Article 174 of the Law of 17 December relating to UCIs, as amended.

Reduction of the subscription tax rate

The new rates are based on the proportion of the net assets of a UCI or an individual compartment of a UCI with multiple compartments invested in sustainable economic activities, as defined in Article 3 of Regulation (EU) 2020/852 (Taxonomy Regulation), as of the last day of the UCI’s financial year.

To benefit from the new subscription tax rates, UCIs, or an individual compartment of a UCI, must transmit a statement certified by a réviseur d’entreprises agréé (approved statutory auditor) to the Administration for the first subscription tax declaration that follows the finalization of the annual report, or, where applicable, the assurance report.

The new rates are as follows:

Examples provided by the Administration

Besides summarizing the Budget Law 2021 provisions regarding the new subscription tax rates for investments, the Administration also provided examples of how the new rate applies. The following case applies to a UCI with a financial year ending on 31 December of year N, with an annual report finalized on 31 March of year N+1:

• The UCI electronically attaches the certified statement of a réviseur d’entreprises agréé.
• This tax declaration shall concern the first quarter of year N+1 (1 January to 31 March).
• The declaration and the certified statement must be submitted via the MyGuichet platform before the 20th day following the end of the quarter (before 20 April of year N+1).

• The certified statement is valid for four quarters following the transmission of the statement to the Administration (the second, third and fourth quarter of year N+1, and the first quarter of year N+2).
• Where the statement certifies that the proportion of net assets of a UCI invested in sustainable economic activities represents 11% of the UCI’s aggregate net assets, this proportion shall serve as a basis to fix the tax rate at 0.04% for the four quarters mentioned previously.
• This percentage of net assets invested in sustainable economic activities shall be valued on the last day of each quarter.

Reminder of the declaration period

Regarding the deadline of the subscription tax declaration on the 20th day of the month following the end of each quarter, the Administration states that it will apply an administrative tolerance regarding statements certified by a réviseur d’entreprises agréé that are sent to the Administration after this date.

The Administration will allow statements certified by a réviseur d’entreprises agréé to be filed separately from the quarterly declaration via the MyGuichet platform until the last day of the quarter concerned, i.e., 31 March, 30 June, 30 September, and 31 December.

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