January 2022 - At the heart of regulatory and tax environments
Professionals of the Financial Sector (PSF) in Luxembourg
Given the considerable size of today’s Professionals of the Financial Sector (PSF) market, we thought it appropriate to share with you our understanding of the current, highly-specific PSF environment.
The CSSF circular 20/758 was introduced and replaces the CSSF circular 12/552 from January 1, 2021 for investment firms. The CSSF circular 20/758 precises the measures to be taken by the investment firms regarding central administration, internal governance and risk management and integrates orientations and recommendations of EBA and ESMA.
On 26 June 2021 a new prudential regime entered into force for investment firms, composed by the Regulation (EU) 2019/2033 (hereinafter IFR) and the Directive (EU) 2019/2034 (hereinafter IFD).
The investment firms were categorised into 3 classes, impacting the reporting requirements.
The Law of 5 April 1993 on financial sector have also been updated by the Law of 21 July 2021: the changes impacted the 3 PSF categories. Articles included in the section of investment firms were revised. For specialized PSF, article 28-2 (Currency exchange dealers) has been repealed and for support PSF, article 29-3 and article 29-4 (Primary IT system operators and secondary IT system and communication network operators of the financial sector) have been combined into a new article 29-3 (IT systems and communication networks operators of the financial sector).
This 2022 edition of our guide aims to provide you with a detailed view of this ecosystem, without being strictly exhaustive as per the latest changes. This is an overview.
In the first chapter, we address the essential aspects of the legal and regulatory framework.
We primarily cover the authorization and licensing procedure, but also the supervision resources of the Commission de Surveillance du Secteur Financier, the supervisory authority, and the role played by réviseurs d’entreprises agréés who contribute to that supervision.
Chapter two describes the tax environment of PSF from a direct corporate tax and VAT perspective. This chapter further highlights some hot tax topics applicable to PSF and gives an overview of incentives relevant to the PSF industry.
Lastly, we present a profile analysis of PSF, together with individual fast-reference sheets for each PSF setting out the most significant characteristics.