Professionals of the Financial Sector (PSF) - regulatory and tax environments

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Professionals of the Financial Sector (PSF) in Luxembourg

2016 - At the heart of regulatory and tax environments

As at 31 December 2015, 309 PSF (Professionals of the Financial Sector) were subject to the prudential supervision of the CSSF compared to 315 as at 31 December 2014. They employed 15,283 people in total compared to 14,864 as at 31 December 2014, with their total balance sheet having amounted to € 14,442 million as at 31 December 2015, compared to € 15,570 million a year before. Their net results year-on-year increased from € 560 million at 31 December 2014 to € 516 million at 31 December 2015.

Whilst employment in PSF shows growth, the number of PSF under CSSF supervision and especially total balance sheet and net results are decreasing, which is the sign of a consolidation of the sector. The evolutions are quite similar for the three different categories of PSF with a high increase in the net result for investment firms compared to the previous year. There are however disparities within the three categories of PSF.

PSF sector is maturing, consolidates in terms of number of PSF but has indicators showing progress, within a
continuously evolving regulatory and tax environment. We therefore thought it appropriate to help decision-makers (whether already established and seeking to expand operations or keen to establish a PSF in the Grand Duchy) better understand the statuses that the name PSF encompasses, and the relevant regulatory requirements necessary to obtain such status.

This document aims to provide readers and decisions-makers with a practical tool summarising the advantages and conditions of obtaining PSF status licences. Through a dynamic presentation of the main categories of PSF, we will present the various PSF statuses that make up the financial sector landscape in Luxembourg, focusing additionally on the tax matters inherent to these structures. Lastly, fast-reference sheets are provided for each sub-group summing up the required conditions to retain PSF status depending on the licences.

To begin with, to enlighten readers about the world of PSF, we will give brief but precise insight into the legal, regulatory and tax environments, including the framework of prudential supervision, applicable to PSF in Luxembourg.

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