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Senior Secured Bond in Luxembourg

2/24/2022 8:00:00 AM
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Mundo offers the best topics so that the world’s top wealth managers and financiers can choose family office investment products. Some of these will be presented at our upcoming Wealth Conference on 3 March.

This is an opportunity to invest in a product that has already been oversubscribed on its latest three offerings. This rare fully real estate secured bond not only pays an amazing 10% in euros, but is also backed by some of the world’s most liquid and attractive real estate in Luxembourg. 

This is at the heart of Europe and it is no wonder that this highly sought-after investment is taken up as soon as it appears on the market. 

Luxembourg has a small population but has big opportunities for investors. There are many financial advantages that this country offers, in terms of taxation and many other respects. 

This tiny nation has established itself as a robust financial center in Europe, as its government is even more willing than its neighbours to diversify its financial and tax sectors. Furthermore, Luxembourg is easily accessible by land and air for those who physically travel to the country for business. 

This country is best known for its tax advantages and banking secrecy, but in recent times Luxembourg has been rising in the world of bonds, the real estate market, and other financial instruments that allow the investor to deposit their capital in a reliable, profitable way without difficulty.

In this article we present you with a unique opportunity in the best possible country. We’ve partnered with a developer that has delivered many projects in Luxembourg since 2008 and is now going to build a residential development in Sandweiler comprising 25 units, including one ground-floor commercial unit. Two small buildings and a parking lot have been acquired for this purpose.

To finance the project, our partner is offering a bond that matures in 24 months offering a 10% yearly revenue. In a nutshell, here there are the main terms:

- EUR 11,00,000 bond at 10.00% per annum for 24 months;

- These funds will be used for the acquisition of the buildings;

- 1st rank mortgage guarantee (no bank debt);

- Full data room available upon request.

- Issue date: 1 March 2022.

The funds will be 100% refunded once the bond is matured. Continue reading for more about wealth management in Luxembourg and this extraordinary bond.

A Senior Secured Bond in Luxembourg

One of our partners offers a bond in one of the most booming markets in recent years in this country: real estate. 

The real estate market has been gaining traction in the global financial world for several decades, and the bonds that are available in this sector cannot be ignored. 

The Senior Secured Bond will be available from March 1st 2022, with a duration of 24 months and a volume of EUR 11 million paid semi-annually with a return of 10% per annum. Other details of this investment include: 

- Low impact of the covid-19 pandemic in Luxembourg

- Possibility of partial payment after 15 months

- High demand in the current real estate market 

- The company in charge of the project has been operating in the country since 2008

- Sustainable growth of real estate in this country over the last years

- Interest on the investment will be paid semi-annually

- Many projects delivered on time by this company

- Early redemption: possible 12 months

The development plan for this project consists of the construction of 25 units, including a ground floor commercial unit, 6 km from Luxembourg City. The exact location would be 19-21, rue Principale, L-5240, Sandweiler. Our partner is looking to raise EUR 11 million for this project, and already raised EUR 5 million within days of opening this to investors - so if you would like to be a part of this, don’t delay!

The reliability of the world's partners translates to all the time operating within this country whose policies with the financial sector are rigorous in order to ensure that companies competing in this market offer the best possible service. 

In addition, the area in which the project will take place has numerous geographical advantages that make it more accessible, safe, and cost-effective for those wishing to get involved, as it is only a 15-minute drive from Luxembourg City. The population growth in this area has meant that demand has increased over the last decade.

Why Luxembourg?

Luxembourg has established itself over the last three decades as one of the most reputable countries for the establishment of investment platforms as well as wealth managers. Here are some quick facts about Luxembourg:

- It is located in the center of Europe and has a stable, thriving economy

- Property tax in Luxembourg is almost non-existent at a maximum of 1%

- Luxembourg’s population is growing at 2.2% per annum, and has an insufficient number of new construction projects, making Luxembourg real estate a safe and lucrative investment

- Luxembourg’s real estate market is proven to be resilient in a crisis: property prices dropped by only 1% in the year after the 2008 global financial crisis, and have more than doubled in the time since then

The country's economic and political stability has allowed this financial ecosystem to grow steadily, as well as enabling the country's administration to promote the policies necessary to attract massive foreign capital. 

This has been key for foreign investors continuing to see Luxembourg as the safest long-term option in the market, alongside renowned countries such as Switzerland. Not to mention that most of the capital moving within this country is foreign, so the diversity of languages means that it is not difficult to communicate within this territory, with English being a fairly common language. 

Wealth management and pension funds in Luxembourg 

Wealth management is a concern for many families, especially those who live in a country where the tax regime is excessively high. These families turn to other destinations where the management of their capital is profitable and secure for the future. 

In Luxembourg, due to its economic and fiscal flexibility, several companies specializing in wealth management have been establishing themselves and consolidating their portfolios to offer their clients the best experience in capital management, especially because of the investment portfolio that they can open in this country, enjoying tax benefits that are impossible in their countries of origin. 

On the pension fund and insurance side, the sector is well developed with more than 100 European multinational companies established in the country, offering their services while complying with EU mandates and still benefiting from Luxembourg legislation. 

Life insurance companies are governed by stringent legislation that guarantees the client the best possible service within this tax haven, covering all types of activities in their packages on offer. 

Tax incentives in Luxembourg

The strength of this country from the beginning was the great ability of the state to allow massive tax breaks, especially if you are an expat. Each jurisdiction in the European Union is allowed to decide how taxes will be handled, which benefits foreign investors and expats in Luxembourg. However, the United States still interferes with the taxation of its nationals that want to file in Luxembourg. 

In the Luxembourg jurisdiction, you can pay as little as 0% tax, although foreigners that are not legal citizens of the country pay up to 2%, which is still very low. However, the most important aspect of taxation is corporate tax. 

For a company whose income is less than EUR 175,000, the corporate tax would be 15%. Above this income level, taxes can be as high as 17%. Luxembourg taxes its residents on businesses they have around the world, while foreigners are taxed only on businesses whose head offices are within the national territory. 

Those businesses exceeding EUR 175,000 in revenue are charged a 7% solidarity surtax and an additional amount depending on the municipality in which it is located. In the case of the capital of Luxembourg it would be 6.75%. This is in addition to the 17% income tax.

These corporate taxes are considerably lower than other jurisdictions in Europe, in addition to all the benefits offered by banks within Luxembourg. It is notable that investment funds are 100% tax-exempt, i.e. they pay absolutely nothing. 

These numbers make Luxembourg a special destination for investors that want to obtain significant tax benefits in a country that has been established and consolidated in the financial system for more than 50 years. Also, this country is located in the center of Europe and is an easily accessible country, where the inhabitants of neighboring countries look favorably on the tax haven that this country represents. 

Disclaimer: The information contained in this article is for informational purposes only and does not constitute financial advice or recommendations. Investing in financial products or cryptocurrencies involves risks, and you should be aware of the potential risks involved before investing. The content on this website is not intended to be a solicitation or offer to buy or sell any financial products or services. The information provided does not take into account your specific investment objectives, financial situation, or needs, and should not be relied upon as a substitute for professional financial advice. You should seek independent advice from a financial advisor or other professionals before making any investment decisions. Please be aware that the legal status of cryptocurrencies and other financial products may vary in different jurisdictions and may be subject to regulation. It is your responsibility to ensure compliance with any relevant laws and regulations governing the sale and marketing of financial products and services in your jurisdiction.

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