Luxembourg's financial regulator, the 'Commission de Surveillance du Secteur Financier' (CSSF), has published a statement regarding Islamic debt securities and stressing Luxembourg's desire to further clarify certain rules which are applicable to Sukuk. The CSSF states that "Issuers of Sukuk have recognized the attractiveness of the Luxembourg legal framework for Islamic finance", and further confirms that Sukuk can qualify as asset backed securities (based on the provisions of article 2.5 of the Commission Regulation (EC) No 809/2004), or, under certain conditions, as debt securities guaranteed (based on the provisions of article 23.2 and Annex VI of the Commission Regulation (EC) No 809/2004).
This development strengthens legal certainty for Sukuk issuance, and further boosts Luxembourg's status as a global hub for Islamic finance and its commitment for continuous growth of Islamic finance in Luxembourg. The CSSF's statement follows two circulars issued by the tax authorities in 2010 which provided guidelines (i) on certain aspects of direct taxes applicable to Murabaha and Sukuk (Administration des Contributions Directes, 12 January 2010), and (ii) on certain aspects of the indirect tax treatment of Murabaha and Ijara transactions (Administration de l'Enregistrement et des Domaines, 17 June 2010).
For further information on this topic please refer to: http://www.lff.lu/finance/news/news-detail/article/cssf-clarifies-rules-applicable-to-sukuk-1/21/