Luxembourg Offers East Europeans And Russians Additional Structuring Options

Prospects are clouded for Cyprus as a domicile for investment and transaction structures set up by entrepreneurs and investors from Russia and other eastern European countries such as Ukraine following a levy on bank deposits and capital controls imposed by the government as part of a package of measures to stabilise the country's banking sector.

However, east European investors unsure about the long-term future of Cyprus as a financial centre have a choice of other jurisdictions within the European Union through which to channel investments either into EU countries or back into Russia.

One of them is Luxembourg, which has extensive financial services experience, expertise and infrastructure, in addition to political, economic and financial stability, a broad range of structuring vehicles and an extensive network of double taxation treaties.

In the face of questions about other EU member states where financial services represents a large proportion of economic activity and is dominated by international rather than domestic business, Luxembourg has emphasised the multi-dimensional nature of the financial services it offers.

Far from being dominated by private deposits, the balance sheets of its banks reflect the largely institutional nature of Luxembourg's financial industry, including the provision of services such as custody to an investment fund sector with €2.4 trillion in assets under management.

The country has one of the lowest ratios of sovereign debt to GDP in Europe at just over 20%, and its AAA sovereign debt rating was recently reaffirmed by Standard & Poor's. Its GDP per capita was the highest in Europe in 2012 and second highest in the world. It also enjoys the benefits of a diversified economy including manufacturing industry, steel production and telecommunications and broadcasting services.

The issue of legal and financial stability has become a more important criterion for investors from eastern Europe as they ponder how to manage existing...

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