Actively managed ETFs domiciled in Luxembourg will join passive ETFs in being exempt from subscription tax after 2025.
The change was approved by the Council of Government on 17 July and was one of 16 measures laid out by Luxembourg’s Minister of Finance Gilles Roth.
The move comes after Roth said the government will look to reduce the subscription tax for active ETFs in March.
Commenting on the approval, Olivier Gaston-Braud, partner at Dechert Luxembourg, said: “This is definitely excellent news, it shows the direction of travel for Luxembourg as a jurisdiction and its position to be more business friendly.
“It means there will be less cost for European ETFs globally and shows that Luxembourg can develop and react to the market.”
Ireland takes the top position for the most domiciled exchange traded products (ETPs), housing 2,722 ETPs with $1.1trn assets under management, compared to 1,364 ETPs across $305bn in Luxembourg, as at the end of October 2023, according to data from ETFbook.
The move is well-timed to help assert Luxembourg as the dominant jurisdiction to house active ETFs, with the active ETF market continuing to accelerate throughout 2024.
An increasing number of prominent asset managers are eyeing active management as a way of entering the European ETF market, with Jupiter Asset Management the latest example.
