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Greater legal security for sukuk issuers - International Law Office

International Law Office

Capital Markets - Luxembourg

Greater legal security for sukuk issuers

February 22 2011

Luxembourg's financial regulator, the Commission de Surveillance du Secteur Financier (CSSF), has published a statement on Islamic debt securities that stresses Luxembourg's desire to provide further clarity on certain rules applicable to sukuk (ie, Islamic bonds). The CSSF states that "issuers of sukuk have recognised 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 EU Prospectus Regulation (809/2004/EC) or, under certain conditions, as guaranteed debt securities (based on the provisions of Article 23(2) and Annex VI of the regulation).

This development strengthens legal certainty for sukuk issuance. It further boosts Luxembourg's status as a global hub for Islamic finance and its commitment to continuous growth of Islamic finance in Luxembourg. The CSSF's statement follows two circulars issued by the tax authorities in 2010, which provided guidelines on:

  • certain aspects of direct taxes applicable to murabaha and sukuk; and(1)
  • certain aspects of the indirect tax treatment of murabaha and ijara.(2)

For further information on this topic please contact Josée Weydert or Jad Nader at NautaDutilh by telephone (+352 26 12 29 1), fax (+352 26 68 43 31) or email (josee.weydert@nautadutilh.com or jad.nader@nautadutilh.com).


(1) "Administration des Contributions Directes", January 12 2010.

(2) "Administration de l'Enregistrement et des Domaines", June 17 2010.

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