Agefi Luxembourg - juin 2026

AGEFI Luxembourg 22 Juin 2026 Fonds &Marchés By JeanKIZITO, Partner, KPMGLuxembourg T he EU’s FASTERDirective (Coun­ cil Directive (EU) 2025/50) seeks to fix one of themost persistent fric­ tions for crossborder investors: excess withholding tax (WHT) ondivi­ dends. From1 January 2030, the Directive aims tomake tax re­ lief and refunds faster, stan­ dardize documentation and deter fraud. For Luxembourg, the leading European fund domicile, the stakes are high. This article aims at assessing FASTERagainst four practical cri­ teria: speed of relief, administrative burden reduction, legal certainty (treaty access) and fraud resilience . With the Directive now adopted and implementa­ tion efforts beginning across Member States, the timing is particularly suitable for an effectiveness study of its anticipated impact. The present article, provide such an assessment by examiningwhether FASTER is likely to achieve its stated objectives in practice,withaparticular focus on theLuxembourg investment fund ecosystem. The EU’s FASTER Directive, coming into effect from 2030, will be a landmark piece of regulation for the funds industry. Its most significant features will include: eTRC is an electronic tax residence certificate, machinereadable, issued within 14 days and us­ able across Member States. It replaces the current patchwork of 450+ national paper forms. CFIs (Certified Financial Intermediaries) are reg­ istered, liabilitybearing intermediaries that aggre­ gate investor data and act as gateways for fasttrack relief. Relief at source and QRS are a relief at source for listed securities and a Quick Refund System (QRS) requiring processing within 60 days for el­ igible claims. Transactional reporting whereby CFIs must re­ port dividendpayments at exdate tied to a verified investor or beneficial owner, enabling real­ time detection of abusive schemes. Clear gains but important limits FASTER modernizes the “how” of with­ holding relief and reclaim; it deliberatelydoes not change the “who” i.e. substantive treaty entitlement. That is the Directive’s con­ stitutional limit: it standardizes pro­ cedures but leaves Member States free to decide substantive eligibility (beneficial ownership, subjectto­ tax), reflecting political and legal constraints underArticle 115 TFEU. The consequence: improvements are real but uneven. Speed of relief For inscope listed securities in jurisdictions that ac­ cept FASTER’s fast lane, relief at source and theQRS can eliminate years of reclaim delay and the NAV drag that funds experience today. The 14day eTRC and the 60day QRS together promise a trans­ formed timetable. Yet delivery is conditional:Mem­ ber States may add requirements in transposition; the QRS lacks a clear enforcement mechanism in practice; and administrative capacity in source states will determine whether deadlines are met. Administrative burden This is FASTER’s clearest operational win. The eTRC replaces diverse national certificate formats; CFIs centralize responsibilities in the custody chain, reducing the fragmentation that forces custodians and fund administrators tomanage dozens of sep­ arate workflows. For UCITS and funds investing mainly in listedequities, the reduction indocumen­ tation and process complexity should be material. Legal certainty and treaty access Here FASTER achieves least. The eTRC proves tax residence quickly, but it does not resolve thedeeper, treatybased disagreements over who is entitled to reduced rates. Luxembourg funds, especially in­ cometax exempt vehicles, still face divergent inter­ pretations abroadof “subjecttotax” andbeneficial ownership. Luxembourg Investment Funds’corpo­ rate incometaxexempt status leaves some source states reluctant to accept treaty benefits. FASTER improves the path to relief; it does not change the gatekeeper’s decision. Fraud prevention FASTERdirectly targets custodychainopacity that enabled Cum/Ex and similar schemes. Transac­ tional reporting – including the requirement to re­ port all financial arrangements such as the use of derivatives and securities lending – tied to regis­ tered beneficial ownersmakesmultiple competing refund claims visible. That design is coherent and potentially gamechanging – but only if tax admin­ istrations canprocess and act on the large, highfre­ quency data flows. TheDirective does not build receivingend analytic capacity; effectiveness thus depends on Member States’investment in processing and enforcement. Luxembourg reality On one hand, UCITS (SICAVs) – highly regulated, widely recognized – are the primary beneficiaries: they are the fund type most likely to enjoy real speed and cost gains under FASTER for listed se­ curities. On the other hand, RAIFs (SCSps) and other alternative structures that invest inprivate as­ sets remain largely outside FASTER’s practical remit: their core flows (private deals, unlisted divi­ dends) are not covered, and sourcestate treatydis­ putes will continue to block relief irrespective of procedural improvements. Germany’sMiKaDiv: an early, mixed signal Germany’s MiKaDiv electronic reporting regime anticipatedmuchof FASTER’s datamodel. It shows two lessons: (1) a major Member State can deviate substantially from the common EU reporting framework during transposition; and (2) in terms of relief or reclaim,MiKaDiv’s preimplementation creates potential path dependencies and reveals how national choices can complicate EUwide op­ erational harmonization. Costs, capacity and the reporting reflex Transactionlevel reporting is justified here, since Cum/Ex exploited transaction opacity. But it im­ poses significant costs onCFIs.Whether the benefit (abuse prevented) outweighs the compliance and operational cost for intermediaries is hard tomeas­ ure exante. Equally, if sourcestate tax authorities lack analytic capacity, CFIswill shoulder costswith­ out a proportionate public benefit. Political outlook: FASTER 1.0 and the prospect of FASTER 2.0 FASTER 1.0 builds the procedural foundation and will generateanunprecedentedEUdataset onwith­ holding relief outcomes. That dataset could under­ pinafuture,moreambitiousinstrument(a“FASTER 2.0”) that proposes common minimum criteria for fund treaty eligibility (beneficial ownership tests, subjecttotax thresholds, CIV recognition). However, the political window is fragile: once the procedural framework is embedded, appetite for substantive reformrequiringunanimitymayshrink. Bottom line FASTER is a major technical and procedural ad­ vance: eTRCs, CFIs, transactional reporting and a QRS modernize the WHT landscape and should deliver meaningful benefits for UCITS and funds investing in listed securities. For Luxembourg’s leading fund industry, this is an important compet­ itive improvement. But FASTER does not and cannot solve the deeper substantive fragmentation of treaty access: Luxembourg investment funds and taxexempt structures remain exposed todivergent sourcestate interpretations. In short: FASTER improves the road, but it does not change who owns the keys. This article summarizes a Luxembourgcentered master’s thesis by Aline Alvarez Feijoo entitled “Withholding Tax Efficiency and the FASTER Directive: A Policy Assessment Through the Lens of Luxembourg Investment Fund Structures”, Luxembourg School of Business, May 2026. Aline’s thesis and traineeship at KPMG Luxembourg was supervised by Jean Kizito, Partner, Financial Services Tax, KPMG Luxembourg. FASTER Directive: a real but partial win for Luxembourg funds I n recent months, the macroeconomic indicators in the United States (the largest economy in the world, repre­ senting 26% of the global GDP) have shown mixed developments, driven by the persistence of elevated uncertainty and by opposite forces: the conse­ quences of the conflict in the Middle East (including inten­ sifying inflationary pressures, with a negative impact on the real disposable income of the households) and the imple­ mentation of artificial intelli­ gence (with positive effects on multifactor productivity). Indeed, the level of uncertainty in U.S. economic policy increased inMay 2026 compared with the previous month, accor­ ding to data from the Federal Reserve Bank of St. Louis. Consumer confidence continued to deteriorate in the fifth month of the year. The indicator esti­ mated by the University of Michigan declined for the third consecutivemonth, falling by five points monthonmonth to a historic low of 44.8 points, as represented in the following chart. This developmentwasmainlydrivenby the deteri­ oration in the real disposable income of the house­ holds, amid rising inflationary pressures following the outbreak of the conflict in the Middle East and thematurity phase of the labour market cycle. Thus, the annual rate of consumer prices (the PCE index monitored by the Fed­ eral Reserve) accelerated from 3.5% in March to 3.8% inApril 2026, the highest level since May 2023, according to data available from the Federal Reserve Bank of St. Louis. This evolution was primarily driven by higher international oil prices. For example, the averagemonthly re­ tail gasoline price in the United States reachedUSD4.479 per gallon inMay, more than 54%higher than in February, before the outbreak of the conflict in the Middle East, ac­ cording to data from the U.S. En­ ergy InformationAdministration. Against this backdrop, the real dis­ posable income of the households de­ clined for the second consecutive month in April in annual terms, posting the sharpest contraction since October 2022 (1.1%), according to estimates from the Federal Reserve Bank of St. Louis. Leading economic indicators also continued to de­ cline in April 2026, falling on an annual basis for the 46 th consecutive month, although at a slower pace of 1.72%, according to data available from MacroMicro. These leading indicators, estimated monthly by the Conference Board, comprise ten components re­ flecting shorttermprospects for theU.S. economy: average weekly hours worked in manufacturing, initial jobless claims, new manufacturing orders (consumer goods and materials), the new orders component of the Institute for Supply Manage­ ment index, new orders for capital goods (exclud­ ingdefence and aircraft), buildingpermits, the S&P 500 index, the leading credit index, the interestrate spread (longterm minus shortterm rates), and consumer expectations for business conditions. Furthermore, the smallbusiness confidence index (NFIB) remained below its historical average for the second consecutive month inApril, according to Trading Economics data. This development was driven by rising inflationary pressures and persis­ tently high uncertainty. Regarding coincident economic indicators, the annual growth rate of industrial production ac­ celerated from 0.8% in March to 1.1% in April 2026, the strongest performance since December 2025, according to Federal Reserve data. This im­ provement was driven by faster growth in durable goods production, whose annual in­ crease accelerated from 1.9% in March to 2.8% in April, the strongest performance since January. Econometric estimates based on Federal Reserve data indicate that industrial production expanded slightly above its potential growth rate in April on an annual basis. On the other hand, the annual growth rate of real personal consumption spending continued to de­ celerate in April, reaching 2.1%, the weakest per­ formance since December 2025, according to data from the Federal Reserve Bank of St. Louis. This evolution was driven by the deterioration in real disposable income and the low household saving rate. The latter fell to 2.6% inApril, the lowest level since mid2022. Meanwhile, activity in the construction sector, which is intensive in both capital and labour, con­ tinued to decline inApril, with the annual contrac­ tion deepening to 2.8%, according to estimates based on Census construction spending data and Federal Reserve inflation data. This trend contin­ ued to reflectweaker investment in both residential and nonresidential structures. According to estimates from the U.S. Department of Commerce, real private investment in nonres­ idential structures declined for the seventh con­ secutive quarter in the first quarter of 2026, with the annual contraction intensifying to 6.1%. At the same time, real private investment in residen­ tial structures decreased for the fifth consecutive quarter in the first quarter of 2026, with the an­ nual decline intensifying to 5.1%. Overall, developments in macroeconomic indi­ cators during the early part of the second quarter of 2026 point to a deceleration in annual eco­ nomic growth in the world’s largest economy after the acceleration recorded in the first quarter. According to estimates from the U.S. Department of Commerce, annual GDP growth accelerated from 2.0% in the fourth quarter of 2025 to 2.6% in the first quarter of 2026, the strongest perfor­ mance since the third quarter of 2024. An improvement in net external demandwas ob­ served, influenced by the new trade policy and the consequences of developments in theMiddle East. Export volumes increased at an accelerated annual rate of 4.2%, while import volumes continued to decline, with the annual contraction intensifying to 5.1% in the first quarter. According to the OECD’s Summer Economic Outlook, published in early June 2026, U.S. economic activity is expected to grow at gradually slower annual rates, from 2.1% in 2025 to 2.0% in 2026 and 1.8% in 2027. Under this baseline scenario, annual growth in private consumption—the largest component of GDP and the engine of the global economy in re­ cent decades—is projected to slow from 2.6% in 2025 to 1.8% in both 2026 and 2027, reflecting the low saving rate and the maturity phase of the labour market. The average annual unemploy­ ment rate is expected to rise from 4.3% in 2025 to 4.4% in 2026 before declining to 4.3% in 2027. The household saving rate is projected to decrease from 4.8% in 2025 to 4.0% in 2026 before re­ bounding to 4.8% in 2027. For gross fixed capital formation in the United States, OECD experts forecast a consolidation of annual growth to 2.7% in 2026, followed by a slight moderation to 2.6% in 2027. Government consumption is expected to grow by 0.4% in 2026 (down from 0.6% in 2025) and by 0.6% in 2027. Finally, the contribution of net external demand to U.S. economic growth is projected to improve during 2026–2027, with a cumulative positive im­ pact of 0.1 percentage points. dr. Andrei RADULESCU, Macroéconomiste international senior Mixed developments in the US economy recently Annual Growth of Industrial Production Relative to its potential growth Source:EconometricestimatesusingFederalReservedata,2026 Industrialproduction Consumer confidence in theUSA (MichiganUniversity indicator) (points) Source:TheUniversityofMichigan,2026 Industrialproduction(trend)