Luxembourg is one of the leading Islamic finance centres in Europe and has worked hard to earn its reputation for developing innovative structures and delivering competent services in this area.
The Luxembourg Stock Exchange was the first to list a sukuk, in 2002. Since then, issuers from Malaysia, Pakistan, Saudi Arabia, the UAE, Bahrain, Qatar, South Africa, the USA, Hong Kong and Europe have listed sukuk in Luxembourg. Luxembourg itself issued the first sovereign sukuk to be denominated in euro, in 2014. At the same time, Grand Duchy has flourished as a domicile for Islamic investment funds.
As business expanded, the government, the financial sector supervisory authority CSSF (Commission de surveillance du secteur financier), the central bank, professional training institutions and the private sector have worked together to create a business environment that meets the needs of Islamic finance practitioners.
The Luxembourg legal and regulatory framework can be adapted without difficulty to Islamic finance products and the CSSF has built up considerable experience in the authorisation and supervision of Islamic finance structures.
The direct and indirect tax treatment of various Islamic products has been clarified by the relevant authorities.
The institute for training in banking, IFBL (Institute de formation bancaire, Luxembourg) offers a foundation certificate and an advanced diploma in Islamic finance.
Today, the financial centre is recognised as the leading European domicile for Islamic investment funds, with promoters keen to harness Luxembourg’s unsurpassed expertise in the cross-border distribution of these products. It is also active in wealth management, structured finance and the listing of sukuks.
The Luxembourg Supervisory Authority for the Financial Sector, the CSSF has signed co‑operation agreements, so‑called Memoranda of Understanding (MoUs) with a number of Supervisory Authorities with a strong Islamic Finance background, such as the Dubai Financial Services Authority, the Central Bank of Bahrain, the Securities Commission Malaysia, the Emirates Securities and Commodities Authority, the Qatar Financial Centre Regulation Authority and the Egyptian Financial Supervisory Authority.
Many Luxembourg companies (including banks, legal and auditing firms, consultants and asset managers) that are active in various aspects of Islamic finance are listed in our directory of Islamic finance service providers.