A PE firm sold its investment in a company which holds and operates student accommodation real estate investments located in Spain.

A risk was identified that non-resident income tax could be due on the disposal if the Spanish-Luxembourg double tax treaty did not apply due to insufficient substance in Luxembourg. The main underwriting focus was on the level of substance in Luxembourg and ensuring the Luxembourg entity used to hold the investment in the Spanish company was for the right motives.

We issued a policy for each of the identified risks which provided the certainty the client required.