Is KPMG a firm of liars, thieves and murders? The answer is unequivocally, Yes.

It is a fact, that KPMG has already plead guilty to committing tax fraud and paid massive fines, lies and thievery. It is a fact that KPMG is continuously fighting lawsuits for accounting fraud, lies and thievery for $100s of millions. It is a fact that KPMG even lied to the DOJ in crafting their statement of facts to the DOJ, Joseph Loonan KPMGs Chief Counsel wrote an email to Joseph Barloon of Skadden Arps (a lackey of Bob Bennett of Skadden) stating that the statement of facts given to the DOJ were false, famously ending his email freedom is just another word for nothing left to lose on March 3, 2005. Clearly the Loonan email (which is public information) proves KPMG to be massive liars and at a minimum a destroyer of lives, the lives of all those they lied to the DOJ about since once the DOJ gets a hold of you it is ball game over, period, guilty or innocent, the U.S. criminal justice system is a meat grinder that has no parallel in the universe. In fact, several studies exist, more fully described below that emphatically state, the rate of suicide is SIGNIFICANTLY higher for anyone having contact with the U.S. criminal justice system, guilty or innocent. The study further provides that all that is necessary for someone to kill themselves at a significantly higher rate, is contact or involvement with someone subject to the degradations provided by the U.S. criminal justice system. By RICK NAUERT PHD Senior News Editor Reviewed by John M. Grohol, Psy.D. on February 9, 2011 Men and women who have had contact with the criminal justice system appear to have a significantly higher rate of suicide than the general population, according to a new study. And the higher suicide rate occurs even if an individual has never received a jail or prison sentence or a guilty verdict. The report is posted online and will appear in the June print issue of Archives of General Psychiatry, one of the JAMA/Archives journals. Keep in mind, the Feds are the ultimate masters of destroying the lives of anyone they deem unworthy (which in the professional context is usually anyone who has not previously worked for the Feds (check it out the stats dont lie)). It is perfectly legal for the Feds to say

anything they want in court with the full knowledge that the lying scum in the media will repeat what the Feds say as fact (like Lynnley Browning of the NYT does). In fact, Jane might be alive today if Browning had one shred of decency or even honesty, but I digress we know she doesnt. Again the Feds can say whatever they want with the one proviso that the Feds must not be absolutely certain what they say is false and then even if what the Feds say is false, as long as no one can prove the Feds made false statements with bad intent, it is perfectly legal. We all know the Feds never have bad intent, so in effect, the Feds can say and do whatever they want for the greater good/evil. Of course all of the above is common knowledge, everyone knows how the system works. In 2003 a DOJ study, link below, provides that 13% of the people in the U.S. prison system are butt raped and acknowledges in the study this figure may be low (and several other studies provide that the butt raping that occurs in the U.S. prison system is significantly higher especially in the higher security prisons or prisons with violent offenders). . Okay, so it is a given, if you lie to the DOJ like KPMG did, KPMG knew the DOJ would use those lies to have people put in prison where the probability was extremely high they would be butt raped (almost a certainty if they are locked up in a 100 square foot room with 23 black guys convicted of murder or worse, who hate Jews and are left unattended for days at a time). See the Prison Rape Elimination Act (PREA) 2003 states that 13 percent of all inmates have been raped in American prisons and jails}. It is also a given based on thousands of studies, see the link the link above, that those subject to the legal system have a significantly greater chance of committing suicide: Thus, it is clear when KPMG knowingly lied to the Feds, KPMG would be causing its former partners to be butt raped and potentially cause the partners or their loved ones to commit suicide, the government studies all provide for this and everyone knows it. Murder is defined in Websters as the crime of unlawfully killing a person. Kill is defined in Websters as to deprive of life : cause the death of . We all know lying to the Feds is unlawful, right? Therefore, KPMG knew when it lied to the Feds, KPMG would be causing the death of those being lied about or their loved ones (all of the prison studies on suicide and rape are common knowledge) and the butt raping of those actually incarcerated. Thus KPMG knew when it lied to the Feds, KPMG would be killing people and committing the act of murder since lying to the Feds is unlawful, thus, KPMG is a firm of murders at least according to Websters.

I will say it again, if you work at KPMG or do business with KPMG if anything goes wrong, to save itself, KPMG will lie, steal and kill to save itself, it is really that simple. The other thing you can be sure of, any transaction you engage with KPMG is likely fraudulent, either tax or audit, I can take any financial statement audited by KPMG and find the Fraud in 5 minutes. In fact, even if the transaction is not fraudulent, KPMG will lie and say the transaction is fraudulent to save itself if it has other issues just like any low life murdering crack dealer would (of course, you may meet the low life crack dealer in prison by the time KPMG is done with you). Beware, KPMG is a firm of liars, thieves and murderers. Let me be absolutely clear, nothing in this post is untrue and no one is being threatened, the only thing any of you dopes have to fear is KPMG itself (and the U.S. Government when KPMG gets done lying to the Feds about you). Luxembourg Holding Companies Luxembourg Holding Companies/ MORE FRAUD BY KPMG

LuluzeLuxembourg tax opportunities for US investors

Houston, 4 November 2010
International Corporate Tax

Luc Alexandre Senior Manager, KPMG Tax Luxembourg

Todays agenda
I. Overview

II. Typical structures

I.

Holding Financing Licensing Trading

II.

III.

IV.

I. Overview

Overview
Luxembourg country facts
At the heart of Europe and founding member of the European Union (member since 1951) A renowned international financial centre

Overview
Luxembourg country facts

Overview
A favourable tax environment
Statutory tax rate:28.59% in 2010 28.80% in 2011 Possible to maintain the ETR to a minimum for any type of activity through tax planning Favorable IP tax regime: Effective tax rate of 5.72% for royalty income A tax ruling is in principle not required

Advance tax ruling system to secure upfront the tax treatment of transactions (prompt and flexible tax authorities written confirmation is obtained within 2 to 6 weeks): pragmatic approach No capital / stamp duties Extensive network of tax treaties that helps reduce/eliminate withholding taxes on foreign income receipts Almost 60 treaties currently in force incl. Mexico, Brazil, HK, etc. 14 treaties currently in negotiation
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Overview
A favourable tax environment (Contd)
No withholding tax on royalties, interest & liquidation proceeds (in principle) No withholding tax on dividends paid to US corporations (subject to conditions) Luxembourg participation exemption (incoming dividend and capital gain exempt) No or minor taxation upon exit or refinancing strategy Access to EU Directives (Parent/Subsidiary, Interest/Royalties, and Merger Directives) No CFC rules Bilateral Investment Treaties
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Overview
Hot topics in Luxembourg

Increase in aggregate corporate tax rate: from 28.59% (2010) to 28.80% (2011) Transfer pricing studies for newly established back-to-back financing entities Minimum flat tax of EUR 1,500 for corporate entities (SOPARFIs) Of which financial assets (including transferable securities, receivables, bank deposit etc.)
exceed 90% of their total assets;

That do not perform activities subject to a business license or approval of supervisory authority; in fiscal unity cases only applicable once at the level of the integrating Luxembourg parent
company or permanent establishment;

But not before 2012

II. Typical structures

Typical structures : Holding

EU subsidiaries or high-taxed non-EU subsidiaries

Benefits

USCo
Dividends

Full exemption on incoming dividends and capital gains (participation exemption regime):

10% ownership or acquisition price of EUR 1.2m (dividends) / EUR 6m (capital gains) 12 months holding period Subject to tax requirement (except for EU subsidiairies)

LuxCo
Dividends Capital gains

No Luxembourg withholding tax on dividends paid to USCo under domestic rules In principle, no foreign withholding tax on incoming dividends from EU/non-EU subsidiaries pursuant to EU Directive and tax treaties

EU / non-EU

Other Considerations
Luxembourg tax clearance Luxembourg substance requirements

Typical structures : Holding

Utilisation of tax losses in Luxembourg

Benefits

USCo

Upon disposal of participations in OpCos to LuxCo2, crystallisation of write-downs into permanent tax losses at the level of LuxCo1 The tax losses of LuxCo1 becoming permanent, may be used against income deriving from e.g. financing, trading activities Losses at the level of OpCos remain tax deductible

LuxCo1

Other Considerations
Luxembourg tax clearance Change of control at OpCos level

OpCos

LuxCo2

OpCos

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Typical structures : Holding

Low-taxed non-EU subsidiaries (tax havens)
Benefits
No or low taxation on incoming dividends and capital gains from low-taxed subsidiaries (e.g. Tax havens) that do not benefit from the Luxembourg participation exemption regime No Luxembourg withholding tax on the accrual (or payment) of yield on TPECs (Tracking Preferred Equity Certificates)

USCo
TPECs Dividends

Tax analysis
TPECs are a hybrid and are treated as debt for Luxembourg tax purposes accrual yield treated as tax deductible interest expense TPECs bear (i) a fixed interest rate equal to 0.1% of the nominal value of the TPECs and (ii) a variable interest rate calculated as 99% of LuxCos net income LuxCo taxed on margin between the dividends/capital gains and the yield on TPECs effective taxation can be as low as 0.3%

LuxCo
Dividends Capital gains Low-taxed non-EU

Other Considerations
Luxembourg tax clearance For US purposes, TPECs are treated as equity under certain conditions as long as the yield is accrued but not paid there is no taxation in the US (no Luxembourg requirement to pay the yield before exit)

Typical structures : Holding

Utilisation of foreign tax treaty PE losses

USCo

Background
The tax rate applicable to income realised by a LuxCo in Luxembourg, should be determined as if LuxCos worldwide (i.e. domestic & foreign) income were subject to tax in Luxembourg (Circular on article 134 of Luxembourg Income Tax Law). This applies to the extent that foreign income is realised in a tax treaty country

LuxCo

Foreign tax treaty PE

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Typical structures : Holding

Utilisation of foreign tax treaty PE losses (Contd)

Example (simplified)

USCo
Assumptions Luxembourg profit/(loss): Foreign PE profit/(loss): 100 million (120 million)

LuxCo

Step 1 Worldwide profit/(loss): Tax rate computed thereon: (20 million) 0% (due to negative result)

Foreign tax treaty PE

Step 2 Luxembourg income: Step 3 Luxembourg income: Applicable tax rate (see step 1): Luxembourg corporate tax due:

100 million

100 million 0% -

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Typical structures : Holding

US Foreign tax credit

Benefits
USCo is in excess of FTC carry forward and incurs an important annual interest expense. USCo apportions interest expense using an asset method (Treas. Reg. 1.861 9T) USCo subscribes to PECs issued by LuxCo and contributes its foreign subsidiaries to LuxCo (Sect 351) Reduction of interest expense to be apportioned to foreign source and increasing USCos FTC limitation From US tax point of view, PECs treated as equity, not subject to US tax until repatriation Luxembourg participation exemption on OpCos dividends, capital gains, liquidation proceeds at the level of LuxCo.

USCo
PECs

LuxCo

OpCos

Other Considerations
Luxembourg tax clearance Terms/conditions of PEC (term of years, fixed interest, etc.) to confirm hybrid treatment (US: equity / Lux: debt)

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Typical structures : Holding

Background
Existing HavenCo will re-domicile to Luxembourg

Benefits
Access to EU Directives, extensive tax planning opportunities, absence of CFC rules Tax capital for dividend distribution free of Luxembourg withholding tax

HavenCo

LuxCo

GroupCos

GroupCos

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Typical structures : Holding & Financing

Luxembourg holding/financing company (CPECs)
Benefits
Taxation on a small margin in Luxembourg No Luxembourg withholding tax on accrual (or payment) of yield on CPECs (Convertible Preferred Equity Certificates) Due to the hybrid nature of CPECs, USCo can push debt down to the ForeignSubs to obtain local country interest expense deduction without incurring any additional US taxable income

USCo
CPECs A CPECs B

Tax analysis

LuxCo
Loans Shares

CPECs are a hybrid and are treated as debt for Luxembourg tax purposes accrual yield treated as tax deductible interest expense Taxable margin between 3bp and 25bp

Other Considerations

ForeignSubs

Luxembourg tax clearance For US purposes, CPECs are treated as equity under certain conditions as long as the yield is accrued but not paid there is no taxation in the US When financing activities are combined with holding activities in Luxembourg, there is no effective taxation in most cases as the interest expenses on the tranche of CPECs relating to the acquisition of shares (CPECs A) allows to offset the taxable margin left on the back-to-back financing activity. In this case, recapture should apply except in case of liquidation (disposal) of ForeignSubs

Typical structures : Financing

Luxembourg back-to-back hybrid

Benefits
Luxembourg participation exemption on OpCos dividends, capital gains and liquidation proceeds at the level of LuxCo From US point of view, PECs treated as equity, not subject to US tax until repatriation Interest income taxes on a margin in Luxembourg No Luxembourg withholding tax on dividends (subject to conditions) paid to USCo

USCo
PECs

LuxCo
Loan

Other Considerations

OpCos

Luxembourg tax clearance Terms/conditions of PEC (term of years, fixed interest, etc.) to confirm hybrid treatment (US: equity / Lux: debt)

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Typical structures : Financing

OpCos financing using reverse hybrid entities

Benefits

USCo

Lux SNC/SCS
Loan

LuxCo
Loan

OpCos

Interest deduction in OpCos with no corresponding pick up in the US (deferral) or in Luxembourg No withholding tax on interest (i) paid by OpCos to LuxCo (tax treaty, EU Directive) and (ii) from LuxCo to Lux SNC/SCS Small net margin left in LuxCo on financing activity No withholding tax on dividends paid to LuxCo (tax treaty, EU Directive) Participation exemption on dividends, capital gains, liquidation proceeds from OpCos No withholding tax on dividends paid by LuxCo and Lux SNC/SCS (subject to conditions) Dividends and interest received by Lux SNC/SCS can be lent through LuxCo (facility agreement) Lux SNC/SCS has legal body (checkable) One single holding and financing structure and cost reduction No anti-debt creation rule

Points of attention
Luxembourg tax clearance.
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Typical structures : Financing

UK financing using UK LLP: Same country exception
Summary of Tax Consequences UK OpCo deducts interest paid to LuxCo UK Lux tax treaty eliminates UK withholding tax Interest paid by UK OpCo qualifies for same country exception (since LuxCo is disregarded) Minimum fully taxable margin left in Luxembourg
Equity

USCo

No Luxembourg withholding tax on interest paid to UK LLP (under Luxembourg domestic law)

UK LLP
Loan Loan

UK OpCo

Benefits Interest deduction in UK; no corresponding UK . Deferral of US taxes Only minimal tax in Luxembourg, which should be creditable

LuxCo
Other Considerations Luxembourg tax clearance Can use Scottish Partnership instead of UK LLP UK thin capitalization, worldwide debt cap and transfer pricing rules
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Typical structures : Financing

Canada financing using Can LP: Same country exception

Summary of Tax Consequences Can Opco deducts interest paid to Can LP Interest subject to 10% Canadian withholding tax under Canada Luxembourg tax treaty Interest paid by Can OpCo qualifies for same country exception
PECs

USCo

Minimum fully taxable margin left in Luxembourg

LuxCo

Benefits Net tax savings in Canada (interest deduction, less 10% withholding tax); no corresponding US taxes Only minimal Luxembourg tax

Can LP
Loan

Can OpCo
Other Considerations Luxembourg tax clearance Canadian thin cap limitation (2:1) Fifth Protocol to US-Canada tax treaty Can LP: Permanent establishment
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Typical structures : Financing

Cash & treasury management

Benefits
TPECs Intra-group short-term loans in Intra-group short-term loans out LuxCo taxed on a margin between (i) its net interest income and (ii) the yield on TPECs effective taxation approx. 0.3% No foreign exchange exposure on short-term loans in multiple currencies in the context of treasury management and cash pooling activities No Luxembourg withholding tax on the accrual (or payment) of yield on TPECs (Tracking Preferred Equity Certificates)

USCo

LuxCo
Cash pooling activities

Other Considerations
Luxembourg tax clearance

Typical structures : Financing

LuxBranch of a Hungarian company

Benefits

USCo

Financing and holding activities can be located at the level of the LuxBranch including FX and derivatives Small Hungarian tax Luxembourg effective tax rate approx. 1.2% 1.5%

HungCo
Other Considerations

LuxBranch

GroupCos
Loans

Luxembourg tax clearance Substance

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Typical structures : Financing

Beneficial ownership test

USCo
PECs

USCo

LuxCo1
0% MRPS

LuxCo1
US branch

LuxCo2
IB Loan

LuxCo2

IF Loan or IB Loan IB Loan

OpCo

OpCo

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Typical structures : Licensing

Luxembourg IP tax regime

Benefits

USCo

80% exemption is granted for income and gains deriving from a wide range of qualifying IP assets (software copyrights, patents, trademarks, domain names, designs & models) resulting in an effective taxation of approx. 5.72% Connected or third party acquisition, or self-developed R&D of IP can be carried out in Luxembourg or abroad (e.g. US) by means of cost-sharing agreement also Law of 5 June 2009 on Research, Development and Innovation providing State-backed financial incentives for R&D activities carried out in Luxembourg No capital or stamp duties due on the injection of cash by USCo to LuxIPCo for incorporation or future financing of the activities

LuxIPCo
IP
Licensing Royalties

ForeignSubs

Typical structures : Licensing

TPEC structure for licensing activities

Benefits

USCo
TPECs

LuxIPCo taxed on a margin equal to the difference between its net royalty income and the yield on the TPECs effective taxation between approx. 0.5% and 1.5%

Tax analysis

LuxIPCo
IP
Licensing Royalties

No Luxembourg withholding tax on accrual (or payment) of yield on the TPECs

Other Considerations

ForeignSubs

Luxembourg tax clearance

Typical structures : Licensing

Migration of IP Lux/Swiss hybrid

Background
Migration of TaxHavenCo from TaxHaven to Luxembourg Immediately thereafter, incorporation by LuxCo of SwissCo and transfer of IP thereto against a hybrid instrument SwissCo performs licensing activities with the IP it owns against royalty income

USCo

USCo

TaxHavenCo
IP

LuxCo
Hybrid

Benefits
Hybrid instrument should qualify as equity for Luxembourg corporate tax purposes, and as debt in Switzerland Income should qualify for the Luxembourg participation exemption at LuxCo level. Expenses should be deductible at Swiss level

SwissCo
IP
Licensing

Other considerations
Safe harbour thin cap rules Apply to related party debt 30% equity for IP Luxembourg tax clearance Arms length interest rate

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Typical structures : Trading

Maquiladora structure

Background
USCo plans to reorganise part of its business, with the creation of a Luxembourg company, and the migration of profit from the US to a Luxembourg company Currently, most of the Groups operations, personnel and intangible value is in the US. Outside the US, its activities are mainly limited to a Mexican manufacturing plan

USCo
Sale of equipment at book value

LuxCo
Fact pattern Services agreements

MexBranch

MexCo

USCo incorporates LuxCo, and contribute the shares in MexCo to LuxCo against share capital/share premium USCo sells existing equipment to LuxCo at book value LuxCo enters into service agreements with MexCo, e.g.

MexPlant agrees to make available personnel to LuxCo to work under the control of the latter A plant manager, controller... will perform their services under the supervision, direction and control of LuxCo and shall be granted authority to represent and act on behalf of the latter in Mexico
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Typical structures : Trading

Maquiladora structure (Contd)

Luxembourg tax treatment

The sale of the Mexican assets to LuxCo should be made at book value. However, if the fair market value of the assets exceeds the book value, the difference should be considered non-taxable informal capital contribution at the level of LuxCo As a result of the activities realised by LuxCo in Mexico through the secondment and services agreements, LuxCo has a permanent establishment in Mexico within the meaning of the Luxembourg Mexico double tax treaty An arms length margin of 8% 12% of the costs (i.e. operating charges incurred in connection with the activities of the head-office, but not current or future interest expenses accrued on debt attributable to the holding or financing activities of LuxCo) in connection with the head-offices commercial activity should be left at the level of the latter and fully taxable in Luxembourg, leading to a very low ETR in Luxembourg.

USCo
Sale of equipment at book value

LuxCo
Services agreements

MexBranch

MexCo

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Typical structures : Trading

Carbon Trading

Background

Funds
1% equity 99% CPECs

LuxCo is incorporated to acquire carbon dioxyde emission allownces (also called Carbon Credits), for resale on public markets LuxCo to be financed 99% with CPECs and 1% with equity

LuxCo

Benefits
CPECs to be considered debt for Luxembourg corporate tax and net wealth tax purposes. Yield due under the CPECs to qualify as interest (and in principle free of Luxembourg withholding tax) Minimum net taxable margin to be left in Luxembourg, measured on the total outstanding annual average outstanding principal amount of CPECs.

Purchase from third parties

CO2 emission allowances

Resale

Other considerations
Luxembourg tax clearance

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Typical structures : Trading

Trading structure Assumption of risks

USCo
TPECs

USCo

CV LuxCo
Risk assumption agreement

TPECs

NL BV

LuxCo

OpCos OpCos

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Typical structures : Trading and Forex

LuxBranch / LuxCo

Background

USCo

A notional deduction at LuxBranch level to offset interest income by LuxCo on its loan portfolio under the fiscal unity regime LuxBranch and LuxCo file a fiscal unity

LuxBranch
Benefits
0% PEC

LuxCo
Foreign currency loans

ForeignCo

Net wealth tax computed at LuxBranch and LuxCo levels Arms length margin Currency gain/losses effectively neutralised Withholding tax at ForeignCo level may be reduced where tax treaty applies

Other consideration
Luxembourg tax clearance

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Contact Details

Luc Alexandre Senior Manager

Tel: ++352 22 51 51 5464 Mobile: ++352 621 87 5464 E-Mail: luc.alexandre@kpmg.lu 10, rue Antoine Jans L-1820 LUXEMBOURG

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Disclaimer
This presentation provides for several tax planning ideas that may be implemented via Luxembourg. Even though the information given in this presentation reflects the tax treatment as experienced in implemented structures, the facts and circumstances of certain cases need to be analysed beforehand. As regards the tax treatment in foreign jurisdictions, our description should be understood as purely indicative. Should a restructuring be envisaged, the foreign tax treatment would have to be analysed by foreign tax advisors. The Luxembourg tax treatment of a structure has to be confirmed by the Luxembourg tax authorities a common practice in Luxembourg with respect to important restructurings.

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