Luxembourg
Luxembourg, officially the Grand Duchy of Luxembourg. is a landlocked country in Western Europe. It is bordered by Belgium to the west and north, Germany to the east, and France to the south. Luxembourg has a population of 524,853 and an area of 2,586 square kilometers making it one of the smallest sovereign nations in Europe. Luxembourg has a long history in Islamic finance that dates back to 1978 when the Islamic Banking System Holdings Limited Luxembourg was established as the first Islamic financial institution in Europe. This was followed by the establishment of Takafol S.A. in 1982, the first Islamic insurance company in Europe. Such history has improved the attractiveness of Luxembourg within Islamic finance industry.
There are some recent developments:
Since April 2008, the Minister of Finance has set up a task force bringing together key actors of the Islamic finance industry in Luxembourg. Its mission is to look at how Islamic finance can be further developed in Luxembourg. In 2008, the Association of the Luxembourg Funds Industry (ALFI) launched a working group focusing on the development of Luxembourg as a center of excellence for Shariah compliant funds. In early 2009, the Luxembourg Deutsche Bank launched "Al Mi'yar", a Luxembourg domiciled platform which aims at smoothing the issuance of Shariah compliant securities. In 2009, the Central Bank of Luxembourg became a member of the Islamic Financial Services Board (IFSB) and, as such, is the first Central Bank of the European Union to become a member of that institution. In January 2010, the Luxembourg Tax Authority published a circular, the object of which is to clarify the tax treatment of Murabaha and Sukuk transactions and ensure that they benefit from the same tax treatment as conventional financing products. In April 2010, Luxembourg for Finance (LFF) issued a brochure describing in detail the vehicles available in Luxembourg for Islamic finance transactions and structures. In May 2010, the Central Bank of Luxembourg managed to get the green light to host the 8th IFSB annual summit in 2011 in Luxembourg and thus to be the first EU member state to host such a meeting.
The main advantage that Luxembourg has over other jurisdictions is that the government has made continuous efforts to promote the country as a robust Islamic financial center. This governmental support is encouraging the different institutions in the private sector to explore this emergent market, and thus to adopt new business strategies to improve Shariah compliant business. Ministerial missions, headed by the Crown Prince Guillaume and members of the Government, are regularly organized in the Gulf countries. More generally, Luxembourg has very good political relationships with the Gulf countries and Malaysia, which shall ensure the attractiveness of the country for these two centers of Islamic finance.45 Islamic investment funds are already established in Luxembourg and other new funds are already planned. This figure places Luxembourg alongside Kuwait and behind only Malaysia and Saudi Arabia as the most popular domicile for Shariah compliant investment funds.

Sukuk Listing In Luxembourg
Luxembourg is the leading Islamic Finance centers in Europe and earning their reputation for developing innovative structures and delivering competent services within Europe. In 2002, Luxembourg Stock Exchange was the first to list a sukuk and since then, issuers from Malaysia, Pakistan, U.A.E., Saudi Arabia and Europe have listed sukuk in Luxembourg. At the same time, Grand Duchy became the domicile for Islamic investment funds. In the recent published by ALFI and CSSF, the number of sukuk listed in Luxembourg is 16 with 5.5 billion Euros assets and ranked the third worldwide while Islamic Investment Funds has 45 in total with 5 billion Euros of assets and ranked the first across Europe. The first international Sovereign Sukuk of Malaysia was listed in Luxembourg . Luxembourg will certainly strengthen its leading position as a hub for Islamic Finance thanks to a fast and smooth implementation of Alternative Investment Fund Managers Directive (AIFMD).

Benefits of Sukuk Listing and Trading in Luxembourg o A Leading Centre for listing and trading –
The Luxembourg Stock Exchange has developed into a leading centre for International listing and 16 sukuk is listed on LSE. o Costs and Timing-
The costs associated with listing procedure are clearly competitive compared to other Sukuk international listing domicile as well as the admission procedure is swift and secure. o Authorities and Private Sector Support-
There is a strong support from CSSF, Luxembourg Central Bank and Minister of Finance and the private sector to attract and facilitate the set up of Islamic Finance in Luxembourg as well as dynamic and growing of Islamic Finance community in Luxembourg.

What is Sukuk?
Sukuk is basically shariah-compliant alternative to conventional bonds. It always linked to an underlying asset and grants the investor a share of the asset along with profits and risk resulting from such ownership. It is based on the structure of a contract of exchange like murabahah, ijarah and istisna’ or a contract of participation like mudarabah or musharakah.
How Luxembourg operate sukuk?
There are numbers of investment vehicles that may be considered suitable for the issuance of sukuk such as UCITS, SIF, SICAR, Securitization vehicle and SOPARFI.
Luxembourg Securitization Law
LSL offers an attractive regulatory framework for setting up workable securitization structures in Luxembourg at reasonable cost. The key features of attractiveness are:
• the enormous flexibility in entity establishment from a cost and structural point of view
• legal certainty
• broad bankruptcy remoteness mechanisms
• broad bankruptcy remoteness mechanisms
• qualified service provider in Luxembourg
• tax neutrality
In addition to the key features, LSL offers:
• high degree of expertise of market players(banks, corporate service providers etc)
• large range of market players present in Luxembourg

Regulated market
Regulated market basically designated for non-EU issuers. In the market, it offers the issuers a European passport and they must comply with Prospectus Directive and Transparency Directive or benefit from exemption. The CSSF is the body that approves the regulated market and responsible for the approving the prospectus for the issuers. It is designed by Bourse de Luxembourg.
Non-regulated market
The non-regulated market is set up for the need of the issuer that is not requiring Europe passport or simply for European. It is outside of the scope of Prospectus Directive or Transparency Directive. The market is provided by Euro MTF.
Tax Treatment
Tax authorities treat periodic payment under sukuk in a manner similar to conventional bonds. As a result, payments on sukuk are tax deductible.