Tax-effective corporate structures

1. Tax-effective corporate structures for real estate transactions MIPIM 2012 Cannes, 6-9 March 2012 LAVECO LIMITED Despina Sofia ComplexApartment 202, United Nations 8, Drosia 6042Larnaca, CyprusTel: +357-24-636-919Fax: +357-24-636-920E-mail: cyprus@laveco.com

2. The aim of this presentation: to outline corporate structures which can help in the minimisation of taxes on income arising from the sale of real estate The LAVECO philosophy: any outlay is an expense which reduces the profit of the company and thus the amount to be paid in dividends or re-invested for further development

3. Tax: I have to cover this expense, just as I do all the others, such as: • costs of materials • wage costs • sub-contractor fees  • Why is this so important? • In times of recession: efficiency is particularly important, since project-financing is already more difficult  • What happens if our competitors follow the above reasoning but we don’t? We will become the victims of competition; as we are less efficient, we have to apply higher prices and thus our competitiveness is reduced

4. Only completely legal solutions, which do not infringe the written tax laws of the given country, should be employed The models outlined here are merely framework models, and should not be construed as tax advice in a concrete case. The solutions presented here by LAVECO can be used globally, and their application should be realised in conjunction with experts from the country concerned.

5. Selling the real estate Selling the interest (shares) of the project company Selling the interest (shares) of the holding company

6. SALE OF OWNERSHIP RIGHTS BUYER’S COMPANY PROJECT COMPANY PAYMENT FORMER OWNERSHIP OF PROPERTY OWNERSHIP OF PROPERTY I. Solution: the real estate itself is sold • Advantages: • simple • transparent solution • uncomplicated for all parties • the change of ownership is registered in the country in which the real estate is situated

7. SALE OF OWNERSHIP RIGHTS BUYER’S COMPANY PROJECT COMPANY PAYMENT I. Solution: the real estate itself is sold FORMER OWNERSHIP OF PROPERTY OWNERSHIP OF PROPERTY Disadvantages: • The PROJECT Company is subject to tax in the country in which the real estate is situated on the profit made from the sale • In general, the buyer is obliged to pay stamp duty in the country in which the real estate is situated • Competitors can easily follow the details of the transaction

8. SALE OF THE SHARES OF THE PROJECT COMPANY BUYER’S COMPANY HOLDING COMPANY PAYMENT FORMER SHAREHOLDER OF THE PROJECT COMPANY SHAREHOLDER OF THE PROJECT COMPANY II. Solution: the shares of, or interests in, the PROJECT Company are sold PROJECT COMPANY Advantages: • This is efficient if profit from the sale of shares or interests is not subject to tax • It is also efficient if stamp duty is not payable after the purchase of shares and interests OWNERSHIP OF PROPERTY

9. SALE OF THE SHARES OF THE PROJECT COMPANY BUYER’S COMPANY HOLDING COMPANY PAYMENT FORMER SHAREHOLDER OF THE PROJECT COMPANY SHAREHOLDER OF THE PROJECT COMPANY II. Solution: the shares of, or interests in, the PROJECT Company are sold PROJECT COMPANY • Disadvantages: • In certain countries, income from the sale of the interests in local companies which own real estate is subject to taxation in that country • In certain countries, the buyer of the interests in local companies which own real estate is obliged to pay stamp duty, just as in the purchase of the real estate itself OWNERSHIP OF PROPERTY

10. OFFSHORE COMPANY 2 SALE OF THE SHARES OF OFFSHORE COMPANY 1 BUYER’S COMPANY PAYMENT FORMER SHAREHOLDER OF OFFSHORE COMPANY 1 III./1. Solution: sale of the shares of, or interests in, the company owning the PROJECT Company with the insertion of offshore companies SHAREHOLDER OF OFFSHORE COMPANY 1 OFFSHORE COMPANY 1 What type of offshore companies are these? Tax-free or fixed tax companies registered in the world’s tax havens (BVI, Bahamas, Belize, Panama, Cayman Islands, Seychelles etc.) Advantages: • No taxor fixed tax is payable in the country in which the offshore companies are registered • The question of payment of stamp duty does not arise • Lawyer’s fees are lower than in the case of the sale of the real estate itself SHAREHOLDER OF THE PROJECT COMPANY PROJECT COMPANY OWNERSHIP OF PROPERTY

11. SALE OF THE SHARES OF OFFSHORE COMPANY 1 OFFSHORE COMPANY 2 BUYER’S COMPANY PAYMENT FORMER SHAREHOLDER OF OFFSHORE COMPANY 1 III./1. Solution: sale of the shares of, or interests in, the company owning the PROJECT Company with the insertion of offshore companies SHAREHOLDER OF OFFSHORE COMPANY 1 OFFSHORE COMPANY 1 What type of offshore companies are these? Tax-free or fixed tax companies registered in the world’s tax havens (BVI, Bahamas, Belize, Panama, Cayman Islands, Seychelles etc.) Disadvantages: • There is a certain negative image associated with offshore companies – blacklists • The offshore company must be maintained, meaning additional expense • In many jurisdictions, the change of ownership can not be verified by official public documents, so the level of trust between buyer and seller is very important SHAREHOLDER OF THE PROJECT COMPANY PROJECT COMPANY OWNERSHIP OF PROPERTY

12. SALE OF THE SHARES OF OFFSHORE COMPANY 1 BUYER’S COMPANY CYPRUS HOLDING COMPANY PAYMENT FORMER SHAREHOLDER OF THE CYPRUS COMPANY SHAREHOLDER OF THE CYPRUS COMPANY III./2. Solution: sale of the shares of, or interests in, the company owning the PROJECT Company with the insertion of companies from Cyprus CYPRUS COMPANY Advantages: • Income from the sale of interests in a company is not taxable in Cyprus, provided that the company does not own real estate in Cyprus • No stamp duty is payable – there has been no change in the ownership of the real estate • Lower lawyer’s fees • The change of ownership can be tracked and verified by the Registrar of Companies • EU Registered Company SHAREHOLDER OF THE PROJECT COMPANY PROJECT COMPANY OWNERSHIP OF PROPERTY

13. SALE OF THE SHARES OF OFFSHORE COMPANY 1 BUYER’S COMPANY CYPRUS HOLDING COMPANY PAYMENT FORMER SHAREHOLDER OF THE CYPRUS COMPANY SHAREHOLDER OF THE CYPRUS COMPANY III./2. Solution: sale of the shares of, or interests in, the company owning the PROJECT Company with the insertion of companies from Cyprus CYPRUS COMPANY SHAREHOLDER OF THE PROJECT COMPANY Disadvantages: • transaction costs: company formation and maintenance fees PROJECT COMPANY OWNERSHIP OF PROPERTY

14. Advantages of thetaxsysteminCyprus: According to 400 experts from one of the Big Four consulting firms, Cyprus has the best tax climate in Europe for the following reasons: • The lowest rate of corporation tax: 10% • No capital gains tax • No inheritance tax • No gift tax • Dividends paid to non-residents are free of tax • No rules on thin-capitalisation • Ideal holding centre: 48 DTTs (in 2012) • EU image: Cyprus has been a full member of the European Union since January 1st 2004

15. Advantages of the tax system in Cyprus: • Transparency: all changes are recorded by the Registrar of Companies • Operates in accordance with international standards: annual audited financial report • Low maintenance costs: in comparison with other EU countries • Professional infrastructure: the financial sector and background services in Cyprus are extremely well developed • Stable: Cyprus has been present on the international market since 1974 – more than 38 years

16. III./3. Solution: sale of the shares of, or interests in, the PROJECT Company owning the real estate with the insertion of an English LLP OWNER OFHONG KONG COMPANIES1 PARTNER50% HONG KONG COMPANY 1 SALE OF THE SHARES OF HONG KONG COMPANIES 1 AND 2 BUYER’S COMPANY FORMER OWNER OFHONG KONG COMPANIES 1 AND 2 UK LLP PAYMENT HONG KONG COMPANY 2 CYPRUS HOLDING COMPANY PARTNER50% SHAREHOLDER OF THE PROJECT COMPANY OWNER OFHONG KONG COMPANIES2 PROJECT COMPANY OWNERSHIP OF PROPERTY Advantages: The owner of the PROJECT Company is registered in a high prestige jurisdiction Income from the sale of interests in a company is not taxable in Cyprus, provided that the company does not own real estate in Cyprus No stamp duty is payable – there has been no change in the ownership of the real estate Lower lawyer’s fees

17. III./3. Solution: sale of the shares of, or interests in, the PROJECT Company owning the real estate with the insertion of an English LLP OWNER OFHONG KONG COMPANIES1 PARTNER50% HONG KONG COMPANY 1 SALE OF THE SHARES OF HONG KONG COMPANIES 1 AND 2 BUYER’S COMPANY FORMER OWNER OFHONG KONG COMPANIES 1 AND 2 UK LLP PAYMENT HONG KONG COMPANY 2 CYPRUS HOLDING COMPANY PARTNER50% SHAREHOLDER OF THE PROJECT COMPANY OWNER OFHONG KONG COMPANIES2 PROJECT COMPANY OWNERSHIP OF PROPERTY Disadvantages: complicated structure several companies higher maintenance costs

18. Advantages of English LLP companies: • EU prestige, not registered in a blacklisted country • Companies formed on the basis of the LLP Act of 2000 are classified as legal entities: limited liability • Flow-through taxation: non-resident members are not subject to tax, provided that they receive no income from local sources • Ideal for holding purposes, not recommended for trade and services within the EU: VAT complications

19. Advantages of Hong Kong companies: • Former British territory, the British legislation in regards to company registration remains untouched • Territorial principle of taxation; tax is only payable on income from local sources (16.5%), income from other sources is not taxable (0%) • Independence: Far away from the EU, falls under the jurisdiction of China

20. WHAT CAN LAVECO OFFER YOU? • Company formation • Bank account opening • Secretarial services • Fiduciary services • Asset protection • Yacht registration • Full legal support

21. COMPANY FORMATION • 40 jurisdictions • Different types of companies: • - Classic offshore companies (Seychelles, BVI, Belize) • - European companies (Cyprus, Bulgaria, Hungary) • - Prestigious companies (UK Ltd, UK LLP, Hong Kong) • Wide network of partners • Shelf companies in 12 jurisdictions • Vintage companies

22. BANK ACCOUNT OPENING • 15 banks in 6 countries • Current, deposit and investment accounts • Bank cards • Internet banking • Some banks do not require personal presence

23. SECRETARIAL SERVICES • Virtual office services • Tel/Fax/Mail forwarding

24. FIDUCIARY SERVICES • Companies fully managed by our directors • The client is in “silence” • Professional management & administration

25. ASSET PROTECTION • International Trust in Cyprus • The Panama Foundation • The St. Kitts Foundation

26. YACHT REGISTRATION • US flags • Registration of yachts in Seychelles • No estate tax • No individual ownership • The owner is a company

27. FULL LEGAL SUPPORT • Power of Attorney • Certificate of Good Standing • Accounting and Auditing • Notarization and Apostille

28. WHY LAVECO? We have been around for 20 years since 1991 Same place, same people for 20 years  Stability Our prices are neither too low, nor too high We know our clients’ requirements Multi-lingual experts in all offices Prices are the same for everybody Network of offices Data confidentiality

29. THE LAVECO GROUP OFFICES: LAVECO KFT. 33/a Raday St., BudapestHungary 1092Tel: +36-1-456-72-00Fax: +36-1-456-72-01E-mail: hungary@laveco.com LAVECO LTD. Third Floor, Blackwell House, Guildhall Yard, LondonEC2V 5AE United KingdomTel: +44-207-556-0900Fax: +44-207-556-0910E-mail: london@laveco.com LAVECO EOOD Porto Lagos No.1, Ent.2, Floor 5, Ap.421463 Sofia, BulgariaTel: +359-2-953-2989Mob: +359-888-126-013 Fax: +359-2-953-3502E-mail: bulgaria@laveco.com LAVECO LIMITED Despina Sofia ComplexApartment 202, United Nations 8 Drosia 6042Larnaca, CyprusTel: +357-24-636-919Fax: +357-24-636-920E-mail: cyprus@laveco.com OPTITAX CONSULT S.R.L. 59 Buzesti Str., A5 Block1st Scale, 1st Floor, 62nd Flat1st District, Bucharest, Romania Tel.: +40-21-311-61-76 Mob: +40-747-595-132Fax: +40-21-311-61-82 E-mail: office@optitax.ro LAVECO LTD. Suite No 2 Olivier Maradan Building Olivier Maradan Street Victoria, Mahe, Seychelles Tel.: +248-32-22-61Fax: +248-32-49-32 E-mail: seychelles@laveco.com

30. Thank you for your attention! Despina Sofia ComplexApartment 202, United Nations 8, Drosia 6042Larnaca, CyprusTel: +357-24-636-919Fax: +357-24-636-920E-mail: cyprus@laveco.com