Middle East: Case Study

The Issue

Sharia compliant real estate fund for its Middle Eastern and European investors. The purpose of the fund was to invest in real estate assets in various locations across Europe. One key element in the client's approach of the market was to ensure that future investors would benefit from a most advantageous tax position on their returns while ensuring that they were being earned in a Sharia compliant manner.

The fund structure aimed to achieve the following:

• Introduce investor capital while adhering to Sharia principles and also obtaining tax relief on the profits earned
  
  
• Create flexibility for future sales and re-financing and also for the ultimate exit
  
  
• Minimise any upfront tax cost for the client and any ongoing tax leakage
  
  
• Provide a structure enabling our client and the investors to invest in a tax efficient way while respecting Sharia principles

Our Approach

The client was confident that we had the technical and project management expertise required to deliver the wide breadth of services that the project would require, including advising on any tax aspects of the acquisition, taking into consideration the commercial background while saving time, cost and coordination efforts.

• We started by working very closely with other PricewaterhouseCoopers offices, lawyers and outside Sharia advisors, so that we would be able to propose an acquisition structure after due consideration of the ethical, commercial, legal, tax and funding constraints existing in the various jurisdictions involved
  
  
• We then worked very closely with the client’s legal advisers to implement the agreed option
  
  
• Finally, we provided the client with a report summarising the benefits of the structure and giving guidance as to how the structure should be managed going forward and which post-completion steps needed to be taken and when

The Outcome

At the end of the project, the client had a flexible structure, which fulfilled all of the objectives set out above and had received valuable advice on how to efficiently manage the implemented structure.