Wellcome Trust’s student housing firm held in Luxembourg

Critics question why iQ, with UK property worth £2.2 billion, is registered offshore in favourable tax regime

September 19, 2018

A student accommodation provider owned by the Wellcome Trust and Goldman Sachs is registered in Luxembourg, prompting critics to question why a company co-owned by a charity and benefiting from public student loans is held in a favourable tax regime.

Companies House documents show that iQ – which describes itself as “the largest accommodation provider in the UK by value” – is ultimately held by a Luxembourg company, Times Higher Education has found.

Earlier this year, THE looked at pay packages in the UK’s biggest student accommodation providers, finding that the highest-paid director at IQSA Services Ltd, part of the iQ group of companies, received just over £1 million in 2016-17.

The partnership between the Wellcome Trust, a charity that is one of the world’s biggest funders of medical research through its endowment, and investment bank Goldman Sachs attracted headlines when it was struck in 2016.

With the purpose-built student accommodation market booming thanks to growth in student numbers, the deal meant that iQ, previously solely owned by the Wellcome Trust, was combined with Prodigy Living, owned by Goldman Sachs with US real estate investor Greystar. iQ now has a 28,000-bed portfolio with a property value in excess of £2.2 billion. 

Accounts for IQSA Group Ltd lodged with Companies House state that “the immediate parent of the company is IQSA Holdings S.à.r.l., a company incorporated and registered in Luxembourg, and is the ultimate parent company into which the company’s accounts are consolidated”.

The accounts add that “the group’s ultimate shareholders are the Goldman Sachs Group, Inc. who indirectly own 64.45 [per cent], the Wellcome Trust and Greystar UK Portfolio I Investors who own 28 [per cent] and 3.6 [per cent] respectively”.

A Wellcome Trust spokeswoman described the arrangement as “a typical holding structure for commingled real estate companies”.

She added: “If the properties were held as a UK company, we would not expect to pay UK tax on our income or capital gains, as Wellcome has charitable status.”

But Sally Hunt, University and College Union general secretary, highlighted that student accommodation was “funded largely by public money and student debt”. 

She said: “It cannot be right that while many students struggle to keep up with rising rents, their accommodation providers are using offshore holding companies.”

Prem Sikka, professor of accounting and finance at the University of Sheffield, questioned why the Wellcome Trust would be “facilitating” any potential tax advantages that could be gained by partners.

He said that, in general, “offshore entities may be able to avoid capital gains tax on the sale of assets” if a property company were to “sell the company and not the individual properties”.

Professor Sikka said of companies held in Luxembourg: “There’s no publicly available information which tells you what the companies do. There are no accounts. So we can’t easily have a look to see what their income is, what taxes they are paying there or anywhere else. Why do they need this secrecy?”

A spokeswoman for iQ said: “This is a common structure for real estate companies. iQ is an owner and operator of UK student accommodation properties. Since its formation in 2016, iQ has invested significantly in its UK portfolio and will continue to do so.”

Asked if being registered in Luxembourg conferred any tax advantages, the spokeswoman said: “Although the company is registered in Luxembourg, we pay tax on UK earnings to HMRC at 20 per cent, as well as employee taxes.”


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