This table aims to show in brief the key features of regulated and lightly regulated investment vehicles in the Grand Duchy of Luxembourg. It features the qualities of UCITS, Part II Funds, SIFs, and SICAR. It also enumerates critical factors, including AIFMD status, service provider requirements, qualifying investors, qualifying assets, regulatory oversight, sub-funds, taxation, and many more.
| REGULATED | LIGHTLY REGULATED | |||
| UCITS | PART II UCI | SIF | SICAR | |
| Applicable Legislation | Law of 17 December 2010 (Part I UCITS Law) | Law of 17 December 2010( Part II UCI Law) | Law of 13 February 2007 (“SIF Law”) | Law of 15 June 2004 (“SICAR Law”) |
| Authorization and Supervision by the CSSF | Yes | Yes | Yes | Yes |
| Eligibility as an AIF | No | Always an AIF |
Yes, unless exempt. It is exempted if the SIF is not meant to raise capital from multiple investors, with the aim of investing it based on a well-defined investment for the benefit of those investors. |
Yes, unless exempt. It is exempted if the SIF is not meant to raise capital from multiple investors, with the aim of investing it based on a well-defined investment for the benefit of those investors. |
| Exemption from AIFMD full regime under lenient regime (AIFMD registration regime) | N/A | Possible |
Possible
|
Possible |
| External Authorized AIFM requirements | N/A | Required in the case of a self-managed AIF and above the AIFMD threshold. | Required in the case of a self-managed AIF and above the AIFMD threshold. | Required in the case of a self-managed AIF and above the AIFMD threshold. |
| Qualifying investors | Unrestricted | Unrestricted | Well-informed investors | Well-informed investors |
| Qualifying assets |
Limited to transferrable securities admitted and active on a regulated market, financial derivative instruments, cash and money market instruments, and investment funds in adherence to UCITS Law article 41 and other pertinent EU directives and regulations. Asset eligibility must be verified on a case-to-case basis in view of prevailing laws and regulatory practice. |
Unrestricted. The investment objective and fund strategy are to obtain approval from the CSSF. |
Unrestricted. |
Limited to securities investments representing risk capital. Based on CSSF Circular 06/241, investment in risk capital is defined as direct or indirect assets contributions to entities in view of their launch, development, and listing on a known stock exchange. The SICAR structure is not permitted to directly invest in real estate, except for its own use or through its participations. |
| Risk Diversification Requirements |
Under articles 42 et seq of the UCITS Law, the non-exhaustive risk diversification requirements are as follows: -A UCITS is not allowed to invest 10% or more of its assets in money market instruments and transferrable securities issued by the same body. -A UCITS is not allowed to invest 20% or more of its net assets towards deposits made with the same body. -Global exposure related to derivative instruments should not exceed a UCITS portfolio’s total net value. |
IML Circular 91/75 (amended by CSSF Circular no 05/177) features risk diversification requirements that are less stringent than those applicable to UCITS -UCI is not permitted to invest more than 20% of net assets in securities issued by any one issuer. Specific restrictions in relation to funds adopting an alternative investment strategy are defined in CSSF Circular no 02/80. |
CSSF Circular no. 07/309 defines the risk diversification requirements that are less stringent than those applicable to UCITS and UCI. -SIF cannot invest more than 30% of net assets in securities of the same type issued by the same issuer. |
No risk diversification requirements. |
| Legal Form |
The following entities must be open-ended:
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The following entities may either be open-ended or close-ended:
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The following entities may either be open-ended or close-ended:
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The following entities may either be open-ended or close-ended: SA
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| Umbrella Structure | Yes | Yes | Yes | Yes |
| Capital Requirements |
FCP requirements: -EUR 1,250,000 required no later than 6 months following CSSF authorization. Self-Managed SICAV/SICAF -EUR 300,000 on the date of authorization and EUR 1,250,000 within 6 months following CSSF authorization.
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FCP requirements: -EUR 1,250,000 required no later than 6 months following CSSF authorization. Self-Managed SICAV/SICAF -EUR 300,000 on the date of authorization and EUR 1,250,000 within 6 months following CSSF authorization.
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EUR 1,250,000 to be attained no later than 12 months following CSSF authorization.
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EUR 1,000,000 to be attained no later than 12 months following CSSF authorization.
|
| Required Service Providers |
Management company for FCP: -Administrative agent -Approved statutory auditor -Depositary institution -Registrar and transfer agent |
Management company for FCP: -Administrative agent -Approved statutory auditor -Depositary institution -Registrar and transfer agent
|
Management company for FCP:-Administrative agent -Approved statutory auditor -Depositary bank or professional of a financial sector providing depositary solutions, and subject to certain conditions. -Registrar and transfer agent |
Management company for FCP: -Administrative agent -Approved statutory auditor -Depositary institution -Registrar and transfer agent
|
| Listing Possibility | Yes | Yes | Yes | Yes, but difficult in practice. |
| European Passport | Yes |
No, except in cases where it falls under the scope of a full AIFMD regime.
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No, except in cases where it falls under the scope of a full AIFMD regime.
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No, except in cases where it falls under the scope of a full AIFMD regime.
|
| Net Asset Value (NAV) Calculation and Redemption Frequency | UCITS is required to publish the issue, including sale and repurchase price of units each time they issue, repurchase, and sell units at least twice a month. | UCITS is required to publish the issue, including sale and repurchase price of units each time they issue, repurchase, and sell units at least twice a month. | Net asset value published at least once a year for reporting purpose. | Not required. |
| Overall Income Tax (Corporate Income Tax and Municipal Business Tax) | No income tax | No income tax | No income tax |
General Aggregate Rate: 24.94% In some instances, a reduction in corporate income tax rate may be applicable. Income derived from transferable securities, such as capital gains realised on the sale of shares and dividends are exempt. Income on cash held for future investment purposes may be exempt for one year only. |
| Subscription Tax (NAV) |
Rate: 0.05% of net asset valuer per year. Reduction: 0.01% of net asset value annually in certain instances. Tax exemptions: special pension funds and pension pooling vehicles, special institutional money market cash funds, and funds investing in other funds that are currently subject to subscription tax.
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Rate: 0.05% of net asset valuer per year. Reduction: 0.01% of net asset value annually in certain instances. Tax exemptions: special pension funds and pension pooling vehicles, special institutional money market cash funds, and funds investing in other funds that are currently subject to subscription tax.
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Rate: 0.01% of NAV annually. Tax exemptions: certain pension funds and money markets, or SIF investing in other funds which are already assessed with subscription tax.
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No subscription tax |
| Wealth Tax | No wealth tax | No wealth tax | No wealth tax | No wealth tax |
| Withholding Tax on Dividends | Not assessed with withholding tax | Not assessed with withholding tax | Not assessed with withholding tax | Not assessed with withholding tax |
| Benefits from Double Tax Treaty Network |
SICAF/SICAV: -Limited to certain double tax treaties (refer to circular L.G., no. 61 of the tax administration of December 2017). FCP: -No. 61 of the tax administration of December 2017.
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SICAF/SICAV: -Limited to certain double tax treaties (refer to circular L.G., no. 61 of the tax administration of December 2017). FCP: -No. 61 of the tax administration of December 2017.
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SICAF/SICAV: -Limited to certain double tax treaties (refer to circular L.G., no. 61 of the tax administration of December 2017). FCP: -No. 61 of the tax administration of December 2017.
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Yes, especially in cases wherein a SICAR is established as a corporate entity (with the exemption of SCS and SCSp legal forms)
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| Benefit from the EU Parent-Subsidiary Directive | No | No | No |
In essence, yes, but only in certain jurisdictions where the target companies’ locations may result in challenging application of the directive.
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| Thin Capitalization Rules (Debt to Equity Ratio) |
Loans up to 10% of net assets to finance redemptions or to purchase real estate for its business. Take note the loans should only be short term and cannot be used for investment reasons. The total borrowing amount should not exceed 15% of assets.
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Loans up to 25% of net assets without restrictions are permitted. |
No debt-to-equity ratio |
No debt-to-equity ratio |
| Practical Application |
Highly regulated vehicle that can be sold through EU passport to all types of investors, including professional investors, institutional investors, and retail investors.
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Investment funds that can be utilized for investment activities that fail to meet the criteria under the UCITS directives.
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Highly ideal for:
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Highly ideal for:
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If you wish to learn more about the different Luxembourg investment vehicles and which one suits your investment needs, please do not hesitate to reach out to our Damalion experts today.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
