Luxembourg legislation favors the creation of investment funds. In respect of this, Luxembourg is the most attractive investment fund destination in the European Union. Due to this, Luxembourg stands out as a reliable investment destination and provides a wide range of alternative investment funds, Specialised Investment Fund (SIF) included.
The Specialised Investment Fund (SIF) which represents a flexible and financially creative choice for global investors is a regulated, Luxembourg-branded, investment fund vehicle for well-informed, institutional, and qualified investors.
Features of the Specialised Investment Fund (SIF)
| The SIF | SIFs can be set up as hedge funds, real estate investment funds, private equity funds and others. |
| Applicable legislation | SIFs are subject to the Luxembourg Law of 13 February 2007 (SIF Law) |
| Eligible investors | SIFs re limited to “well-informed” investors that are able to sufficiently evaluate the risks associated with an investment in such a vehicle. |
| Eligible assets | Any type of alternative investment with no restriction |
| Risk diversification requirements | SIFs risk diversification requirements are detailed in CSSF Circular 07/309. But the primary requirement for the SIF is not to invest over 30% of its assets with the same issuer. |
| Legal Form | The SIF may be made up in the following different forms: A fonds commun de placement (FCP) A société d’investissement à capital variable (SICAV) or société d’investissement à capital fixe (SICAF). This entities may be open-ended or closed-ended. SICAV/SICAF can be established in following legal forms: – SA/Société Anonyme, – Sàrl/ Société à Responsabilité Limitée, – SCA/ Société en Commandite par Actions, – SCoSA: Société Co-opérative organisée comme une Société Anonyme |
| Segregated compartments | Yes |
| Capital requirements | The minimum capital requirements of a SIF is EUR 1,250.000 and this minimum must be reached within a period of twelve months following its authorisation. |
| Net asset value (NAV) calculation and redemption policy | Required at least once a year for reporting purposes. |
| SIF taxation | A SIF is exempt from the following taxes in Luxembourg: – Corporate Income Tax – Municipal Business Tax and Net Wealth Tax – withholding tax (except in situations where the Savings Directive applies) – SIF Subscription Tax: A SIF is liable to pay an annual subscription tax of 0.01% of the value of the SIF’s net assets. The SIF Law exempts from the subscription tax, specific institutional cash funds, microfinance funds and pension pooling funds. |
| Stock exchange listing | The SIF can be listed on the Luxembourg stock exchange |
| European passport | No (unless it falls under the scope of the full AIFMD regime) |
| Authorisation and supervision | A SIF must be approved by the CSSF and is subject to its supervision. |
| Required Luxembourg service providers | – A management company, – Eligible depositaries which are Luxembourg credit institutions, – Other service providers of a SIF include lawyers, portfolio managers, administrators and/or registrars and transfer agents. |
The SIF is a fascinating fund vehicle for the following reasons:
- Flexibility
- It is straightforward to handle and the regulatory requirements are incredibly reduced compared to regular investment funds. Efficiency and proactivity of Luxembourg authorities Although limited, it benefits from certain double tax treaty network, and
- Stability of Luxembourg.
Although the Grand duchy of Luxembourg is a desirable investment fund destination, businessmen interested in opening a Luxembourg fund will need to become acquainted with the legislation that regulates the type of vehicle they want to register in this country. This is where your Damalion expert comes in, we offer a wide range of services for local and foreign businessmen who want to start a fund in Luxembourg.
To set up your Specialised Investment Fund in Luxembourg, let’s go ahead and contact your Damalion expert now.
