I. Fine arts as alternative assets
Fine arts, collectibles and antiques, including digital assets have been growing in popularity as an alternative investment in recent years, with more and more investors seeking to diversify their portfolios and capitalize on the potential returns that the art market can offer. In 2020, the global art market reached an estimated value of $64.5 billion, a testament to the increasing interest in fine art investments. But how can art collectors and investors effectively turn their collections into investment opportunities? – Enter the Luxembourg Special Limited Partnership (SLP).
II. What is Luxembourg Special Limited Partnership (SLP)?
Luxembourg Special Limited Partnership (SLP) is a unique investment vehicle that enables fine art owners to convert their portfolios into investment opportunities for potential investors. It is fiscally transparent, meaning that it is not a legal entity, and the taxation occurs at the level of its investors. This makes SLP an attractive option for those looking to invest in fine art and other collectibles, as it offers a tax-efficient structure for these investments.
III. Benefits of Luxembourg SLP for Fine Art Investments
There are several benefits to using Luxembourg SLP for fine art investments, including:
Tax efficiency: As mentioned, the lack of legal entity status means that taxation occurs at the investor level, which can result in lower overall tax liabilities.
Transparency: SLP operates as an open-ended structure, providing investors with full visibility into the underlying assets and the investment strategy.
Liquidity: The open-ended structure of SLP also allows for greater liquidity, as new units can be issued and redeemed as needed.
Professional management: By pooling assets, SLP enables fine art owners to access professional investment management services thanks to the General Partner (GP) acting as the management company of the investment fund. GP helps to maximize returns and minimize risks.
IV. How Does Luxembourg SLP work for Fine Art Investments?
Investing in fine art through Luxembourg SLP is a relatively straightforward process. Firstly, the fine art owner would set up the SLP with the help of a professional service provider. Once the SLP is established, the fine art owner would transfer their fine art portfolio to the SLP. The SLP would then market the fine art portfolio to potential investors, who can invest in the SLP by purchasing units. The income generated from the fine art portfolio is then distributed among the investors.
V. Advantages of Investing in Fine Art through Luxembourg SLP
Investing in fine art through Luxembourg SLP has several advantages. Firstly, SLP provides investors with access to a diverse range of fine art assets, which can help to diversify their portfolios. Secondly, SLP offers a level of transparency and accountability that is not found in other investment vehicles, making it an attractive option for those who are unfamiliar with the fine art industry. Thirdly, the tax-efficient structure of SLP provides investors with a significant tax advantage, making it an attractive option for those looking to maximize their returns.
VI. Create your fine art investment fund in Luxembourg
The art market has continued to grow in recent years, offering investors new opportunities to diversify their portfolios and capitalize on potential returns. By using Luxembourg SLP, fine art owners can effectively turn their collections into investment opportunities, offering greater tax efficiency, transparency, liquidity, and professional management.
Contact your Damalion experts to launch your fine art investment fund in Luxembourg, now.
