The Luxembourg Special Limited Partnership (SCSp) is a highly flexible and tax-efficient investment vehicle that has become increasingly popular for structuring private investments, including private equity, real estate, private debt, and ESG funds.
Key Features of the Luxembourg Special limited partnership (SLP) or Société en commandite spéciale (SCSp)
- Structure and Liability
- The Luxembourg SCSp consists of at least one General Partner (GP) with unlimited liability and one or more Limited Partners (LPs) whose liability is limited to their contributions.
- It does not have a separate legal personality, meaning it operates as a contractual arrangement between partners.
- Contractual Flexibility
- The SCSp offers significant flexibility in drafting the Limited Partnership Agreement (LPA), which governs its operations. This includes provisions for profit distribution, partner admission, voting rights, and liquidation rules.
- Contributions can be made in cash, kind, or services without the need for external valuation.
- Tax Transparency
- The SCSp is treated as tax-transparent for corporate income tax (CIT), municipal business tax (MBT), and net wealth tax (NWT) purposes in most cases. This makes it attractive for international investors seeking to avoid double taxation.
- No Minimum Capital Requirement
- Unlike other Luxembourg entities, the Luxembourg SCSp does not require a minimum capital contribution, reducing barriers to entry for investors.
- Short Time to Market
- The SCSp can be established quickly through a private deed without cumbersome formalities, making it operational in less than a month.
- Regulated vs. Unregulated Options
- The SCSp can be structured as either a regulated or unregulated entity. If regulated under the Alternative Investment Fund Managers Directive (AIFMD), it may serve as an umbrella fund with segregated compartments.
Benefits for your private investments
- Diverse Asset Classes
- The SCSp can invest in various asset classes such as private equity, real estate, intellectual property rights, and more. It is not subject to diversification or risk-spreading rules unless regulated under AIFMD.
- Confidentiality
- Only an excerpt of the LPA is published in the Luxembourg Trade and Companies Register, ensuring a high level of confidentiality for investors.
- Cost Efficiency
- The absence of minimum capital requirements, low administrative burdens, and no need for a depositary (unless regulated) make the SCSp a cost-effective option compared to other vehicles.
- International Appeal
- Inspired by Anglo-Saxon limited partnership models, the SCSp is designed to meet the needs of global investors and fund managers. Its tax transparency and legal flexibility make it particularly appealing for cross-border investments.
Use cases of the Luxembourg special limited partnership
The SCSp is commonly used for:
- Private equity funds
- Real estate investment structures
- Co-investment vehicles
- Venture capital funds
- Family office structures
The Luxembourg SCSp offers an ideal solution for structuring private investments due to its flexibility, tax efficiency, and ease of setup. It continues to bolster Luxembourg’s reputation as a leading hub for alternative investment vehicles.
Damalion supports investors who want to structure their investments throughout Luxembourg. To benefit from the Luxembourg Special Limited Partnership, please contact your Damalion expert now.
This communication is for informative purpose only. Damalion focused on advising families for wealth preservation by identifying opportunities and challenges. Please contact your Damalion expert now.
