Tech

Luxembourg Fund Structuring: Your Complete Guide to Setting Up Investment Vehicles

John A2 weeks ago

0 4 4 minutes read

Luxembourg Fund Structuring: Your Complete Guide to Setting Up Investment Vehicles

When it comes to launching an investment fund in Europe, Luxembourg remains the gold standard. With its robust legal framework, investor-friendly regulation, and global reputation for financial stability, Luxembourg is home to thousands of investment structures. At FundSetup, operating from DIFC, Dubai, we specialize in guiding asset managers, family offices, and institutions through every step of Luxembourg fund structuring.

If you’re looking to establish a fund that meets international standards, attracts global investors, and benefits from strong regulatory oversight, this guide is your starting point.

Why Choose Luxembourg for Fund Structuring?

We recommend Luxembourg for several compelling reasons:

World’s second-largest investment fund center (after the U.S.)
Access to EU passporting under UCITS and AIFMD
Broad range of regulated and unregulated fund structures
Attractive environment for alternative investment funds (AIFs)
Solid reputation with global investors and institutions

Luxembourg’s fund ecosystem is ideal for hedge funds, private equity, venture capital, real estate, infrastructure, and more.

Types of Funds Available in Luxembourg

Choosing the right fund vehicle is essential. Luxembourg offers multiple options depending on your fund’s strategy, investor profile, and regulatory needs.

1. RAIF (Reserved Alternative Investment Fund)

No CSSF pre-approval required, but must appoint an authorized AIFM.
Popular among private equity, real estate, and crypto asset managers.
Fast setup, strong structuring flexibility, and access to AIFMD passport.

2. SIF (Specialised Investment Fund)

Regulated by the CSSF.
Designed for professional investors.
Offers a broad investment scope and risk-spreading requirements.

3. SICAR (Investment Company in Risk Capital)

Tailored for private equity and venture capital strategies.
Regulated and supervised by CSSF.
No risk diversification rules but must invest in risk-bearing assets.

4. UCITS (Undertakings for Collective Investment in Transferable Securities)

Fully regulated, retail-friendly.
Passportable throughout the EU.
Best for liquid asset strategies like bonds, equities, and ETFs.

5. Part II Funds

Non-UCITS but regulated and can be marketed to retail and professional investors.
Highly flexible but subject to more restrictions than UCITS.

6. Unregulated Vehicles (SOPARFI, SPF)

SOPARFI: Used for holding and financing purposes, not subject to fund regulation.
SPF: Private wealth structuring for individuals.

We help clients select the right vehicle depending on whether they’re targeting institutional investors, HNWI, or the retail market.

Key Players in Luxembourg Fund Structuring

Setting up a fund in Luxembourg involves several crucial stakeholders:

AIFM (Alternative Investment Fund Manager): Required for RAIFs and AIFs to ensure regulatory oversight and investor protection.
Depositary Bank: Mandatory for regulated funds; responsible for safekeeping and oversight.
Administrator and Registrar: Manages NAV calculation, investor registry, and back-office services.
Auditor: Ensures financial transparency and compliance.
Legal Advisor: Drafts offering documents, partnership agreements, and liaises with the CSSF (if applicable).

At FundSetup, we connect our clients with a trusted network of these service providers.

Tax Efficiency and Investor Protection

Luxembourg offers a highly efficient tax environment, including:

No withholding tax on dividends or interest paid by most investment vehicles.
Double taxation treaties with over 80 countries.
No subscription tax for certain assets and structures.
Transparent VAT and management fee regimes.

Funds in Luxembourg can also benefit from ring-fencing of sub-funds, allowing the creation of umbrella structures with different strategies and asset classes under one legal entity.

Regulatory Overview: The CSSF

The Commission de Surveillance du Secteur Financier (CSSF) is Luxembourg’s financial regulator. While structures like RAIFs are not directly supervised by the CSSF, others—such as SIFs, SICARs, and UCITS require:

Approval of the fund and its offering documents.
Regular compliance and reporting.
Coordination with a licensed AIFM or management company.

We provide full assistance in handling CSSF documentation and compliance procedures

Step-by-Step: How to Structure a Fund in Luxembourg

Here’s how we handle Luxembourg fund structuring at FundSetup:

Step 1: Define Investment Strategy and Target Investors

We work with you to understand your fund goals, asset classes, and investor profile.

Step 2: Choose the Optimal Fund Structure

Based on your strategy and timeline, we recommend and design the most suitable vehicle (e.g., RAIF, SICAR).

Step 3: Appoint Service Providers

We help you select experienced AIFMs, custodians, administrators, and auditors in Luxembourg.

Step 4: Draft Legal Documents

This includes the Private Placement Memorandum (PPM), LPA, Articles of Incorporation, and regulatory disclosures.

Step 5: Regulatory Filings and Setup

For regulated structures, we coordinate with the CSSF and legal team for approval and registration.

Step 6: Launch and Fundraising

After incorporation, the fund is live—ready for subscriptions, capital calls, and portfolio acquisition.

Luxembourg Fund Structures at a Glance

Structure	Regulated?	Investor Type	Time to Launch	Key Benefit
RAIF	Indirect (via AIFM)	Professional	4–6 weeks	Fast, flexible
SIF	Yes (CSSF)	Professional	3–6 months	Broad scope, tax efficient
SICAR	Yes (CSSF)	Professional	3–6 months	Ideal for PE/VC
UCITS	Yes (CSSF)	Retail	6–12 months	EU passporting
SOPARFI	No	Private/Corporate	2–4 weeks	Holding platform
SPF	No	Individuals	2–4 weeks	Wealth structuring