For known professional investors and a pool below EUR 100 million, or EUR 500 million unleveraged and closed-ended, an unregulated SCSp with a registered manager is the lightest Luxembourg route: no fund approval, no subscription tax, tax transparent. Above the thresholds or with an EU marketing passport you need an authorised AIFM; a RAIF then adds a fund wrapper without CSSF approval and 0.01% subscription tax. A SIF is approved by the CSSF and may manage itself below the thresholds. Retail money goes into a Part II fund or an ELTIF.
Three questions decide the vehicle
Luxembourg offers a long menu of fund vehicles. For a private fund, a club deal or a family investment pool, the choice comes down to three questions. Who invests: professionals only, wealthy individuals who can commit EUR 100,000, or the public? How large is the pool, counting what is bought with borrowed money? And do you need to market across the EU, or are the investors already at the table?
An unregulated limited partnership (SCSp or SCS) is the lightest: a private agreement, no fund approval, no subscription tax, and often a manager that only needs to register with the CSSF. A RAIF adds a fund wrapper and umbrella compartments without CSSF approval, but must be run by an authorised AIFM. A SIF is approved and supervised by the CSSF and may manage itself below the AIFMD thresholds. For retail money the options are a Part II UCI or an ELTIF.
This note uses the rules in force in October 2026, including AIFMD II, and ends with a vehicle checker. For the domicile question, see our note on Luxembourg versus Ireland for funds.
Lightest
Private deed, no CSSF approval, tax transparent, no subscription tax.
Fast fund
No CSSF approval; authorised AIFM and depositary required.
Supervised
CSSF approval; may be self-managed below the thresholds.
Part II or ELTIF
CSSF approval and an authorised AIFM.
Registered or authorised AIFM: the decision that drives everything
Most investment pools are alternative investment funds (AIFs) under the AIFM Directive, and every AIF needs a manager. A manager can stay registered rather than authorised if the assets it manages across all its AIFs stay below EUR 100 million, or below EUR 500 million where the funds use no leverage and give investors no redemption rights for five years from the first investment. Assets bought with borrowed money count towards the threshold, including debt raised in controlled property or holding companies.
A registered AIFM files a short registration with the CSSF and needs no AIFMD capital, depositary or full risk functions. The trade-off: no marketing passport. The fund can only be offered in each EU country under that country's private placement rules, and some countries close the door to sub-threshold managers.
An authorised AIFM gets the passport to market to professional investors across the EU and EEA, and in exchange carries the full regime: capital, a depositary, valuation, risk and liquidity management, remuneration rules and Annex IV reporting. Luxembourg expects at least two full-time conducting officers resident in the EU. A first-time sponsor rarely builds this. The usual answer is a third-party AIFM, also called a host or super-ManCo, which takes the regulatory role while the sponsor advises on deals.
| Registered AIFM | Authorised AIFM | |
|---|---|---|
| Threshold | Below EUR 100m, or EUR 500m unleveraged and locked for five years | Any size; mandatory above the thresholds |
| CSSF process | Registration | Authorisation, usually several months |
| EU marketing passport | No | Yes, to professional investors |
| Depositary for the AIF | Not required for an unregulated fund | Required |
| Can manage a RAIF | No | Yes |
| Can manage a SIF | Yes, a self-managed SIF below thresholds | Yes |
Two points surprise sponsors. The passport covers professional investors only. A wealthy individual who commits EUR 100,000 is well-informed under Luxembourg product law but is usually still a retail client under MiFID unless they opt up, so marketing to them follows national rules even with a passport. And the threshold counts everything the manager runs.
AIFMD II. Directive (EU) 2024/927 applies in Luxembourg since 16 April 2026 through the law of 3 March 2026, with some reporting changes from April 2027. For private funds the main changes are the loan origination rules: a fund that mainly originates loans, or whose originated loans reach 50% of its net assets, is capped at 175% leverage if open-ended and 300% if closed-ended, may not lend more than 20% of its capital to a single financial undertaking, AIF or UCITS, and must keep 5% of the notional value of loans it sells on. Luxembourg also bars AIFs from lending to consumers in Luxembourg. Open-ended funds must choose at least two liquidity management tools.
Law and practice: Directive 2011/61/EU (AIFMD), Article 3(2) on the thresholds,; Delegated Regulation (EU) No 231/2013, Article 2; Law of 12 July 2013 on AIFMs, Article 3 (registration with the CSSF); Directive (EU) 2024/927 (AIFMD II), transposed by the law of 3 March 2026 (bill no. 8628), in force since 16 April 2026.
Regulated wrappers: RAIF, SIF, Part II and ELTIF
RAIF. The reserved alternative investment fund, available since 2016, is a SIF without product approval. It can be an FCP or a SICAV in SA, SARL, SCA, SCS or SCSp form, have umbrella compartments with segregated liability, and be open or closed-ended. The authorised AIFM, depositary and auditor provide the safeguards. The fund is formed by notarial deed or private agreement and entered on the official list of RAIFs kept by the Luxembourg Business Registers.
The RAIF Law sets no diversification limits; the documents describe them. A RAIF whose documents limit it to risk capital can opt for a regime modelled on the SICAR: no subscription tax, and, in corporate form, corporate income tax that exempts income and gains from risk capital securities.
SIF. The specialised investment fund is the older regulated wrapper. It needs CSSF approval before launch, and the CSSF supervises it on an ongoing basis, which some insurers and pension funds still require. A SIF that is not managed by an external authorised AIFM can be self-managed and, below the thresholds, simply register its own AIFM status. That makes the SIF the regulated option for a sponsor that will not appoint a third-party AIFM.
On 19 December 2025 the CSSF issued Circular 25/901, replacing Circular 07/309 for SIFs and the SICAR risk capital circular. The old 30% single-asset limit for SIFs is gone: a SIF or a Part II fund marketed only to well-informed investors may now place up to 50% in one asset or entity, or 70% for infrastructure. Private asset funds may ramp up over up to four years; closed-ended funds approved earlier keep their rules.
The 2023 modernisation. The Law of 21 July 2023, in force since 28 July 2023, lowered the minimum investment for well-informed investors from EUR 125,000 to EUR 100,000 in the SIF, SICAR and RAIF laws, doubled the time to reach EUR 1.25 million of net assets to 24 months, gave Part II funds 12 months, and exempted funds authorised as ELTIFs from subscription tax.
Retail. A Part II UCI is the Luxembourg fund for alternative strategies sold to the public: CSSF approval, an authorised AIFM, and investor protection rules, including a 25% single-asset limit for funds sold to unsophisticated retail investors. The ELTIF under the revised Regulation (EU) 2015/760, as amended by Regulation (EU) 2023/606 and applicable since 10 January 2024, is the EU label for long-term private assets with a retail passport. ELTIF 2.0 removed the EUR 10,000 retail minimum. An ELTIF needs an authorised EU AIFM and CSSF authorisation as an ELTIF, and can sit on top of an SCSp, a RAIF, a SIF or a Part II fund.
Law and practice: Law of 23 July 2016 (well-informed investors, authorised AIFM, the RAIF list kept by the Luxembourg Business Registers, and Article 48 on the risk capital regime); Law of 13 February 2007 (prior CSSF approval); CSSF Circular 25/901 of 19 December 2025; Law of 21 July 2023 (published 24 July 2023); Regulation (EU) 2023/606 (ELTIF 2.0).
How each vehicle is taxed
The unregulated SCSp and SCS are transparent: no corporate income tax, no net wealth tax, and, because the tax authorities treat a partnership that is an AIF as not carrying on a commercial activity, no municipal business tax. Distributions bear no withholding tax. Investors are taxed in their own countries on their share of income and gains as if they held the underlying assets.
SIFs and RAIFs in corporate form are exempt from corporate income tax, municipal business tax and net wealth tax. They pay only the subscription tax of 0.01% a year on net assets, calculated quarterly. Distributions are free of withholding tax. Treaty access is limited. A RAIF under the risk capital regime pays no subscription tax and is instead subject to corporate income tax with an exemption for income and gains from risk capital, which can give it treaty access. A fully taxable holding company would pay 23.87% in Luxembourg City in 2026.
| Vehicle | Fund level tax | Subscription tax | Withholding on distributions |
|---|---|---|---|
| Unregulated SCSp / SCS | Transparent | None | None |
| RAIF (standard) | Exempt | 0.01% | None |
| RAIF (risk capital regime) | Corporate tax with risk capital exemption | None | None |
| SIF | Exempt | 0.01% | None |
| Part II UCI | Exempt | 0.05%; 0.01% institutional classes | None |
| ELTIF | Exempt | None | None |
Other exemptions include assets invested in Luxembourg funds that already pay subscription tax. Management fees of a Luxembourg AIF are exempt from VAT.
Real estate. Since 2021, SIFs, RAIFs and Part II funds that are not tax transparent pay a 20% tax on income and gains from real estate situated in Luxembourg. A fund buying Luxembourg property should model it; for property abroad it does not apply.
A RAIF in SCA form with EUR 150 million of net assets pays EUR 15,000 a year in subscription tax, EUR 3,750 a quarter. The same fund as a RAIF limited to risk capital under the SICAR-type regime pays none, and an unregulated SCSp of the same size pays none either.
See also our notes on carried interest for fund managers and a UK company investing in a Luxembourg fund cover those sides.
Law and practice: Law of 13 February 2007 and Law of 23 July 2016 (tax provisions, subscription tax and exemptions); Law of 17 December 2010, Articles 174 and 175; Circular L.I.R. no. 14/4 of 9 January 2015 on the tax treatment of SCS and SCSp; Law of 19 December 2020 introducing the 20% tax on Luxembourg real estate income of funds; VAT Law, Article 44.
Depositary, AML, timelines and costs
Depositary. RAIFs, SIFs and Part II funds always need a Luxembourg depositary. An unregulated SCSp needs one only if its manager is an authorised AIFM. For closed-ended funds with no redemption rights for five years that invest mainly in private companies or real estate, the depositary can be a specialised professional depositary of assets other than financial instruments rather than a bank, which is often cheaper.
Anti-money laundering. Every Luxembourg fund, regulated or not, is an obliged entity under the AML Law of 12 November 2004. The fund or its AIFM must identify and verify every investor and the beneficial owners behind corporate investors, screen against sanctions lists and keep the records. The CSSF supervises regulated funds for AML; the AED supervises RAIFs and unregulated partnerships. The fund registers its beneficial owners in the RBE, and where no individual holds more than 25%, the managers of the general partner appear instead.
Timelines. The steps depend on the route. An unregulated SCSp with a registered AIFM can be formed in a few weeks once the partnership agreement is agreed. With a third-party AIFM, onboarding usually takes six to twelve weeks. A RAIF typically needs two to three months, driven by the AIFM, depositary, administrator and auditor. A SIF adds CSSF review, often three to six months. A Part II fund or an ELTIF can take longer. These are indicative practice ranges, not statutory deadlines.
- Term sheetStrategy, size, investors, fees, carry, target closing.
- Vehicle and managerSCSp, RAIF or SIF; registered, self-managed or third-party AIFM.
- ProvidersAIFM, depositary if needed, administrator, auditor, bank, domiciliation.
- DocumentsPartnership agreement or articles, offering memorandum, subscription forms.
- FormationDeed or private agreement; RCS or RAIF list; CSSF where required.
- First closingInvestor onboarding, AML checks, capital calls.
Costs. A registered SCSp needs a general partner, accounts, an auditor and domiciliation; a RAIF adds AIFM and depositary fees; a SIF adds CSSF fees. Provider fees usually have annual minimums, so small funds feel them most.
Law and practice: Law of 12 November 2004 on the fight against money laundering and terrorist financing, Article 2 (obliged entities including AIFs) and Article 2-1 (supervision of unregulated funds by the AED); Law of 5 April 1993 on the financial sector, Article 26-1 (professional depositaries); Law of 12 July 2013, Article 19.
How the choice plays out
Four families pool EUR 30 million to co-invest in private companies with a trusted sponsor. All are professional investors and no-one else will be approached. The vehicle: an unregulated SCSp with a Luxembourg SARL as general partner, registered with the CSSF as a sub-threshold AIFM. No CSSF fund approval, no depositary, no subscription tax, transparent for each family's tax. If the pool only invests the families' own wealth and raises nothing from outsiders, it may not be an AIF at all, which simplifies further. See family offices in Luxembourg and the Netherlands and the SPF family wealth company.
A new private equity team targets EUR 150 million from pension funds and insurers in Germany, France and the Netherlands. At that size and with cross-border marketing, an authorised AIFM is needed, and the team appoints a third-party AIFM rather than seeking its own licence. The vehicle: a RAIF in SCSp form, which gives investors a fund wrapper and tax transparency without a CSSF queue. Subscription tax at 0.01% would be EUR 15,000 a year; opting for the risk capital regime removes it. A depositary is required. Investments go through Luxembourg holding SPVs.
Eight wealthy individuals commit EUR 60 million, at least EUR 250,000 each, to buy logistics property in Germany. Banks lend EUR 90 million to the property companies. The leverage counts: assets under management are about EUR 150 million, above the EUR 100 million threshold for leveraged funds, so a registered AIFM is not enough. Options: an unregulated SCS with an authorised third-party AIFM, or a RAIF. The 20% Luxembourg real estate tax does not apply to German property.
For deal-by-deal and venture structures, compare the Dutch B.V. or Luxembourg route for venture capital. If the plan is to repackage loans or receivables rather than run a fund, a securitisation vehicle may fit better.
Law and practice: AIFMD recital 7 on family office vehicles; Delegated Regulation (EU) No 231/2013, Articles 2 to 4 on assets under management and leverage; Law of 23 July 2016, Article 48; Law of 19 December 2020 on the real estate levy.
Find your Luxembourg fund vehicle
The checker applies the thresholds and rules above in a simplified way. It assumes a closed-ended fund without leverage at fund level for private assets, and an open-ended fund for liquid securities.
Which Luxembourg vehicle fits your fund?
Seven questions about size, investors, distribution, speed, assets and tax. You get a recommended vehicle and legal form, the manager you need, whether the CSSF approves the fund, the subscription tax, an indicative launch time, the depositary position and the warnings that matter.
Registered or authorised AIFM decides the rest.
Lightest route for known professional investors.
Fund wrapper without CSSF approval, but an authorised AIFM.
CSSF approval; self-managed below thresholds.
Luxembourg private funds: frequent questions
What is the difference between a RAIF and a SIF?
Both are Luxembourg alternative investment funds for well-informed investors with the same EUR 100,000 investment floor, the same 0.01% subscription tax and the same EUR 1.25 million minimum net assets. A SIF is approved by the CSSF and may manage itself below the AIFMD thresholds. A RAIF is not approved by the CSSF but must appoint an authorised AIFM.
Does an unregulated SCSp need an AIFM?
If it is an alternative investment fund, yes, but the manager can be a registered AIFM rather than an authorised one when total assets stay below EUR 100 million, or EUR 500 million for unleveraged funds with no redemption rights for five years. A registered AIFM files with the CSSF but has no EU marketing passport. A family vehicle that invests only its own private wealth without raising capital from outsiders is usually not an AIF.
Who is a well-informed investor in Luxembourg?
An institutional or professional investor, or any other investor who confirms in writing that they are well-informed and either invests at least EUR 100,000, or is assessed by a bank, investment firm or management company as able to understand the investment. The threshold was EUR 125,000 until the Law of 21 July 2023.
How quickly can a RAIF be launched?
The RAIF itself needs no CSSF approval: once the documents are ready it is formed by deed or private agreement and entered on the RAIF list held by the Luxembourg Business Registers. In practice provider onboarding sets the pace: often two to three months.
What did AIFMD II change for private funds?
Since 16 April 2026, mainly loan origination limits, liquidity management tools for open-ended funds and wider delegation and cost disclosures. Section 03 has the figures.