A Specialized Investment Fund in Luxembourg (abbreviated SIF) is a primary investment fund vehicle used for all kinds of alternative investment funds (AIFs), for example: hedge funds, real estate funds, private equity funds and others. Specialized Investment Funds have become more popular and are widely used by investment fund managers in Luxembourg. Our Luxembourg lawyers can help you create an investment fund and offer you detailed information about the SIF regime in Luxembourg.
Specialized Investment Funds in Luxembourg are authorized and supervised by the Supervisory Commission for the Supervision of the Financial Sector (CSSF-Commission de Surveillance du Secteur Financier).
The main characteristics of a SIF in Luxembourg
A Specialized Investment Fund must have an active portfolio management and one of its most important characteristics is that is can invest in any type of assets. However, because a SIF provides a low level of protection for investors, these types of funds are generally recommended for institutional and professional investors, also known as sophisticated investors.
Other characteristics of a Specialized Investment Fund are:
-single fund or umbrella structure;
-no limitations for the initiator or sponsor;
-limited requirements for specific documentation;
-no taxes on capital gains, profits and income;
All Specialized Investment Funds in Luxembourg must have a minimum capital or net assets of 1,250,000 euros and this amount must be achieved within twelve months after the SIF receives its authorization. The qualified investor must have a minimum of 125,000 euros to invest in the fund or an attestation issued by a bank, investment company or management company that he or she possesses the required knowledge and experience to operate and evaluate investments in a SIF. Specialized Investment Funds are subject to the principle risk spreading, which means that each investor must comply with the minimum risk diversification requirements.
A SIF in Luxembourg can take the form of a common fund or an investment company in Luxembourg (SICAV or SICAF). A common fund is managed by a management company, thus, investors in Luxembourg may consider opening a company for this purpose. SIFs in Luxemburg can also be listed on the Luxembourg Stock Exchange. Our team of lawyers in Luxembourg can provide more information about specific requirements for investors and also about the authorization process and requirements for launching a SIF in Luxembourg.
The video below shows you how to set up a SIF fund in Luxembourg:
Taxation and financial reporting for a SIF in Luxembourg
All SIFs in Luxembourg are required to submit annual financial reports and must prepare their financial statements according to the general accounting principles in Luxembourg. The financial statements must also be audited by an independent auditor.
SIFs are generally subject to an annual subscription tax of 0.01%, payable and calculated quarterly. There are no withholding taxes on dividends paid by SIFs in Luxembourg and these types of funds are tax exempt in Luxembourg. Apart from the annual subscription tax, SIFs have to pay a registration fee at the time of the incorporation. For more information about tax law and tax compliance in Luxembourg, please contact our law firm.
Luxembourg is becoming increasingly attractive in the investment fund industry. If you are interested in creating a SIF or other types of funds in Luxembourg, we can help you with detailed information.
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