At the end of last year Luxembourg has adopted a new legislation related to the establishment of a new type of investment fund, the Reserved Alternative Investment Fund (fonds d’investissement alternatifs réservés, FIAR). This new type of structure is available to all types of investors and authorized fund managers and is a combination between specialized investment funds (SIF) and SICAR funds.
One of the greatest advantages of the FIAR fund is that it is not required to undergo authorization by the CSSF.
Luxembourg FIARs can be set up as:
FIARs may also choose to have variable capital structures or be registered as umbrella corporations. No matter the type of structure utilized, the Luxembourg FIAR must appoint a local or a EU authorized investment fund manager. The FIAR must also nominate an independent auditor. The minimum amount to be injected into the fund is 125,000 euros.
The Reserved Alternative Investment Fund must be registered with the Luxembourg Chamber of Commerce within 10 days from its establishment.
The FIAR can choose to be taxed as a SIF and benefit from exemptions from the corporate tax, municipal business levy and net worth tax. In this case the FIAR will only be subject to the subscription tax of 0.01% of the fund’s net value of assets.
The other alternative is the regime applied to SICAR funds, under which the FIAR will be levied the taxes mentioned above, but will allow the fund to benefit from all Luxembourg’s double tax treaties which can provide for substantial tax benefits for foreign investors.
The Luxembourg Reserved Alternative Investment Fund is the newest type of investment fund one can set up in the Grand Duchy and was designed to provide more flexibility to investors. The new regime also provides for more flexibility in choosing the assets to be invested in the FIAR. The fund may also choose to have a fixed or a variable capital.
For assistance in setting up a FIAR in the Grand Duchy, you can contact our lawyers in Luxembourg.
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