Special Investment Funds in Luxembourg
Specialized Investment Funds in LuxembourgUpdated on Friday 14th December 2018
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The Specialized Investment Fund (SIF) is a type of fund that benefits from a different regulatory and approval regime. It is popular among investors in Luxembourg because it can be used for various purposes, including real estate funds or private equity funds as well in hedge funds.
One of the most important characteristics of the Specialized Investment Fund is that it is subject to a lighter regulatory regime. It still has to be registered at the Luxembourg Comission de Surveillance du Secteur Financier (CSSF) but it does not need to be approved by this Comission before it is created.
The SIF is dedicated mostly to specialized investors who have greater expertise regarding the functioning and risks of investment funds. The lighter regulatory regime is a direct result of the fact that this fund targets professional investors. This type of fund does not have such detailed protection provisions and offers greater flexibility to the investor.
The flexibility of the Specialized Investment Funds
Compared to the UCITS in Luxembourg, the Specialized Investment Fund offers a wider area of allowed investment assets. This flexibility is what makes it attractive to institutional and professional investors. The SIF can invest in any type of assets and has the ability to choose the preferred investment strategy: traditional or alternative investments.
Although there are no investment restrictions and lesser restrictions to prevent any risks, the SIF must observe certain standards for avoiding risk-spreading. A SIF cannot invest more than 30% of its assets or commitments to subscribe in securities of the same nature issued by the same user. Risk management for the SIF is not regulated. This is why investors can request the services of an expert in Luxembourg.
The lawyers at our Luxembourg law firm can tell you more about the laws governing these types of investment vehicles.
Reporting and taxation for SIFs in Luxembourg
According to law, the SIF only has two mandatory reporting documents that must be submitted on a regular basis:
- the offering document: must include relevant information for investors willing to invest in the fund as well as the adjacent risks;
- the annual financial statements: an accountant in Luxembourg can help you with this.
The Specialized Investment Fund must have a minimum share capital of 1.250.000 EUR which must be reached within six months after the fund has received its authorization.
The taxation regime is also favorable for SIFs: there is no income tax levied on these business structures and, except in some cases, dividends and capital gains are not subject to withholding taxes.
The experts at our law firm in Luxembourg can help you with additional information about the SIF law and can help you open a specialized fund. For more information, please contact our attorneys in Luxembourg.