24 November 2022,
WHO SHOULD START THE FUND IN LUXEMBOURG?
If you are thinking of acquiring funds from investors from different markets, and if you need a prestigious structure to talk to the founders of companies from around the world, then the Luxembourg fund will be a good solution. Luxembourg is a global financial service centre and the world’s most popular (after the US) location for investment funds. Luxembourg funds are flexible in registration and use and offer a quick prospect of entering the market.
As a result, Luxembourg is an ideal place for many types of funds, including venture capital, umbrella, hedge, private equity, real estate or family office structures.
BENEFITS OF THE FUND IN LUXEMBOURG
- INVESTMENT FLEXIBILITY The ability to adapt the fund structure to your goals. A wide range of asset classes, including ordinary shares and bonds, as well as innovative strategies for infrastructure, renewable energy, precious metals and much more.
- SIMPLE ADJUSTMENTS. Compliance with UE regulations. Highly standardized processes, acceptable worldwide. The possibility of obtaining recapitalisation from European funds.
- LOW TAX. The Fund shall not be subject to any taxes on capital gains or income earned in Luxembourg. Favourable tax system especially for non-residents.
- BRAND. Improved perception of the fund on international markets. Among investors from all over the world and funds from overseas. First of all, due to the predictability of processes and their high flexibility. In addition, Luxembourg ranks FIRST in the EU Member States in terms of business conduct and compliance with EU law and regulations
- ACQUISITION OF CAPITAL/EXIT. Funds such as AIFs, RAIFS and UCITS can be listed on Luxembourg’s stock exchange and other recognised EU stock exchanges.
Luxembourg is the largest and best-known location for investment funds in Europe and the second largest after the United States headquarters of funds in the world. The value of the assets managed by funds registered in Luxembourg as at 30 November 2021 is EUR 5 749 billion.
Luxembourg’s investment fund sector is a global leader in the cross-border distribution of funds. Luxembourg-based investment structures are distributed in more than 70 countries worldwide, with a special focus on Europe, Asia, Latin America and the Middle East. Many Luxembourg funds use the so-called European passport, which allows funds (and their managers) complying with the UCITS Directive or the Alternative Investment Fund Managers Directive (the Alternative Investment Fund Managers Directive) to be marketed to investors in the European Economic Area (EEA), following a simple notification procedure.
THE MOST FREQUENTLY SELECTED STRUCTURES OF THE LUXEMBOURG FUNDS:
- LUXEMBOURG’S PROPRIETARY ALTERNATIVE INVESTMENT FUND (RAIF)
The RAIF structure was introduced in 2016 and combines the features of Luxembourg’s most popular fund structures, SIF and SICAR, until then.RAIF are limited to well-informed and professional investors.
RAIF aims to minimise the planning uncertainty that may arise during the mobilisation of funds by eliminating the need for prior authorisation and ongoing direct prudential supervision by the CSSF.
This specific structure has a low tax of 0.01% of the net asset value. However, if RAIF invests exclusively in risk capital, it may opt for taxation as in the case of SICAR.
RAIF can be set up and run in a simplified process (typically 4-6 weeks) as it is not supervised by CSSF. RAIF is subject to the AIFMD and is supervised by an authorised EU alternative investment fund manager (AIFM) and benefits from marketing across the EU using the provisions on the European passport.
- LUXEMBOURG SPECIALISED INVESTMENT FUND (SIF).
SIFs are regulated and tax efficient multifunctional alternative investment funds for all types of investment.
SIF is created in a contractual form, i.e. as an Investment Fund represented by the Managing Company (fonds commun de placement, FCP) or in the form of a company, i.e. as an Investment Company whose capital is variable (SICAV) or fixed (SICAR).
SIFs benefit from a number of tax advantages, including an exemption for investors from capital gains tax, an annual subscription tax of only 0.01% of the net asset value (with some exceptions), an abolition of capital duty on the formation of a company, and investors’ shares are not subject to net value tax. It has a limited right to benefit from double taxation conventions if it is set up as an investment company.
SUPPORT BY PANASIUK & PARTNERS TEAM
We specialize in international investment structures, i.e. in holding companies, investment funds and topics related to law and international taxes for over 20 years.
- We will analyze the best structures and markets that meet your investment criteria and objectives.
- Our team offers full legal and tax support based on specialist knowledge of the local and international dynamics of legal and tax changes.
- As part of the cooperation, our team manages the entire process of organizing your investment structure, thanks to which we remove the burden of coordinating the international process (we have been doing it for 20 years!). You get space for investment decisions. On our part, you will receive a guarantee of a holistic view of issues arising not only from Polish, Dutch or other markets where investments will be carried out, but also aspects related to the change of tax residence (if such a subject occurs).