How to set up an investment fund in Luxembourg in 2020

How to set up an investment fund in Luxembourg in 2020

If we briefly describe the financial environment of Luxembourg, then it can be said that this country was one of the founders of the European Union and today it is one of the generally recognized financial centers.

Being in the heart of Europe, a small state has an invaluable experience in working with complex financial instruments and quick accessibility for direct contact with government agencies.

Taking into account that the local investment fund industry is one of the largest in Europe and the second in the world, it makes sense to consider this jurisdiction in order to set up an investment fund in Luxembourg (IF).

This country is interesting for citizens of post-Soviet states, that is, there is a real interest to open an investment fund in Luxembourg for CIS citizens.

The setting up an investment fund in Luxembourg provides for preliminary consideration of several variants of local IFs, which are called "specialized".

The SIF or a specialized investment fund in Luxembourg has two types (on equity participation):

  • (SICAV) - an IF with a variable;
  • (SICAF) - IF with a constant;
  • SIF is most suitable for private investors who decide to create their own fund in Luxembourg.

The Luxembourg IF with variable capital (SICAV) is a separate legal entity with a legal form of AO. The variable capital of this fund at any time is in full accordance with the real value of IF.

The Luxembourg IF with constant capital (SICAF) is also an entity that has the right to function as an IF of closed or open type.

However, it should be clarified that investment funds in Luxembourg with both types of capital must have an activity permit, and are under the supervision and supervision of the local Committee for Financial Supervision (CSSF).

The investor of the fund must prove documentary the existence of 125 thousand euros for further investment.

The manager or investment company, as well as the head office, must actually be located in the country, and you need to check the annual fund report with a licensed Luxembourg auditor.

IFs with both types of capital, having Luxembourg dominions, are exempt from taxes:

  • with capital;
  • income;
  • sources of income.

From the funds each year, only the subscription tax is charged - 0.05% of the net asset value of the IF.

There is another one-time capital tax - 1 250 euros, which is paid at registration.

If you have decided to create an investment fund in Luxembourg, you will need information about the investment policy of IF.

Specialized SIF funds have the right to invest finance in any assets - securities, including those transferred, short-term investment IFIs, NFs (real estate funds), hedge funds and private equity funds.

The storage of your assets is entrusted only to a credit institution officially registered in Luxembourg.

The liability of the custodian of assets is limited only by the damage that shareholders / unit holders can incur if they themselves are guilty of non-performance / improper performance of their duties.

By the way, IF shareholders can be three types of depositors:

  • institutional;
  • professional;
  • well informed.

In a year's work of the fund and not later, the property of your IF should be brought to the level of 1,250,000 EUR.

In the event that the IF with variable capital, all of its shares you must distribute by subscription. At the same time, only 5% of fixed assets are paid in cash or in property.

The rather flexible rules of redemption and issue of shares or shares, as well as the serious attitude towards confidentiality in the jurisdiction, is an attractive factor for setting up an investment fund in Luxembourg for Ukrainians or opening an investment fund in Luxembourg for Russians.

Separately, it should be noted that if you decided to open an investment fund in Luxembourg, the name of your company is necessarily the presence of the abbreviation SIF.

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