Set up a SICAV in Luxembourg
Updated on Thursday 29th June 2017
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The SICAV vehicle in Luxembourg refers to an investment company with variable capital, which has a legal personality. Businessmen interested in how to start a fund in Luxembourg as SICAV should know that this type of vehicle can be incorporated following the regulations applicable for Collective Investment in Trasferable Securities (UCITS) or the ones regulating the Specialized Investment Funds (SIF). One of the main characteristic of the SICAV refers to the fact that its capital should always match the fund’s net assets.
Main characteristics of the Luxembourg SICAV
The SICAV in Luxembourg is incorporated as a limited liability company, but the legal structure is not considered a commercial company and thus, the vehicle is to be registered with the Commission du Surveillance de Secteur Financier (CSSF), the main institution regulating and supervising the activity of the investment vehicles incorporated in this jurisdiction.
Taxation of SICAV in Luxembourg
Investors interested in how to start an investment fund in Luxembourg as a SICAV vehicle will be exempted from paying certain corporate taxes, as follows:
• corporate income tax;
• capital gains tax;
• withholding tax.
Although the SICAV is incorporated as a company, it will be treated following the regulations applicable to investment funds. In this sense, it is important to know that the vehicle will be liable to paying the annual subscription tax, which is imposed at the rate of 0,05% of the fund’s net assets.
Foreign businessmen who want to register a SICAV should know that if the fund will be regulated following the rules applicable to UCITS, there will be no restrictions related to the company’s investors.
However, in the case of SICAVs registered under the SIF regulations, the company’s investors can only be represented by qualified investors.
The investment market available in Luxembourg provides the same rights for foreign businessmen as the ones available for the local investors. Thus, businessmen may set up a hedge fund startup or a SICAV/ SICAF vehicle or another type of business form.
The SICAV may set its investment operations as one of the following:
• security funds;
• real estate funds;
• money market funds;
• holding funds.
Our team of affiliates in Luxembourg can provide more details on the SICAV legislation. Please contact our partners for assistance on this matter.