Luxembourg Funds

Luxembourg is Europe’s fund centre (and the second largest in the world) with almost 2.5tn EUR under management. Luxembourg also has about 75% of market share of UCITS (a European retail fund designed to allow seamless cross-border operation, see below). Its success is thanks to its well regulated and stable financial services regime and exceptionally low tax rates. By comparison with the smaller European fund centres Luxembourg can be criticized as being overly complex, bureaucratic and slow but for larger players it remains the country of choice.

Types of Fund in Luxembourg
There are two main types of funds in Luxembourg and their information is set out in the below table. This page is specific to Luxembourg funds, for the general differences between types of funds please see our main article in the products section.


Undertakings for collective investment in transferable securities (UCITS)

Specialised investment funds (SIFs)

Retail or Professional?




0.05% per year on net asset value

0.01% per year on net asset value

Who can invest?

Any EU investor (straightforward passporting arrangement)

eligible investors only, such as professional (more complex but passporting arrangements)

Minimum amount per investor?


125,000 EUR

What assets can form the fund?

Limited to cash/currency and transferable securities (i.e. listed companies) and some derivatives related to these things.


Minimum total fund value

1.25m EUR in six months

1.25m EUR in six months

Leveraging permissible?



Short selling permissible?



Risk Spreading Requirements?


Yes (but less strict - no more than 30% in a single asset)

Appropriate Vehicle?

SICAF (closed investment company (SARL)) or SICAV (open investment company (SA), variable share capital) or FCP (tax transparent pool of assets similar to a unit trust)

SICAF (closed investment company (SARL) or SICAV (open investment company (SA), variable share capital) or FCP (tax transparent pool of assets similar to a unit trust)

Common uses

UCITS (see above for asset class restrictions)

Private Equity Funds
Hedge Funds
Venture Capital Funds
Real Estate Funds
Private Placement Funds
Distressed Asset (Vulture) Funds
Funds combining multiple classes of underlying asset or investement

In addition to the above two types there are others including the SICAR which is used for distressed assets and is similar to a SIF but without the same diversification requirements.

Regulation and Licensing Process
Funds in Luxembourg are regulated by the Commission de Surveillance du Secteur Financier (CSSF). Licensing beings with the submission of documents including Key Investor Information Documents (KIID), prospectus, constitutional documents. The CSSF then undertakes the usual approval of all involved parties (service providers, directors, shareholders, beneficial owners etc) as people of good standing. Licence applicants must also ensure compliance with local risk management, Anti Money Laundering (AML), and other statutory rules and regulations. This is an area where local providers generally provide assistance. 

Local Providers
All Luxembourg funds must appoint a regulated local management company, custodian and use of local auditors (which in most cases also means that accountants and bankers will be local too in order to avoid duplication of work). The above requirements add an element of cost since Luxembourg is a fairly expensive country, in an international context and outsourcing may be impossible or undesirable and could lead to significant delays.

If everything is in order 6 months should be allowed from first discussions with local service providers until the operating licence is in hand.

Luxembourg SIFs and SICARs can be listed on the Luxembourg stock exchange (or any other stock exchange subject to local rules).

Undertaking for Collective Instrument in Transferable Securities (UCITS)
Undertakings for Collective Instrument in Transferable Securities (UCITSs) is a measure to allow the free operation within the EU of open ended funds which invest in transferable securities without the need for local regulation in each country and bypass requirements relating to the appointment of local investment managers. The scope of UCITS is limited to open PIFs dealing in transferable securities. Suitable PIFs can be UCITS.