In Luxembourg, we specialize in: company (corporation) registration, investment funds, residence and permanent residency within the framework of business immigration, and property selection.
Below is an example of a portion of the work completed on one of our projects in Luxembourg.
Investment Fund in Luxembourg – Example of Implementation
Project for creating a fund to list shares on the green exchange in Luxembourg with the goal of constructing a solar panel manufacturing plant in Europe.
Complete proposal for creating a regulated fund with the necessary structure, listing the fund on the exchange, and its ongoing management and regulation*
Initial Data:
Ten individuals from Germany, France, and England are investing a total amount of EUR 100 million in a specially created fund to list shares on the green exchange in Luxembourg with the goal of building a solar panel manufacturing plant in Europe. The specific construction site has not yet been determined.
A business plan for the design and construction of the plant and a repayment plan are not available.
The estimated cost of constructing the plant is approximately EUR 150 million.
Project Goal:
Build a solar panel manufacturing plant.
Brief Project Timeline and Preliminary Expense Estimate
1. Organization of a Regulated Fund with a Supervisory Authority in the form of an AG and a Target Partnership in the form of an AG + Annual Management of the Entire Structure in the First Year: Approximately EUR 196,000**
Duration for Structuring: Approximately 6 to 12 months
During this period, the entire structure (fund, supervisory authority, and target partnership) will be created, a business plan, repayment plan, and memorandum will be prepared. All documentation for the listing on the exchange will be compiled.
Fund Listing on the Exchange with an Existing Memorandum and All Permits: Approximately EUR 85,000, including government fees.
Duration for Listing: Approximately 3 to 5 months
During this period, the project will be reviewed by supervisory authorities, all permits will be obtained, and the fund will be listed on the exchange.
3. Ongoing Management and Regulation of the Fund on the Exchange, Administration of the Supervisory Authority and Target Partnership (annual cost): Approximately EUR 170,000, including quarterly audit and legal support.
Stage 3 – This is the first year of operation of the entire structure after the fund’s listing on the exchange, including all regulatory checks and quarterly reports to regulators.
Stages 1, 2, and 3 are estimated to take approximately 24 months and will require total costs of approximately EUR 196,000 + EUR 85,000 + EUR 170,000 = EUR 451,000
4. Cost of Each Subsequent Year (from the 3rd year onward): Approximately EUR 140,000, including quarterly audit and legal support.
Total Project Costs for a Five-Year Period: EUR 451,000 + EUR 140,000 x 3 = Approximately EUR 871,000***
The five-year period is a conventionally assumed duration for the project.
Stages 1, 2, 3 (2 years) + 3 years (Stage 4 x 3): Approximately 5 years
Notes:
*All calculations are applicable to options for listing on two different markets. The specific market will be determined during the detailed project development phase.
**All amounts are net and subject to VAT at 19%.
***All stages represent maximum cost estimates considering intensive operation of the entire created structure.
Investment Fund SICAV / SICAF in Luxembourg
I. Legal Structure
1. Concept
SICAV and SICAF are investment fund structures in Luxembourg that can be formed as UCITS (Undertakings for Collective Investment in Transferable Securities) or as Specialized Investment Funds (SIFs).
SICAV (Société d’Investissement à Capital Variable) is an investment fund in the form of an investment company with a variable capital structure, where the value at any time corresponds to the net asset value of all sub-funds (shares without nominal value). In contrast, SICAF (Société d’Investissement à Capital Fixe) exists in the form of an investment company with a fixed capital structure. Since both types of investment funds are not incorporated, they are managed or externally managed investment companies. SICAV and SICAF investment funds are permitted to manage assets only in their own portfolios.
2. Objective:
Their aim is to invest equity capital in securities or other liquid financial investments following the principle of diversification to allow shareholders to receive income from the management of their assets.
3. Investment Policy
SICAV and SICAF can be structured with mixed investment assets, including Securities; Real Estate; Money Market; and Holdings.
4. Investors:
If SICAV and SICAF are formed as UCITS, there are no restrictions on who can be an investor. In contrast, Specialized Investment Funds (SIFs) are reserved only for “qualified investors.”
5. Formation
SICAV is formed as a public limited company (PLC., Corp./SA). In contrast, SICAF can be formed as a corporation in the form of a public limited company (PLC., Corp./SA), limited liability company (LLC., Ltd./SARL), Partnership Limited by Shares (SCA), or Cooperative in the form of an Open Joint Stock Company (SCOSA). SICAV and SICAF are often formed as umbrella funds with several sub-funds. In this case, various sub-funds can be structured such that the assets and liabilities of each sub-fund are separate. This results in the independence of each sub-fund to the maximum extent possible. Additionally, each sub-fund may have its own investment strategy and investment manager.
6. Minimum Capital
The minimum capital for SICAV/SICAF investment funds is at least EUR 1.25 million and must be paid within 6 months after receiving permission from the Luxembourg Financial Sector Supervisory Authority (CSSF) for UCITS and within 12 months for Specialized Investment Funds (SIF). The minimum equity capital depends on the chosen legal form.
7. Registered Office
The registered office and primary place of control and management of SICAV and SICAF must be located in Luxembourg according to the statute. This includes, among other things, the creation and storage of all documents provided to investors, as well as the issuance and redemption of shares.
8. Depositary/Custodian
SICAV/SICAF assets must be transferred to a resident custodian in Luxembourg (depositary bank). This ensures that shares are issued and redeemed in accordance with statutory provisions. Additionally, the custodian must ensure that income and/or profits are used in accordance with the statute.
9. Investment and Distribution Policy
SICAV and SICAF may issue and redeem new shares at any time, not exceeding the value of net assets. Both funds can freely regulate the distribution of dividends or other payments to their investors through formal conditions in the articles of association. Both investment funds in Luxembourg are not required to create reserves.
10. Regulatory Issues
10.1. Creation
SICAV and SICAF are supervised by the Luxembourg Financial Sector Supervisory Authority (CSSF). Both the investment funds and the fund managers and advisors require licenses before starting operations. However, there are no restrictions on the citizenship of the individuals or companies managing or providing the funds.
10.2. Reports
SICAV and SICAF must prepare annual and semi-annual reports, which must be audited by an independent auditor. These reports must be published no later than 4 months (and no later than 6 months for Specialized Investment Funds (SIF) in Luxembourg) after the end of the year. Additionally, investment funds must prepare, except for closed-end UCITS funds, a prospectus that includes, among other things, the founding documents to allow investors to assess the proposed investments and associated risks.
II. Tax Structure of SICAV / SICAF Investment Funds
1. Corporate Taxation
SICAV and SICAF investment funds are exempt from corporate taxation. They are subject to a “subscription tax” at an annual rate of 0.05% of their net assets or 0.01% if the investment funds are formed as Specialized Investment Funds (SIF).
2. Tax Exemptions
Both SICAV and SICAF are exempt from net wealth tax and withholding tax on dividend distributions to non-resident investors. Additionally, fund management services provided by the management company in Luxembourg are not subject to VAT. However, other services may still be subject to VAT at a rate of 15%.