Private equity Funds in Luxembourg

Investment company in risk capital ("SICAR"): specific to this asset class, Luxembourg has introduced legislation designed to meet the needs of the private equity and venture capital community. This Law of June 10, 2004 relating to an investment company in "risk capital" ("SICAR") creates a very favorable regulatory and tax regime for vehicles which technically are not investment funds, but resemble their functioning closely. Compartments may be implemented to avoid any contamination between the different assets owned by the SICAR. The SICARs, which are also reserved to well-informed investors, are, next to the SIFs, the prime vehicles for investing into private equity and venture capital. The total number of SICARs incorporated in Luxembourg up to February 2011 amounts to 242.

See more in our brochure: Private equity in Luxembourg

Contacts:

Valérie Tixier Audit Partner, Private Equity Funds - Regulated Structures

Markus Mees Audit Partner, Private Equity

Xavier Balthazar Regulatory Compliance Advisory Services Partner

Funds dedicated to well-informed investors ("SIF"): as a counter-act to the retail regime of the 2002 Law, Luxembourg has created a new regime of funds designed for well-informed investors, i.e. either institutionals, large corporates or individuals which are ready to certify that they adhere to the status of well-informed investors and who invest a minimum of EUR 125,000 in a SIF, or alternatively, obtain an assessment from a regulated entity certifying their expertise, experience and knowledge in assessing the risk of their investments. The range of eligible assets is unlimited. Compartments may be implemented to avoid any contamination between the different assets owned by the SIF. On February 13, 2007 the Lux Government enacted a law to allow institutional investors to invest in SIFs. The success of the SIF Law is a testimony to the vision of the Luxembourg legislature and to its capacity of translating industry and clients’s demand into reality.

See more in our brochure: Private equity in Luxembourg

Contacts:

Valérie Tixier Audit Partner, Private Equity Funds - Regulated Structures

Markus Mees Audit Partner, Private Equity

Xavier Balthazar Regulatory Compliance Advisory Services Partner

Public funds: Non-UCITS ("Part II funds"): there is no restriction as to the type of investors (minimum subscription amount of EUR 12,500); Part II funds are open to the retail public in Luxembourg as well as to corporates or institutions. The range of investments eligible for Part II funds is not limited and therefore, all types of private equity investments are permitted provided the Part II fund complies with the principle of risk-spreading. Compartments may be implemented to avoid any contamination between the different assets owned by the fund.

See more in our brochure: Private equity in Luxembourg

Contacts:

Valérie Tixier Audit Partner, Private Equity Funds - Regulated Structures

Markus Mees Audit Partner, Private Equity

Xavier Balthazar Regulatory Compliance Advisory Services Partner

A "Soparfi" ("Société de participation financière") is a Luxembourg company carrying on holding and/or financing activities which is not subject to the supervision of a financial authority (a "non-regulated company"). Since the Soparfi is fully subject to corporate income tax it benefits from double tax treaties that Luxembourg has signed with other countries (see the list of DTT available) and from application of the EU Directives (e.g. Parent-Subsidiary Directive).

We frequently recommend the use of such type of company as acquisition and financing vehicles for foreign offshore investment funds investing in European private equity. Indeed, in a proper tax structuring, the overall structuring results in an efficient tax regime facilitating funding stage and repatriation mechanisms with a low effective taxation.

Luxembourg holding companies may be turned into investment platform companies (i.e. MasterLuxCo concept) whereby, provided the structure and financing agreements are properly designed, several offshore or onshore funds could invest through the same holding company in different kind of assets. Such tax structuring is well-tested, flexible and efficient to suit private equity funds’ constraints and needs. This structuring allows indeed for easy investments and divestments and benefits from the tax regime applicable to a Soparfi, i.e. access to DTT, EU Parent-Subsidiary directive, no supervision and low administrative costs.

Contacts:

Fiona Monsen Tax Partner, Tax Structuring, Repatriation Planning and Due Diligence

Luc Trivaudey Tax Partner, Private Equity Accounting Services

Geraldine Piat Tax Partner, Private Equity Tax Compliance Services

Christophe Loly Tax Partner, Corporate Secretarial Services

Véronique Lefebvre Audit Partner, Assurance Private Equity Leader