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US GAAP for AIFs under SCSp legal form possible in Luxembourg


In brief

An amendment to the Luxembourg Law transposing the Alternative Investment Fund Managers Directive (AIFMD) has been enforced in July 2021, allowing, amongst others, the use of accounting principles generally accepted in the United States of America (“US GAAP”) for Alternative Investment Funds (AIF) under the SCSp legal form.

This amendment to the existing law and allowance of US GAAP for SCSp is one more step in the globalisation of the Luxembourg alternative investment industry to continue leading the way in Europe and beyond.

In detail

According to the Luxembourg Company Law, a “Société en Commandite Spéciale” (SCSp, or special limited partnership) has to keep accounting books, without the obligation to comply with the Luxembourg accounting standards (Lux GAAP) or International Financial Reporting Standards as adopted by the EU (IFRS). In practice, the Limited Partnership Agreements define the accounting standards to be applied to the SCSp’s accounts.

As SCSp can be operated in a very similar manner to a foreign limited partnership, they become very popular as a legal form for AIF. Many asset managers, especially those based in the US, decided to prepare the financial statements of their SCSp in accordance with US GAAP to address the needs of their investors and improve the comparability with their other funds.. 

The annual reports of the AIFs must also comply with AIFMD requirements. In this context, for the sake of the clarification regarding the use of US GAAP for financial statements of AIF under SCSp form, an amendment to the Luxembourg Law of 12 July 2013, transposing AIFMD in the country’s regulation, has been proposed early April 2021. 

This amendment specifies that, “The accounting standards applicable to a Luxembourg AIF, which has adopted the form of a special limited partnership, are the accounting standards provided for by the Law of 19 December 2002 concerning the trade and companies register as well as the accounting and annual accounts of companies, as amended, as well as the accounting standards considered as equivalent by the amended Commission Decision of 12 December 2008 on the use by third countries’ issuers of securities of certain third country’s national accounting standards and International Financial Reporting Standards to prepare their consolidated financial statements.” USGAAP are included in the list of accounting standards deemed as equivalent by the Commission Decision.

The amendment was enforced in the Luxembourg Law on 21 July 2021 (Article 20.(3) of the law). 

Contact us

Vincent Lebrun

Alternatives Leader, Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 3193

Alexandre Leleux

Partner, PwC Luxembourg

Tel: +352 49 48 48 2884

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