The new legal framework applying to the Lux LP and the Lux SLP allows for high flexibility while providing greater legal certainty. It also caters for an extended Luxembourg tax transparency treatment for non-regulated Lux LP and Lux SLP.
By improving the existing Lux LP regime and adding the Lux SLP to its legal arsenal of investment vehicles dedicated to the alternative investment industry, Luxembourg offers a new solution as alternative investment fund jurisdiction to Private Equity and Venture Capital operations and to alternative investment funds managers and promoters in general.
The main difference between these two vehicles lies in the absence of any legal personality for the Lux SLP. The Lux LP and Lux SLP constitute an onshore solution with a legal flexibility comparable to the Anglo-Saxon Limited Partnerships model, and a full tax transparency in most cases. This allows the fund and the acquisition structure to be in the same jurisdiction and currently grants immediate access to the passport for distribution to European investors, provided that the AIFM in charge is located in Europe.
Also the Luxembourg tax authorities released a Circular on the taxation of the Luxembourg limited partnership (Société en Commandite Simple - SCS) and of the Luxembourg special limited partnership (Société en Commandite Spéciale - SCSp), which clarifies the interpretation of the Luxembourg tax authorities on the tax regime of these two types of entity when set up as AIF not regulated product.
The Lux SLP and the Lux LP may be set up as non-regulated vehicles (being AIF or not) or as regulated funds under the SIF or the SICAR regime.
Since 2016, Lux SLP and Lux LP may also be set up as RAIF under a SIF or a SICAR regime but not regulated as product but only regulated indirectly through regulation of the AIFM.
More than 1800 active Lux SLPs are registered as of April 2018. The numbers are constantly growing but they do not take into account common limited partnerships with legal personality.
Few SLPs are set up as specialised investment funds subject to the law of 13 February 2007. Most of them are unregulated vehicles e.g. fund vehicles, general partners, acquisition vehicles, holding vehicles, etc. SLPs set up as un-regulated or regulated funds offer, combined with an EU AIFM, access to the European Passport for distribution of alternative investment funds to European investors.
Private Equity Leader, PwC Luxembourg
Tel: +352 49 48 48 3193