Securitization vehicle
Practical use• True sale
and synthetic
securitisations.
• Securitisation
of a portfolio of
securities.
• Securitisation
as structure for intra
group financing
activities.
• Securitisation of
non-performing loans.
• Securitisation of
leasing receivables.
• Real estate securitisations (project financing and real estate financing)
Applicable legislationLaw of 22 March 2004 (“Securitization Law”)
Authorisation and supervision by the CSSFNo (unless continuous issues of
securities to the public)
Qualification as an AIFNo, in case
• such vehicle
meets the definition of
“securitisation special
purpose vehicle or
securitisation SPV”
under the AIFM Law;
• it issues
collateralised debt
obligations;
• it only issues debt
instruments;
• such entity is not
managed according to
an investment policy
within the meaning of
the AIFM Law.
Exemption
from AIFMD
full regime
under lighter
regime (AIFMD
registration
regime)
Possible.
External
authorised
AIFM
requirement
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Eligible investorsUnrestricted.
Eligible assetsUnrestricted.
Securitization of any kind of risks relating to claims, other assets, or obligations assumed by third parties or inherent to all or part of the activities of third parties.
Risk diversification requirementsUnrestricted.
Securitisation of any
kind of risks relating
to claims, other
assets, or obligations
assumed by third
parties or inherent
to all or part of the
activities of third
parties.
Legal FormA securitisation
vehicle may be set
up in the form of a
company (SA, Sàrl,
SCA, SCoSA) or a
fund consisting of
one or several coownerships
or one
or several fiduciary
estates and managed
by a management
company.
Umbrella structureYes
Capital requirementsIf the securitisation
vehicle is set up as a
company, it depends
on the form:
• SA / SCA: EUR
30,000
• Sàrl: EUR 12,000
If the securitisation
vehicle is set up as
a fund, there is no
minimum capital
requirement.
Required Luxembourg service providers• Alternative
Investment Fund
Manager (if the
securitisation vehicle
qualifies as an AIF).
• Management
company (if the
securitisation vehicle
is set up in the form
of a fund).
• Independent
auditor.
• No depository
institution (unless for
regulated securisation
vehicles).
• No administrative
agent.
Possibility of listingNo.
European passportNo, unless it falls under the scope of the full AIFMD regime.
Net asset value (NAV) calculation and redemption policyNot required.
Corporate income tax• General
aggregate rate
for securitisation
companies: 24.94%.

Securitisation
vehicles should be
able to deduct from their gross profits their operational costs
and the dividends or interests distributed to the shareholders / creditors. Therefore securitisation
companies should not generate significant taxable profits and should therefore to a large extent be tax neutral.
Subscription taxNo subscription tax.
Wealth taxNo wealth tax.
Withholding tax on dividends / interests and capital gainsNot subject to withholding tax except
if EU Savings Directive applies.
Benefit from double tax treaty networkYes for securitisation
companies.
Benefit from the EU Parent Subsidiary DirectiveYes
Thin capitalization rules (debt-to-equity ratio)No debt-to-equity ratio.

The Luxembourg law of 22 March 2004 on securitisation (the “Securitisation Law”) has laid the foundations for the legal, regulatory and tax framework for Luxembourg securitisation vehicles. The main features and advantages of the Securitisation Law are discussed hereunder.

A securitisation is a type of structured financing whereby a pool of financial assets (such as loans, mortgages, etc.) is transferred to an entity that subsequently issues debt securities backed solely by the transferred assets (collateral) and payments derived from those assets.

While the benefits of securitisation may vary for different issuers and investors, the common advantage of securitisation is that it provides a lower cost of capital, it enables a company to convert illiquid assets into cash and it also transfer the risks related to some assets to third parties.

(a)        Definition

The definition of “securitisation” is very broad and encompasses all transactions whereby an undertaking acquires (true sale securitisation) or assumes (synthetic securitisation) any risk linked to an asset. This undertaking is financed by the issue of shares, bonds or other securities, whose return value depends on the investment risks.

(b)        Legal forms – share capital

The Securitisation Law distinguishes between securitisation vehicles that have either been set up under the form of a company (securitisation company) or under the form of a fund (securitisation fund) without legal personality run by a management company. The securitisation company must adopt one of the following forms, namely (i) a company limited by shares (société anonyme or S.A.), (ii) a limited liability company (société à responsabilité limitée or S.à. r.l.), (iii) a partnership limited by shares (société en commandite par actions) or (iv) a cooperative company organized as a company limited by shares (société cooperative organisée comme société anonyme). A securitisation company is not subject to a specific minimum share capital. The minimum share capital depends upon the legal form and it ranges between 12.000 euro (for a S.à r.l.) to 30.000 euro (for a S.A. and S.C.A.).

(c)        Supervision

As a general rule, securitization vehicles do not require the approval of the Luxembourg regulator, the Supervisory Commission of the Financial Sector (“CSSF”), if such vehicles issue securities in a private placement or make a single issue of securities or issue on an irregular basis, less than 3 times per year. On the other hand, securitisation vehicles which issue securities on a continuous basis to the public must be authorized by the CSSF. The following terms should be understood as follows:

  • continuously” means more than three (3) issues per year to the public. The number of issues to consider is determined by the total number of issues of all compartments of the securitisation undertaking.
  • to the public”: concerning the issuance of securities to the public, the CSSF provided the following criteria:
    • issues to professional clients within the meaning of Annex II to Directive 2004/39/EC (MIFID) are not issues to the public;
    • issues having denominations equal to or above EUR125,000 are assumed not to be placed with the public;
    • the listing of an issue on a regulated or alternative market does not ipso facto entail that the issue is deemed to be placed with the public;
    • issues distributed as private placements, irrespective of their denomination, are not considered as issues to the public. The CSSF assesses whether the issue is to be considered as a private placement on a case-by-case basis according to the communication means and the technique used to distribute the securities.

(d)       Asset classes

The Securitisation Law allows for the securitisation of “risks related to the ownership of all assets, whether movable, tangible or intangible, as well as risks resulting from commitments that were assumed by third parties or that are inherent to all or part of the activities undertaken by third parties”. As a result, virtually all assets can be securitised such as: mortgages, trade receivables, commercial credits, current accounts, shares, debenture loans, buildings, etc. Securitisation may be used in various situations and it may be performed either as (i) a true sale whereby the securitisation undertaking becomes the legal owner of the claims, (ii) a synthetic securitisation where only the risks linked to the debt portfolio are transferred to the securitization undertaking, or as (iii) a whole or partial business securitisation.

Some potential applications could be:

  • Securitisation of a portfolio of securities

In order to mitigate the negative consequences of the risk inherent of holding securities being accounted for on the balance sheet, a company may transfer this portfolio at current value to a securitisation vehicle. This allows companies to convert a portfolio of securities into liquid assets. The investors investing in the securitisation vehicle have the benefit of acquiring a significant interest in a portfolio of securities without having to bear the full investment of this portfolio alone.

  • Securitisation as a structure for intra group financing activities

It enables a group company to find a financing source within the securitisation vehicle. Holders of the securities of the securitisation vehicle will be paid profits owed to them on the financing activity. Unlike normal Luxembourg companies, there is no debt equity ratio that needs to be maintained on a securitisation vehicle. A securitisation vehicle can thus be financed without having to maintain any minimum capital requirement. This substantially reduces the costs of financing and the operating companies will have a bigger leverage, as they are able to deduct more interests than is the case when using a common Luxembourg company (soparfi)).

A securitisation vehicle may qualify as an AIF within the meaning of the law of 12 July 2013 on alternative investment funds managers (“AIFM Law”) under certain conditions. For example, undertakings having as a core business the securitisation of loans that they grant themselves, acting in their capacity of “first lender” would fall under the definition of AIF. Similarly, securitisation vehicles that issue structured products offering a synthetic exposure to assets other than loans (non-credit related assets) and whereby the credit risk transfer is only ancillary would also be considered as an AIF.

Should a securitization vehicle qualify as an AIF, additional requirements would need to be fulfilled that are more or less numerous depending on its supervision status. At a minimum, the securitisation AIF would need to appoint an alternative investment fund manager that shall be either registered or authorized subject to the value of the portfolio it manages.

Certain unregulated securitisation vehicles may qualify as shadow banking entities and therefore provisions related to shadow banking should be observed, in particular exposure of investors to shadow banking entities.

For the avoidance of doubt, a securitisation vehicle shall not qualify as an AIF if:

  • such vehicle meets the definition of “securitization special purpose vehicle or securitization SPV” under the AIFM Law;
  • it issues ”collateralised debt obligations”;
  • it only issues debt instruments; or
  • such entity is not managed according to an “investment policy” within the meaning of the AIFM Law.

The securitisation undertaking supervised by the CSSF is expected to provide copies of the following documents to the CSSF, as soon as such documents are finalised:

  • the final issue documents related to any issue of securities;
  • the financial reports prepared by the undertaking and rating agencies, if applicable;
  • the annual reports and the documents issued by the auditor;information regarding any change of service provider and significant provisions in a contract, and
  • information on any amendment regarding fees and commissions.

Additionally, the authorized securitisation vehicle should provide following documents to the CSSF:

  • a listing of the new issue of securities, other outstanding issues and issues that matured over the period under review, on a semi-annual basis within 30 days;
  • a summary of the financial situation of the securitisation, on a semi-annual basis within 30 days;
  • a draft balance sheet and profit and loss account, within 30 days from the financial year closing date; and
  • any other information deemed necessary by the CSSF.

  • No debt equity ratio: As above mentioned, there is no debt-to-equity ratio obligation that needs to be maintained for a securitisation vehicle. This is not the case when using a common Luxembourg company (soparfi), where there is a 85/15 debt equity ratio. Nevertheless, although borrowing is permitted, it should be noted that borrowing can only be used on an ancillary basis and/or where the credit line would be temporarily necessary in view of the type of securitization.
  • Withholding tax: Interests paid by securitisation vehicles are not subject to any withholding tax (except for the application of EU Law). Furthermore payments made to holders of shares (for instance dividends) of a securitisation undertaking are not subject to any withholding tax. This is a major advantage as compared to an ordinary Luxembourg company (soparfi) which is subject to a 15% withholding tax on dividends.
  • Deductibility of expenses and payments to investors of the Luxembourg securitisation undertaking: All expenses related to the management of the securitisation undertaking are fully deductible and the payments made to investors of the securitization company (whether in the form of interests or dividends) are further fully deductible from the taxable basis of the securitisation undertaking. Therefore Luxembourg securitisation companies should not generate significant taxable profits and should therefore to, a large extent, be tax neutral.
  • VAT exempt: The management of securitisation vehicles are exempt from VAT.
  • No Luxembourg wealth tax: Securitisation vehicles are exempt from net wealth tax. This is an important advantage as normal Luxembourg companies (soparfi) are subject to a wealth tax of 0.5% on the net assets of the company.
  • Benefit from Luxembourg’s double tax treaty network: As securitisation companies are fully taxable companies, they can in principle benefit from Luxembourg’s double tax treaty network.
  • Liquidation / tax exempt: The liquidation of securitisation companies is tax exempt.
  • Registration tax: Any agreement executed in the context of a securitisation or any deed related thereto is exempt from the registration formality unless it relates to real estate situated in Luxembourg, aircraft or vessels recorded in a Luxembourg public register. In case of voluntary registration, such agreements and deeds are subject to a fixed registration duty of 12 Euro. It is important to note that for the registration of any agreement or deed relating to a securitisation, documents written in English are accepted without the need for a translation into French or German.
  • Listing on the Luxembourg Stock Exchange: The securities issued by a Luxembourg securitisation vehicle may be listed on the Luxembourg Stock Exchange (either on the Regulated Market as on the Euro MTF), however such listing does not necessarily entail the issuance to be qualified as “to the public”.
  • Possibility to have segregated compartments: The Luxembourg securitisation company can establish segregated compartments and maintain at the same time its status of a single legal entity. Each pool of assets may be invested for the exclusive benefit of the relevant shareholders of the compartment and each compartment shall be responsible only for the liabilities which are attributable to such compartment. All the rights of investors and creditors in relation to each compartment are therefore limited to the assets of the compartment. Each compartment will be deemed to be a separate entity for the investors and creditors of the relevant compartment and unlike investment funds, the liquidation of the last compartment of the securitization vehicle does not entail the liquidation of the company structure.

The Securitisation Law allows Luxembourg to market itself as a key jurisdiction for securitisation transactions. Luxembourg legislators have created a tailored framework for securitisation transactions by establishing a well balanced compromise between flexibility of the securitisation vehicle on the one hand and investor protection on the other hand whilst at the same time providing a tax neutral environment.

Compare two vehicles:


 UCITSUCISIFSICARRAIFSPFSecuritization vehicleUnregulated SCS/SCSpSOPARFI
Practical useHighly regulated vehicle which can
be sold to all types of investors and
cross-border into any other EU
Member State.
Investment funds which do not meet
the criteria set by the EU Directives.
Hedge funds, private equity fund, venture capital fund, real estate fund,
infrastructure fund,
distressed debt fund, microfinance fund,
socially responsible
investment fund,
tangible assets fund
and any other type of
alternative funds.
Private equity and
venture capital
transactions.
Hedge funds, private
equity and venture capital
funds, real estate funds,
infrastructure funds,
distressed debt funds,
Islamic finance funds,
microfinance funds,
socially responsible
investment funds, tangible
assets funds and any other
type of alternative funds.
Individuals wishing
to optimise their
personal tax
planning (private
wealth management
purposes).
• True sale
and synthetic
securitisations.
• Securitisation
of a portfolio of
securities.
• Securitisation
as structure for intra
group financing
activities.
• Securitisation of
non-performing loans.
• Securitisation of
leasing receivables.
• Real estate securitisations (project financing and real estate financing)
Private equity fund, venture capital fund,
real estate fund, private debt fund, crypto fund , ESG fund / Impact investing fund, infrastructure fund,
pledge fund, micro finance fund, socially responsible fund, tangible assets fund, dedicated family office structure
Holding and financing
activity, commercial
activity, holding of
IP, etc.
Applicable legislationLaw of 17 December 2010
Part I (“UCITS Law”)
Law of 17 December 2010
Part II (“UCI Law”)
Law of 13 February 2007 (“SIF Law”)Law of 15 June 2004 (“SICAR Law”)Law of 23 July 2016 ("RAIF Law")Law of 11 May 2007 (“SPF Law”)Law of 22 March 2004 (“Securitization Law”)Law of 10 August 1915 ("Company Law")Law of 10 August 1915 (“1915 Law”)
Authorisation and supervision by the CSSFYesYesYesYesNoNoNo (unless continuous issues of
securities to the public)
NoNo
Qualification as an AIFNoAlways an AIF.Yes, unless exempt.
It is exempt if it does not raise capital from a number of
investors, with a
view to investing it
in accordance with a
defined investment
policy for the benefit
of those investors.
Yes, unless exempt.
It is exempt if it does
not raise capital
from a number of
investors, with a
view to investing it
in accordance with a
defined investment
policy for the benefit
of those investors.
Always an AIFIn principle, no
(as it would not
be considered as
“raising” capital from
a number of investors
as the structure
generally serves for
the investment of the
private wealth of a
“pre-existing group”
(as defined in the
Esma guidelines on
key concepts of the
AIFMD)).
No, in case
• such vehicle
meets the definition of
“securitisation special
purpose vehicle or
securitisation SPV”
under the AIFM Law;
• it issues
collateralised debt
obligations;
• it only issues debt
instruments;
• such entity is not
managed according to
an investment policy
within the meaning of
the AIFM Law.
Non-AIF, unless
activities fall within
the scope of article 1
(39) of the AIFM Law.
Non-AIF, unless
activities fall within
the scope of article 1
(39) of the AIFM Law.
Exemption
from AIFMD
full regime
under lighter
regime (AIFMD
registration
regime)
Not applicable.Possible.Possible.Possible.No.Not applicable.Possible.Possible.Possible.
External
authorised
AIFM
requirement
Not applicable.Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Always required.Not applicable.Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Eligible investorsUnrestricted.Unrestricted.Well-informed investorsWell-informed investorsWell-informed investors.Restricted to:
• natural persons
acting in the context
of the management of
their personal wealth;
• management
entities acting solely
in the interest of
the private wealth
(e.g. trusts, private
foundations); and
• intermediaries
acting for the
account of the above
mentioned eligible
investors (e.g. bank
acting under a
fiduciary agreement).
Unrestricted.Unrestricted.Unrestricted.
Eligible assetsRestricted to
transferable securities
admitted or dealt on
a regulated market,
investment funds,
financial derivative
instruments, cash
and money market
instruments that are
in compliance with
article 41 of the Ucits
law and the relevant
EU directives and
regulations.
Please note that the
eligibility of the asset
must be ascertained
on a case-by-case
basis in view of the
applicable laws and
regulatory practice.
Unrestricted.
The investment
objective and strategy
of the fund is subject
to the prior approval
of the CSSF.
Unrestricted.Restricted to investments in securities representing risk capital.
According to the CSSF Circular 06/241, investment in risk capital is to be understood as the direct or indirect contribution of assets to entities in view of their launch, their development or their listing on a stock exchange.
The SICAR is not allowed to invest directly in real estate (except for its own use or through its participations).
Unrestricted, unless it invests in a portfolio of risk capital (such as a Sicar).Restricted to acquisition, detention, management and realization of financial assets.
The SPF is not allowed to carry out commercial activities or to hold directly real estate (except for its own use or through its participations).
Unrestricted.
Securitization of any kind of risks relating to claims, other assets, or obligations assumed by third parties or inherent to all or part of the activities of third parties.
Unrestricted.Unrestricted.
Risk diversification requirementsRisk diversification requirements are provided by articles 42 et seq. of the UCITS Law, e.g. (not exhaustive):
- a UCITS may invest no more than 10% of its assets in transferable securities or money market instruments issued by the same body;
- a UCITS may not invest more than 20% of its net assets in deposits made with the same body;
- the global exposure relating to derivative instruments does not exceed the total net value of the UCITS portfolio.
Risk diversification requirements are defined by IML Circular 91/75 (as amended by CSSF Circular 05/177). Such requirements are less stringent than the ones applicable to UCITS.
In particular, a UCI is not allowed to invest more than 20% of its net assets in securities issued by any one issuer.
Specific restrictions concerning funds adopting an alternative investment strategy are contained in CSSF Circular n° 02/80.
Risk diversification requirements are
defined by CSSF Circular n° 07/309.
Such requirements are less stringent
than the ones applicable to UCITS
and UCI.
In particular, a SIF is not allowed to
invest more than 30% of its net
assets in securities of the same type
of issuer.
Restricted to
investments
in securities
representing risk
capital.
According to the
CSSF Circular
06/241, investment
in risk capital is to
be understood as
the direct or indirect
contribution of assets
to entities in view
of their launch, their
development or their
listing on a stock
exchange.
The SICAR is not
allowed to invest
directly in real estate
(except for its own
use or through its
participations).
Unrestricted, unless it
invests in a portfolio of risk
capital (such as a Sicar).
Restricted to
acquisition, detention,
management and
realisation of financial
assets.
The SPF is not
allowed to carry out
commercial activities
or to hold directly real
estate (except for its
own use or through its
participations).
Unrestricted.
Securitisation of any
kind of risks relating
to claims, other
assets, or obligations
assumed by third
parties or inherent
to all or part of the
activities of third
parties.
Unrestricted.Unrestricted.
Legal FormForm • FCP
• SICAV (SA)
• SICAF (SA,SCA)
All of these entities
must be open-ended.
• FCP
• SICAV (SA)
• SICAF (SA, Sàrl,
SCA, SCS, SCSp)
The entities may be
open-ended or closed-ended.
• FCP
• SICAV (SA, Sàrl,
SCA, SCoSA, SCS,
SCSp)
• SICAF (SA, Sàrl,
SCA, SCoSA, SCS,
SCSp)
The entities may be
open-ended or closed-ended.
• SA
• Sàrl
• SCA
• SCS
• SCSp
• SCoSA
The entities may be
open-ended or closed-ended.
• FCP
• SICAV (SA, Sàrl, SCA,
SCoSA, SCS, SCSp)
• SICAF (SA, Sàrl, SCA,
SCoSA, SCS, SCSp)
The entities may be openended
or closed-ended.
• SA
• Sàrl
• SCA
• SCoSA
A securitisation
vehicle may be set
up in the form of a
company (SA, Sàrl,
SCA, SCoSA) or a
fund consisting of
one or several coownerships
or one
or several fiduciary
estates and managed
by a management
company.
• SCS
• SCSp
• SA, Sàrl, SCA
• SAS
• SCoSA
• SCS
• SCSp
Umbrella structureYesYesYesYesYesNoYesNoNo
Capital requirements• FCP:
EUR 1,250,000 to be
reached no later than
6 months following
the authorisation by
the CSSF.
• Self managed
SICAV / SICAF:
EUR 300,000 at the
date of authorisation
and EUR 1,250,000
within 6 months
following its
authorisation.
• FCP:
EUR 1,250,000 to be
reached no later than
6 months following
the authorisation by
the CSSF.
• Self managed
SICAV / SICAF:
EUR 300,000 at the
date of authorisation
and EUR 1,250,000
within 6 months
following its
authorisation.
EUR 1,250,000 to be
reached no later than
12 months following
the authorisation by
the CSSF.
EUR 1,000,000 to be
reached no later than
12 months following
the auhorisation by
the CSSF.
• FCP:
EUR 1,250,000 to be
reached within 12 months
from the entry into force
of the management
regulations.
• SICAV:
EUR 1,250,000 to be
reached within 12 months
from the incorporation of
the SICAV.
Depends on the form:
• SA / SCA: EUR
30,000
• Sàrl: EUR 12,000
• SCoSA: no
minimum capital
If the securitisation
vehicle is set up as a
company, it depends
on the form:
• SA / SCA: EUR
30,000
• Sàrl: EUR 12,000
If the securitisation
vehicle is set up as
a fund, there is no
minimum capital
requirement.
No minimum capital requirement.Depends on the form:
• SA / SCA: EUR
30,000
• Sàrl: EUR 12,000
No minimum capital
requirement for other
legal forms.
Required Luxembourg service providers• Management
company in case of
an FCP.
• Depositary
institution.
• Administrative
agent.
• Registrar and
Transfer Agent.
• Approved
statutory auditor.
• Management
company in case of
an FCP.
• Depositary
institution.
• Administrative
agent.
• Registrar and
Transfer Agent.
• Approved
statutory auditor.
Management
company in case of
an FCP.
• Depositary bank
or professional of
the financial sector
providing depositary
services, subject to
conditions.
• Administrative
agent.
• Registrar and
Transfer Agent.
• Approved
statutory auditor.
• Depositary bank
or professional of
the financial sector
providing depositary
services, subject to
conditions.
• Administrative
agent.
• Registrar and
Transfer Agent.
• Approved
statutory auditor.
• Management company
in case of an FCP.
• Depositary bank
or professional of the
financial sector providing
depositary services, subject
to conditions.
• Administrative agent.
• Registrar and Transfer
Agent.
• Approved statutory
auditor.
Registered auditor in
principle not required
unless two of the
following criteria are
met: (i) net turnover
above EUR 8.8 million,
(ii) balance sheet
above EUR 4.4 million
and (iii) average
number of employees
above 50.
However, depending
on the legal form
of the company,
there may be an
obligation to appoint
a commissaire aux
comptes.
• Alternative
Investment Fund
Manager (if the
securitisation vehicle
qualifies as an AIF).
• Management
company (if the
securitisation vehicle
is set up in the form
of a fund).
• Independent
auditor.
• No depository
institution (unless for
regulated securisation
vehicles).
• No administrative
agent.
For SCS:
• Alternative
Investment Fund
Manager (if the SCS
qualifies as an AIF).
• No requirement
to appoint a
depositary (except
if the SCS qualifies
as an AIF and is
managed by a duly
authorised AIFM).
For SCSp:
• Alternative
Investment Fund
Manager (if the SCSp
qualifies as an AIF).
• No requirement
to appoint a
depositary (except
if the SCSp qualifies
as an AIF and is
managed by a duly
authorised AIFM).
Registered auditor in
principle not required
unless the company
is an AIF managed
by an AIFM with AUM
above the threshold
or two of the
following criteria are
met: (i) net turnover
above EUR 8.8 million,
(ii) balance sheet
above EUR 4.4 million
and (iii) average
number of employees
above 50.
However, depending
on the legal form
of the company,
there may be an
obligation to appoint
a commissaire aux
comptes.
Possibility of listingYesYesYesYes, but difficult in practice.YesNoNo. In principle no. The
SCS/SCSp may
however issue debt
securities that are
eligible to be listed on
the stock exchange.
Yes
European passportYes.No, unless it falls under the scope of the full AIFMD regimeNo unless it falls under the scope of the full AIFMD regimeNo, unless it falls under the scope of the full AIFMD regime.YesNo
No, unless it falls under the scope of the full AIFMD regime.Non-AIF, unless activities fall within the scop of article 1 (39) of the AIFM Law. No, unless it falls under the scope of the full AIFMD regime.
Net asset value (NAV) calculation and redemption policyTThe UCITS must make
public the issue, sale
and repurchase price
of their units each
time they issue, sell
and repurchase their
units, and at least
twice a month.
The UCIs must make
public the issue, sale
and repurchase price
of their units each
time they issue, sell
and repurchase their
units, and at least
once a month.
At least once a year for reporting
purposes.
Not required. At least once a year for reporting purposes.Not required. Not required. Not required.Not required.
Corporate income taxNo corporate income taxNo corporate income taxNo corporate income taxGeneral aggregate ate: 24.94%

In certain cases,
reduced corporate
income tax rates may apply. Income derived from transferable
securities (e.g.
dividends received
and capital gains
realised on the sale of shares) is exempt. Income on cash held for the purpose of a future investment is also exempt (for one year).
No income tax, unless investing only in risk capital, then SICAR tax regime applicable.No corporate income tax• General
aggregate rate
for securitisation
companies: 24.94%.

Securitisation
vehicles should be
able to deduct from their gross profits their operational costs
and the dividends or interests distributed to the shareholders / creditors. Therefore securitisation
companies should not generate significant taxable profits and should therefore to a large extent be tax neutral.
No corporate income tax applicable. Municipal business tax of 6.75% applicable in very limited circumstances,
namely in case the
SCS/SCSp (i) carries out a commercial
activity or (ii) is
deemed to carry out a commercial activity.

A SCS/ SCSp is
deemed to carry out a commercial activity if its general partner is a
Luxembourg public or private limited liability company holding at least 5% of the partnership interests.

With a proper
structuring of the
GPs partnership
interest it should be possible to avoid the deemed commercial characterisation of
the SCS/SCSp.
General aggregate
rate: 24.94%, but
100% exemption for
dividends, liquidation
proceeds and capital
gains from qualifying
participations.
Subscription tax• Rate: 0.05% of
the NAV annually.
• Reduction: 0.01%
of the NAV annually in
certain specific cases.
• Tax exemptions:
special institutional
money market cash
funds, special pension
funds (including
pension pooling
vehicles) and funds
investing in other
funds which are
already subject to
subscription tax.
• Rate: 0.05% of
the NAV annually.
• Reduction: 0.01%
of the NAV annually in
certain specific cases.
• Tax exemptions:
special institutional
money market cash
funds, special pension
funds (including
pension pooling
vehicles) and funds
investing in other
funds which are
already subject to
subscription tax.
• Rate: 0.01% of
the NAV annually.
• Tax exemptions:
certain money market and pension funds
or SIFs investing in
other funds which
are already subject to subscription tax.
No subscription tax.• Rate: 0.01% of the NAV annually.
• Exemptions apply.
Annual subscription
tax of 0.25% on the
amount of paid up
capital and issue
premium (if any).
No subscription tax.No subscription tax.No subscription tax.
Wealth taxNo wealth tax.No wealth tax.No wealth tax.No wealth tax.No wealth taxNo wealth tax.No wealth tax.No wealth tax.0.5% on the NAV on 1 January.

Since 2017, this
minimum net wealth tax for holding and
finance companies
(known as the
Soparfis)—the fixed financial assets, intercompany loans,
transferable securities
and cash at bank of which exceed both 90% of their gross assets and EUR 350,000—is fixed at EUR 4,815 per year.

The minimum net
wealth tax for all other corporations has not changed; in other words, it is EUR 535 for companies with a
total balance sheet up to EUR 350,000.
Withholding tax on dividends / interests and capital gainsNot subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax.Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax. Dividends distributed
by a Luxembourg
company are in
principle subject to
withholding tax at a rate of 15%, unless a domestic law exemption or a lower tax treaty rate applies.
Benefit from double tax treaty network• SICAV/SICAF:
Limited to certain
double tax treaties
(see circular L.G.
-A n°61 of the tax
administration of 8
December 2017).
• FCP: see circular
L.G.-A n°61 of the tax administration of 8 December 2017.
• SICAV/SICAF:
Limited to certain
double tax treaties
(see circular L.G.
-A n°61 of the tax
administration of 8
December 2017).
• FCP: see circular
L.G.-A n°61 of the tax administration of 8 December 2017.
• SICAV/SICAF:
Limited to certain
double tax treaties
(see circular L.G.
-A n°61 of the tax
administration of 8
December 2017).
• FCP: see circular
L.G.-A n°61 of the tax administration of 8 December 2017.
Yes in case the
SICAR is set-up as
a corporate entity
(except if set-up
under the form of a SCS/SCSp).
• RAIFs investing in a portfolfio of risk capital (such as a SICAR)
Access if set-up as a corporate entity (except if set-up under the form of a SCS/SCSp).

• RAIFs not investing in
a portfolio of risk capital (such as a SICAR), but setup
as:
SICAV / SICAF: Limited to
certain double tax treaties
(see circular L.G. -A n°61 of
the tax administration of 8
December 2017).
FCP: see circular
L.G.-A n°61 of the tax
administration of 8
December 2017.
NoYes for securitisation
companies.
NoYes
Benefit from the EU Parent Subsidiary DirectiveNoNoNoIn principle yes, but
certain jurisdictions
where the target
companies are
located may
challenge the
application of the
directive.
No, unless RAIF that
invests in a portfolio of risk
capital (such as a SICAR).
NoYesNoYes
Thin capitalization rules (debt-to-equity ratio)Borrowings of up to 10% of net assets to finance redemptions (it should be a short
term borrowing
and cannot be for
investment purposes) or to buy real estate
for its business.
The total borrowing
under the above may not exceed 15% of net assets.
Borrowings of
up to 25% of net
assets without any
restrictions are
allowed.
No debt-to-equity ratio.No debt-to-equity ratio.No debt-to-equity ratio.Tax of 0.25% on the debt that exceeds 8 times the paid-up capital increased by the issue premium.No debt-to-equity ratio.No debt-to-equity ratio.No provision in Luxembourg law.
However, there is a specific administrative practice.