Being the largest investment fund hub in Europe, Luxembourg provides a wide range of investment fund structures either regulated or unregulated, capable of accommodating all sorts of demands from fund sponsors as well as investors’ needs.
Luxembourg unregulated Funds
Unregulated investment vehicles are primarily governed by the law of 10 August 1915 on commercial companies (the Company Law).
An unregulated vehicle qualifies as an AIF (alternative investment fund) if its activities fall within the spectrum of the AIFM Law and if no exemption is available.
Unregulated vehicles are useful for private equity, venture capital, infrastructure, and real estate investment structuring, as well as for holding and financing activity.
Features of Luxembourg’s unregulated funds
Legal form
Luxembourg’s unregulated funds take generally either the form of a RAIF (reserved alternative investment fund) or of an unregulated limited partnership:
- special limited partnership (SCSp or SLP) or
- common limited partnership (SCS).
Luxembourg’s unregulated funds can be open or closed-ended but cannot be established as an umbrella fund.
The major difference between the SCS and the SCSp is the legal personality. SCS is a legal entity, while SCSp does not include separate legal personalities different from its partners.
When choosing the most applicable vehicle, the choice will be influenced by a range of characteristics including the type of funding to be raised, the investors’ specifics, tax considerations, and the type of investments.
Capital
The SCS and the SCSp, permit more flexibility regarding capital variations as there are no minimum or maximum capital requirements for them.
Supervision
An unregulated fund is not subject to the authorization of the Luxembourg Financial Market Authority (Commission de Surveillance du Secteur Financier or CSSF).
Investment restrictions
An unregulated fund may invest in any asset class and according to any investment policy or strategy.
AIFM
An unregulated fund qualifying as AIFs and not profiting from an exemption included in the AIFM Law must appoint an AIFM.
AIFMs may market an unregulated fund to investors within the European Union through a regulator-to-regulator notification regime if the unregulated fund qualifies as an AIF. Additionally, there are no restrictions pertaining to suitable investors.
Tax Regime
The tax rule related to Luxembourg AIFs depends both on the legal form of the fund and whether it is subject to a specific law or not.
Although the management of an investment fund can be delegated to a specialized investment company, the investors must know the particular laws and regulations pertaining to the set-up and functioning of an investment vehicle.
To explore the best investment options for your needs (even for a securitization vehicle), let’s go ahead and contact your Damalion experts today.
Overview of Luxembourg’s unregulated investment vehicles — what counts as “unregulated,” when an AIFM/depositary is still required, how SCSp/SCS, SOPARFI and securitisation vehicles compare, and a clear setup sequence from term sheet to first close.
For sponsors, entrepreneurs, family offices, private credit and real-asset investors • Damalion facilitates structuring, provider selection, documentation, banking rails, and operational go-live.
Last updated:What is an “unregulated” investment vehicle in Luxembourg?
“Unregulated” means the vehicle itself is not authorized or directly supervised by the CSSF. In practice, many such vehicles are still part of an Alternative Investment Fund (AIF) and therefore follow AIFMD rules via an appointed AIFM and, where required, a depositary bank. Typical choices include SCSp/SCS partnerships, SOPARFI holding companies (SA/SARL), and securitisation vehicles (SVs).
Which vehicle fits which job?
| Vehicle | Core use | Governance & notes | Tax snapshot* |
|---|---|---|---|
| SCSp / SCS | Funds, co-invest sleeves, deal SPVs | GP/LP model; LPA-driven; AIFM & depositary when used as an AIF | Generally transparent when no commercial activity at partnership level |
| SOPARFI (SA/SARL) | Holding, co-investment, corporate structuring | Board-led; can sit in AIF structures; corporate law applies | Fully taxable, with participation-exemption regime under conditions |
| Securitisation Vehicle (SV) | Debt/receivables, asset-backed, note issuance | Compartment-based ring-fencing; issuer-investor docs are key | Taxable but with broad deductibility of commitments to investors |
*Always confirm with tax counsel based on facts, activities, and documentation.
When do AIFM and a depositary apply?
If the structure qualifies as an AIF (raising capital from multiple investors with a defined investment policy), an authorized AIFM is appointed and, where the law requires, a depositary bank is engaged for safekeeping and cash-flow monitoring. Unregulated wrappers (e.g., SCSp, SOPARFI) used as AIFs follow this route even though the vehicle itself is not CSSF-authorized.
How to set up — step by step
- Define the perimeter. Strategy, assets, leverage, investor base, co-invest policy.
- Pick the wrapper. SCSp/SCS, SOPARFI, or SV; add feeders/SPVs/compartments as needed.
- Classify the product. AIF or not; confirm AIFM and depositary needs.
- Draft the pack. LPA or articles, subscription suite/term sheet, valuation & conflicts policies.
- Open rails. Banking/registrar, payment approvals, reporting calendar.
- Operational test. Mock commitment, call/distribution or note issuance.
- First close/go-live. Execute agreements, align provider workflows, start reporting.
Damalion coordinates providers and documentation so onboarding and launch stay on one timeline.
Frequently asked questions
Is a RAIF considered “unregulated”?
Do unregulated vehicles need CSSF approval?
Which wrapper is fastest to launch?
Can we use co-invest SPVs?
How are LP liabilities handled in SCSp/SCS?
What about tax transparency?
When is an AIFM required?
When is a depositary required?
Can we market to EU professional investors?
Can the GP or board be outside Luxembourg?
Can compartments be used?
Are audits required?
What minimum capital applies?
What banking and registrar setup is typical?
What is a typical timeline to first close or issuance?
Where should you read next?
