SICAR or Société d’Investissement en Capital à risque was born in Luxembourg. Luxembourg is one of the largest global financial centers in the world, benefiting from flexible and impressive legal and tax regimes.
Luxembourg’s investment funds industry ranks as the biggest European Union fund domicile jurisdiction and the second largest fund domicile jurisdiction in the world.
One of the principal Luxembourg fund vehicles suitable for private equity, real estate, venture, mezzanine, and infrastructure funds, available to institutional, professional, and sophisticated investors, is the société d’investissement en capital à risque (SICAR).
Luxembourg SICAR
A SICAR is an investment vehicle that was formulated for investments in private equity and venture capital. It generally qualifies as an alternative investment fund (AIF) and can be sold to well-informed investors.
The société d’investissement en capital à risque (SICAR), otherwise known as “the risk capital investment company”, was created by the Law of 15 June 2004 (as amended in 2013) to give a bespoke vehicle for private equity and venture capital investment.
Legal forms of the SICAR
A SICAR may be incorporated in five different forms:
- a partnership limited by shares (Société en Commandite par Actions),
- a private limited company (Société à Responsabilité Limitée),
- a public limited company (Société Anonyme),
- a limited partnership (Société en Commandite Simple) or
- a cooperative company organized as a public limited company (Société Cooperative organisée sous forme de Société Anonyme).
A SICAR may adopt an open-ended or closed-ended structure. And the minimum required capital depends on the legal form established.
Investment restrictions
Aside from the requirement to invest in risk capital only, the SICAR Law doesn’t contain investment rules or restrictions and doesn’t employ borrowing limits. Also, a SICAR is not required to acknowledge the principle of risk diversification.
Disclosure requirements
A SICAR must prepare a prospectus, a PRIIP Key Information Document (KID) if retail investors can make investments, and a yearly report. There is no commitment to prepare a semi-annual report.
Marketing
A SICAR qualifying as AIF and overseen by an authorized EU AIFM benefits from a passport enabling the AIFM to market the SICAR’s shares or partnership interests to professional investors within the EU through a regulator-to-regulator notification regime.
Supervision
A SICAR is authorized and overseen by the financial sector regulatory authority, the Commission de Surveillance du Secteur Financier (CSSF).
Note that compulsory ongoing supervision comes at the price of a small annual fee.
Appointment of an AIFM
SICARs that qualify as AIFs are expected to appoint an AIFM unless they benefit from the limited exceptions provided by the AIFM Law. The AIFM can be in Luxembourg, in another EU Member State or in a third country. SICARs may either assign an external AIFM or prefer to be internally managed. In the latter case, the SICAR will itself be considered the AIFM and will have to acknowledge all the legal obligations of the AIFM Law.
Eligible assets
SICARs may only invest in securities that represent risk capital. Risk capital consists mostly high-risk investments made in view of their launch, development, or listing on a stock exchange. The SICAR may also marginally hold financial derivative instruments on a unique basis. Temporary investment in other assets is permitted pending they qualify as an investment in risk capital.
Eligible Investors
The investors in a SICAR must be well-informed investors in the following aspect:
- institutional investors
- professional investors
- and other investors who verify in writing that they adhere to the status of “well-informed” investors and who either invest a minimum of EUR 125,000 or have been evaluated by a credit institution, an investment firm, or a management company which validates the investor’s ability to understand the risks attributed with investing in the SICAR.
Taxation
Any SICAR included differently than an ordinary limited partnership is subject to Luxembourg income tax at the regular rate and may therefore benefit from the Luxembourg tax treaty network, the EU parent-subsidiary directive, and the Luxembourg provisions respecting participation exemption.
But, SICAR income deriving directly from transferable securities is not included in the SICAR’s chargeable tax base.
Where constituted as a public company or an incorporated limited partnership, income resulting from the sale or liquidation of such assets is also excused from the SICAR’s chargeable tax base.
SICAR can register for VAT purposes.
If you want to launch your Luxembourg SICAR, let’s go ahead and contact your Damalion experts today.
Launch your Luxembourg fund: SICAR — practical guide to eligibility, documents, investors, governance, depositary, tax points and time-to-market.
For private equity, venture capital, growth equity, real assets with risk-capital profile • Damalion helps scope, prepare and coordinate your file with selected providers. Authorization and acceptance remain at each institution’s discretion.
Last updated:What makes a SICAR work well?
Keep the fund idea simple and consistent: what you invest in (risk capital), who may invest (well-informed investors), and how cash moves (commitments, calls, exits). Provide a clear file from day one: identity and address, tax status, source of funds, track record of initiators, draft term sheet, and a short business plan. This allows legal, compliance and bank teams to review faster.
SICAR in short
| Topic | Key points |
|---|---|
| Legal basis | Law of 15 June 2004 on the investment company in risk capital (as amended), alongside AIFM Law and related regulations. |
| Purpose | Investment in risk capital (e.g., PE/VC, growth, pre-IPO). No statutory diversification rule; investment policy must stay within risk-capital scope. |
| Eligible investors | Well-informed investors: institutional, professional, or other investors committing at least EUR 125,000 or certified for knowledge and experience. |
| Supervision | CSSF authorization and ongoing supervision. If qualifying as an AIF, the AIFM framework applies (internal or external AIFM). |
| Forms | SCA, SA, Sàrl, SCS, SCSp (open- or closed-ended). Single fund or umbrella with compartments. |
| Depositary | Depositary in Luxembourg required where the AIFM/AIF rules so provide; scope depends on marketing and structure. |
| Documents | Prospectus or offering document; annual report; PRIIPs KID only if applicable for retail access (uncommon for SICAR). |
| Tax outline | Corporate income tax regime with exemptions for income and gains from risk-capital securities; generally no subscription tax; minimum net wealth tax may apply. |
Documents most teams prepare
- Valid passport/ID and recent proof of address for initiators and managers.
- Tax residency (TIN) and U.S. indicia where relevant.
- Source of funds and track record of principals: divestments, carried interest, salaries, dividends.
- For the SICAR: draft LPA or articles, investment policy, fees, risk disclosures, governance, conflicts and valuation policies.
- Provider term sheets: AIFM (if any), depositary, administrator, auditor, legal counsel.
- Expected investors and marketing plan (countries, channels), with AIFMD notifications where needed.
- Certified translations/apostilles if requested.
SICAR vs. other Luxembourg options
| Vehicle | Typical use | Supervision | Investor base |
|---|---|---|---|
| SICAR | Risk-capital strategies (PE/VC/growth) | CSSF-authorized and supervised | Well-informed investors |
| RAIF | Fast launch via external authorized AIFM | Indirect (AIFM-level) | Well-informed investors |
| SIF / Part II | Broader fund strategies | CSSF-supervised | Professional (SIF) / wider (Part II) |
| SCSp (stand-alone) | Flexible partnership; often tax-transparent | Depends (AIF status/AIFM) | Professional / well-informed |
From idea to first close — plain steps
- Pick the structure. Choose form (e.g., SCSp/SCA/SA/Sàrl), umbrella or single fund, and define the policy as risk capital.
- Line up providers. AIFM (if required), depositary, administrator, auditor, legal counsel; align scopes and SLAs.
- Draft the documents. LPA or articles, offering materials, valuation, conflicts, governance, and reporting.
- Regulatory filings. CSSF application for SICAR; AIFMD passporting or national private placement where applicable.
- Open bank accounts. Set signatories, controls, and multi-currency needs; run test payments.
Costs and timelines
- Authorization and provider onboarding add time; preparation quality drives speed.
- Fees include setup, annual supervision, administration, depositary (where applicable), audit and legal.
- From complete file to first close: typically weeks to a few months depending on structure and readiness.
Related reading
Frequently asked legal questions
Who may invest in a SICAR?
Is a SICAR always an AIF?
Is CSSF authorization required?
What legal forms are possible?
Are there diversification rules?
What counts as “risk capital”?
Do we need a depositary?
Is an AIFM mandatory?
Can we market across the EU?
Which reports are required?
Is a PRIIPs KID required?
How are assets valued?
What about taxation?
Is carried interest treated separately?
Does AIFMD 2 change anything now?
Are side letters allowed?
What are AML/KYC expectations?
Is SFDR applicable?
What is the depositary’s role?
Can we convert to or from another vehicle?
- Banque et Caisse d’Épargne de l’État (Spuerkeess)
- BGL BNP Paribas
- Banque Internationale à Luxembourg (BIL)
- Banque de Luxembourg
- ING Luxembourg
- Deutsche Bank Luxembourg
- Banque Raiffeisen
- SEB Luxembourg
- Advanzia Bank
- Société Générale Luxembourg
