The Luxembourg Special Limited Partnership (SCSp or SLP) has established itself as a leading vehicle for private equity, venture capital, real estate, and alternative investment fund structuring in Europe. The SCSp, also referred to as the Société en Commandite Spéciale, offers maximum contractual flexibility, tax transparency, and investor privacy. As a result, fund managers and institutional investors increasingly favour this structure for cross-border strategies.
What is the Luxembourg SCSp (Special Limited Partnership)?
The Luxembourg SCSp (Special Limited Partnership) is a partnership structure governed by the Law of 10 August 1915 on commercial companies, as amended. Luxembourg introduced the SCSp regime in 2013, aligning the structure with international standards for fund partnerships. In English-language practice, professionals often use “SLP” interchangeably with “SCSp.” Both terms describe the same vehicle: a partnership formed between one or more general partners (GPs) with unlimited liability and one or more limited partners (LPs) whose liability remains limited to their contribution.
The SCSp, unlike the SCS (Société en Commandite Simple), does not have legal personality. Therefore, the SCSp cannot own assets in its own name or act independently. Instead, the general partner acts on behalf of the partnership. This distinction offers significant flexibility, particularly for international sponsors seeking a familiar limited partnership model. Furthermore, the SCSp can act as an unregulated partnership or as a regulated fund vehicle—such as a RAIF, SIF, or SICAR—depending on its intended use and investor base.
For a deeper analysis of the SCSp, see the Luxembourg Special Limited Partnership overview.
Key structural features of the SCSp
Contractual freedom and limited partnership agreement
The SCSp offers broad contractual flexibility. The partners negotiate and enter into a limited partnership agreement (LPA), which governs the partnership’s internal organisation, capital commitments, voting rights, profit allocation, and management structure. The LPA does not require filing with the Luxembourg Trade and Companies Register (RCS), except for a summary of key terms. As such, the structure protects sensitive commercial information and investor identities.
In practice, the LPA determines the allocation of carried interest, management fees, and distribution waterfalls. Therefore, sponsors can tailor the fund economics and governance to meet the specific needs of institutional investors or family offices.
General partner and management
The SCSp requires at least one general partner, who assumes unlimited liability and manages the partnership. The general partner may be an individual or a corporate entity, often a Luxembourg S.à r.l. or SA. Limited partners do not participate in day-to-day management and retain limited liability. However, the LPA may grant certain consent rights or advisory roles to LPs without jeopardising their liability protection. This feature aligns the SCSp with established Anglo-Saxon partnership structures.
No minimum capital and flexible contributions
The law does not prescribe a minimum capital for the SCSp. Partners can make contributions in cash, in-kind, or through promissory commitments. Meanwhile, the LPA specifies the terms for capital calls and drawdowns, which supports private equity and venture capital fund models. The absence of a minimum capital requirement reduces setup costs and administrative burdens.
Transfer of partnership interests
The SCSp allows free transferability of partnership interests, subject to the restrictions laid out in the LPA. Typically, the LPA imposes pre-emption rights or consent requirements to control the investor base. This approach aligns with investor expectations and regulatory requirements for closed-ended funds.
Regulatory status and AIFMD
The SCSp itself is not a regulated entity unless it qualifies as an alternative investment fund (AIF) subject to the Luxembourg Law of 12 July 2013 on alternative investment fund managers (AIFMD Law). When structured as an AIF, the SCSp must appoint an authorised or registered AIFM. The AIFM manages the fund in compliance with AIFMD requirements on risk management, valuation, and reporting. As a result, the SCSp can benefit from pan-European marketing passports where eligible.
Tax transparency and fiscal treatment of the SCSp
SCSp tax transparency for investors
Luxembourg law treats the SCSp as a tax-transparent entity for corporate income tax, municipal business tax, and net wealth tax purposes. The SCSp does not pay corporate income tax on its profits. Instead, investors are taxed directly on their share of the profits in their home jurisdictions, subject to local rules. Therefore, the SCSp avoids economic double taxation at the fund level.
In addition, the SCSp does not qualify as a Luxembourg resident taxpayer. It does not have access to the Luxembourg double tax treaty network. However, investors can benefit from treaty relief in their own countries, depending on their status and the fund’s activities.
VAT and other indirect taxes
Management services provided to SCSp funds qualifying as alternative investment funds (AIFs) benefit from VAT exemption under Article 44(1)(d) of the Luxembourg VAT Law. Therefore, the SCSp does not suffer irrecoverable VAT leakage on fund management fees. Nevertheless, VAT may apply to certain ancillary services.
Specific tax considerations for SCSp fund structuring
When the SCSp invests in private equity, real estate, or debt instruments, its tax neutrality remains intact. However, if the SCSp conducts a commercial activity in Luxembourg, the authorities may deny tax transparency and treat the partnership as a taxable permanent establishment. Therefore, fund sponsors must ensure that the SCSp restricts its activities to passive investment. The Luxembourg direct tax authorities provide guidance on these issues in Circular L.I.R. n° 14/4 dated 9 January 2015. Additionally, the SCSp can distribute profits without Luxembourg withholding tax, except in rare cases involving certain bond arrangements or hybrid instruments.
SCSp in private equity and venture capital structuring
Why fund managers choose the SCSp for private equity and venture capital
Fund managers have rapidly adopted the SCSp for private equity and venture capital structuring. The SCSp offers robust alignment with international limited partnership best practices, making it familiar to global investors. As such, the SCSp supports both regulated and unregulated strategies—including RAIF, SIF, and SICAR regimes—while maintaining flexibility in investor onboarding and deal execution.
In particular, the SCSp supports complex carried interest and profit-sharing arrangements. The LPA outlines the allocation of carried interest among the general partner, investment team, and sponsors. Therefore, fund sponsors can attract and retain key talent while meeting investor expectations for performance fees.
SCSp carried interest and incentive structuring
The SCSp enables fund sponsors to structure carried interest and co-investment vehicles alongside the main fund. Carried interest recipients can benefit from a favourable Luxembourg tax regime, provided they meet the requirements under Article 129b of the Luxembourg Income Tax Law. In practice, this allows investment professionals to receive carried interest at beneficial rates, subject to specific conditions on holding periods and fund activity.
SCSp vs SLP: terminology and international recognition
International investors often encounter both “SCSp” and “SLP” in Luxembourg fund documentation. Both terms refer to the same vehicle. SCSp is the official French abbreviation, while SLP has gained traction in English-speaking markets. This dual terminology does not affect the legal or tax position of the partnership. Instead, it reflects Luxembourg’s role as a multilingual financial centre catering to global investors.
Setting up a Luxembourg SCSp: requirements and process
Formation steps and documentation
The process to set up a Luxembourg SCSp remains straightforward and efficient. The partners draft and sign a limited partnership agreement outlining the partnership’s key terms. A Luxembourg notary does not need to notarise the LPA or formation deed, as a private deed suffices. However, the founders must file an extract of the LPA with the Luxembourg Trade and Companies Register (RCS) to complete registration. This extract contains only limited information, protecting the confidentiality of the full LPA and investor list.
Partners and required registrations
The SCSp requires at least one general partner and one limited partner. Both individuals and legal entities can act as partners. General partners often use a Luxembourg S.à r.l. to ring-fence liability. In addition, the SCSp must appoint a Luxembourg-based registered office and maintain statutory records in Luxembourg. Where the SCSp qualifies as an AIF, it must appoint an AIFM and meet additional regulatory requirements under the AIFMD Law.
Timeframe and practical considerations
Most SCSps can be established within two to four weeks, depending on the complexity of the LPA and investor onboarding. Sponsors should allow additional time for KYC procedures, especially where the fund will be marketed cross-border. In practice, the absence of a notarial deed or minimum capital enables swift market entry compared to other fund structures.
Ongoing obligations
The SCSp does not require annual audits unless it qualifies as a regulated fund (e.g. SIF, RAIF, SICAR) or exceeds certain thresholds. However, the partners must approve annual accounts and file a summary with the RCS. The SCSp must also comply with Luxembourg anti-money laundering (AML) rules and maintain accurate beneficial ownership records. As such, the structure combines flexibility with regulatory rigour where necessary.
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Related Luxembourg structuring insights
- Luxembourg Special Limited Partnership (SCSp): comprehensive overview
- Luxembourg RAIF: Reserved Alternative Investment Fund Structuring Essentials
