Combining many of the features of the SIF and SICAR regimes, the RAIF (reserved alternative investment fund or fonds d’investissement alternatif réservé) is Luxembourg’s investment vehicle that offers legal structuring and investment flexibility.
Luxembourg introduced the RAIF in July 2016, in order to increase its attractiveness for investment funds and asset management, and since, it has lived up to expectations.
Features of the RAIF
| Luxembourg RAIF | Luxembourg’s investment vehicle that can invest in all asset classes and investment strategies. |
| Applicable legislation | RAIFs are subject to the Luxembourg Law of 23 July 2016 (the RAIF Law) |
| Eligible investors | The RAIF is restricted to “well-informed” investors who can assess the risks associated with it (These are institutional investors, professional investors and investors who have confirmed in writing that they grasp the “well-informed” investor status). |
| Eligible assets | The RAIF can invest in any eligible alternative asset. |
| Risk diversification requirements | The RAIF must respect a 30% diversification threshold. There are, however, no risk diversification rules for RAIFs that invest exclusively in ‘risk capital’ investments. |
| Legal Form | A RAIF may be created under either 1. a contractual ‘common fund’ form (FCP), 2. a corporate legal form like a public or private limited liability company (S.A. or S.à. r.l.), 3. a corporate partnership restricted by shares (SCA) or 4. a partnership form (SCS or SCSp/Special Limited Partnership), either with variable or fixed capital (SICAV or SICAF). |
| Segregated compartments | Yes (RAIF allows for diversification, consisting in an “umbrella” fund with several compartments) |
| Capital requirements | The RAIF Law states that the RAIF’s net assets should reach a minimum of EUR 1,250,000 within twelve months after its establishment |
| Net asset value (NAV) calculation and redemption policy | At least once a year for reporting purposes. |
| Tax regime | RAIF is subject to an annual subscription tax of 0.01% on the Net Asset Value of the fund (with some exemptions available) and are exempted from Municipal Business taxes, wealth tax, Corporate Income taxes, and Net Income taxes. |
| Authorisation and supervision by the CSSF | No. RAIF is an unregulated fund and is not subject to the initial approval nor the supervision of the Luxembourg Financial Supervisory Authority (CSSF) |
| European passport | RAIF benefits from the European Passport, enabling all businesses invested in the fund to be marketed in all EU-countries; |
| Possibility of listing | Yes |
| Double Tax Treaties | RAIFs organised under a SICAV or SICAF may have access to the Double Tax Treaties concluded by Luxembourg. RAIFs established as FCPs or partnerships have no access to Double Tax Treaties. But, investors might claim the benefits of tax treaties. |
| Required Luxembourg service providers | – Management Company – a duly authorised AIFM – a depositary (subject to the AIFMD liability regime) – a statutory auditor – Registrar and Transfer Agent |
Up to now, the RAIF tops the list of the most prominent investment fund among investors and savers in Luxembourg. And its popularity depends on the benefits listed below.
- It can be formed in a very short time
- RAIF does not need the approval of CSSF for being established.
- It has the same flexibility proposed by Special Investment Funds (SIF) and Capital Risk Funds (SICAR).
- It has access to an EU marketing passport.
- It comes with structuring flexibility in addition to the AIFMD quality seal (transparency, risk management, and independent valuation).
Luxembourg is the world’s second-largest fund domicile after the USA, and in respect of this, there are numerous structures available for different types of investment fields.
To set up your investment fund in Luxembourg, let’s go ahead and contact your Damalion expert now.
Know more about: Luxembourg parallel funds, Luxembourg feeder funds.
Use Luxembourg’s Reserved Alternative Investment Fund (RAIF) — clear rules, investor eligibility, forms, governance, providers, diversification, tax and timings.
For professional and institutional strategies across private equity, venture capital, private credit, real assets and funds of funds. This page explains the legal and practical points in simple terms so counsel, managers and investors can work efficiently.
Last updated:What is a RAIF?
A RAIF is a Luxembourg alternative investment fund governed by the Law of 23 July 2016. It must be managed by an external authorised AIFM under the AIFM Law of 12 July 2013. There is no CSSF product authorisation, but the AIFM and core providers are regulated. The vehicle suits cross-border professional capital with short setup times.
Key facts at a glance
| Topic | Summary |
|---|---|
| Legal basis | RAIF Law of 23 July 2016; AIFM Law of 12 July 2013; where relevant, EU MMF Regulation for money-market strategies. |
| Investors | “Well-informed” investors: institutional or professional investors, or other investors confirming status and meeting legal suitability conditions (including the minimum investment threshold applicable at law). |
| Asset scope | All alternative assets and strategies. Risk-capital RAIFs follow specific rules. |
| Diversification | General 30% risk-spread rule (exceptions for pure risk-capital strategies apply). |
| Forms | FCP (contractual fund), corporate forms (S.A., S.à r.l., S.C.A.), or partnerships (SCS / SCSp). Variable (SICAV) or fixed (SICAF) capital possible. |
| Umbrella | Yes. Multiple compartments with segregated assets and liabilities. |
| Minimum capital | EUR 1,250,000 net assets within 12 months from launch. |
| Regulatory status | No CSSF product approval; the AIFM is authorised and supervised. Depositary is subject to AIFMD liability regime. |
| Passporting | EU AIFMD marketing passport via the authorised AIFM to professional investors, subject to conditions. |
| Listing | Possible to list units/shares on a stock exchange if desired. |
| Valuation & NAV | At least annually for reporting, more frequently per documents; independent valuation rules under AIFMD. |
| Tax | Subscription tax at 0.01% of NAV (with exemptions in defined cases). Generally exempt from Luxembourg income, municipal business and net wealth taxes. |
| Service providers | AIFM, depositary, auditor, central administration/transfer agent; legal counsel and tax advisers as needed. |
| Timing | Documentation and provider onboarding drive timing; once complete, launch can be rapid compared to fully regulated products. |
Legal forms and governance
- FCP: no legal personality; managed by a management company.
- Corporate forms: S.A., S.à r.l., S.C.A. with board or general meeting oversight according to form.
- Partnerships: SCS or SCSp with general partner and limited partners; partnership agreement defines rights.
- Umbrella/compartments: ring-fenced assets and liabilities; separate policies and fee schedules per compartment.
- Policies: valuation, conflicts, liquidity, risk management and remuneration per AIFMD standards.
Tax outline
- Subscription tax: 0.01% of NAV, typically calculated and paid quarterly. Certain strategies or assets may qualify for exemptions under specific conditions.
- Income/wealth taxes: generally not levied at fund level. No withholding on distributions under Luxembourg law.
- Treaties: access depends on legal form and substance (e.g., SICAV/SICAF forms may access double tax treaties, partnerships/FCPs typically do not at fund level).
- Investor taxation: depends on investor residence and profile; seek local advice.
Frequently asked questions
1) Which laws apply to a RAIF?
The RAIF is governed by the Luxembourg Law of 23 July 2016 on reserved alternative investment funds and by the AIFM Law of 12 July 2013 through its external authorised AIFM. EU rules (e.g., the MMF Regulation) apply when the strategy falls in scope.
2) Is a RAIF authorised or supervised by the CSSF?
No product authorisation is required. The RAIF must appoint an authorised external AIFM. The AIFM, depositary and other regulated providers are subject to CSSF supervision.
3) Who can invest in a RAIF?
Well-informed investors: institutional or professional investors, and other investors who confirm their status and meet the legal suitability and minimum-investment conditions set by Luxembourg law.
4) What is the current minimum investment for non-professional investors?
Luxembourg law provides a minimum cash investment threshold for investors who are not institutional or professional investors. The amount must follow the threshold in force at the time of subscription.
5) What diversification rules apply?
As a general rule, a RAIF should not invest more than 30% of its gross assets or investor commitments in a single asset. RAIFs investing solely in risk capital are not subject to this risk-spread requirement.
6) What legal forms are available?
Contractual FCP, corporate forms (S.A., S.à r.l., S.C.A.) and partnerships (SCS / SCSp). Capital can be variable (SICAV) or fixed (SICAF).
7) Can a RAIF be structured as an umbrella?
Yes. A RAIF may create multiple compartments with segregated assets and liabilities. Terms, fees and strategies can differ by compartment.
8) What is the minimum capital?
The RAIF’s net assets must reach EUR 1,250,000 within 12 months of launch. This can be across compartments.
9) Which providers are mandatory?
An authorised external AIFM, a depositary subject to the AIFMD liability regime, a statutory auditor, and a central administrator/transfer agent. Counsel and tax advisers are commonly engaged.
10) How often is NAV calculated?
At least annually for reporting. Many RAIFs calculate quarterly or monthly depending on strategy and investor terms.
11) What are the tax features?
RAIFs are generally exempt from Luxembourg income, municipal business and net wealth taxes. A 0.01% subscription tax applies to NAV, with defined exemptions for certain assets or structures.
12) Can a RAIF access tax treaties?
Corporate forms (e.g., SICAV/SICAF) may access double tax treaties if substance and other conditions are met. FCPs and partnerships do not generally access treaties at fund level; investors may rely on their own treaty positions.
13) Can units or shares be listed?
Yes. Listing is permitted if the fund chooses to pursue it and meets the listing market’s requirements.
14) How is marketing carried out in the EU?
Through the AIFMD passport of the authorised AIFM to professional investors, subject to notification procedures and any host-state conditions.
15) Do SFDR disclosures apply?
Yes. SFDR applies at AIFM and product level as relevant. Prospectus and website disclosures must match the RAIF’s sustainability approach (Article 6, 8 or 9), with periodic reporting where required.
16) What AML/KYC obligations apply?
Luxembourg AML/CFT law applies to the AIFM, depositary, administrator and other obliged entities. Investors must provide verified identity, ownership and source-of-funds information.
17) How are valuations governed?
AIFMD requires a valuation policy, valuation frequency aligned to the instrument liquidity and independent valuation or a functionally independent process.
18) Are there restrictions on leverage?
Leverage limits must be set and monitored under AIFMD (gross and commitment methods). They are disclosed in the fund documents and reports.
19) Can a RAIF invest in loans or real assets?
Yes, subject to the fund documents, AIFMD risk management, and any strategy-specific rules (e.g., loan origination policies, real-asset custody and valuation).
20) How long does setup take?
It depends on documentation and provider onboarding. Once documents are agreed and providers are in place, launch can be swift compared to fully regulated fund products.
