Launch your Fine Art Investment fund in Luxembourg: Opportunities & Strategies

Fine art investment has become increasingly popular over the years, as more and more individuals seek alternative investment options with attractive returns. Luxembourg has positioned itself as a hub for fine art investment, offering a favorable environment for investors and art owners alike. We explore the different ways to set up a fine art investment fund in Luxembourg and the benefits that come with it.

II. Unregulated Investment Funds in Luxembourg

One of the most popular options for setting up a fine art investment fund in Luxembourg is through the use of unregulated investment funds such as Special Limited Partnerships (SLPs) and Reserved Alternative Investment Funds (RAIFs). These types of funds are not subject to the same level of regulation as traditional investment funds and offer more flexibility in terms of investment strategies and risk management.

III. Tokenization of Fine Arts

Tokenization is the process of turning a tangible asset, such as a work of art, into a digital token that can be bought and sold on a blockchain platform. Tokenization offers a new way for fine art owners and investors to access the art market, as it allows for fractional ownership of a work of art and makes it easier for investors to buy and sell their holdings.

IV. NFTs as Digital Assets

Non-fungible tokens (NFTs) have recently gained popularity as digital assets that are attracting international investors. NFTs are unique digital assets that represent ownership of a specific work of art or other collectible, making them ideal for use in fine art investment funds. The global NFT market has grown rapidly, with sales reaching $2.6 billion in 2020, and is expected to continue growing in the coming years.

V. Investment Opportunities in Luxembourg

Luxembourg offers a favorable environment for fine art investment, with a stable political and economic climate and a strong legal framework for protecting intellectual property rights. The country has also established itself as a hub for the art market, with a number of leading art galleries and auction houses based there. This, combined with its favorable tax regime, makes it an attractive destination for fine art investment funds.

VI. Supporting Art and Artists

Fine art investment funds can also play a crucial role in supporting the growth and development of the art market, by providing financial support to artists and helping them reach a global audience. By investing in fine art, investors can not only benefit from attractive returns but also contribute to the development of the art market and help new and influential artists to reach their full potential.

Fine art investment in Luxembourg offers a unique opportunity for investors to access the growing art market and benefit from attractive returns. Whether through unregulated investment funds, tokenization, or NFTs, there are a number of ways for fine art owners and NFT artists to launch their own investment funds and offer investors a way to participate in the growth of the art market. With its favorable environment for investment and its role as a hub for the art market, Luxembourg is an ideal destination for fine art investment funds. To launch your fine art investment fund, please contact your Damalion experts now. 

Launch your Fine Art Investment Fund in Luxembourg — options, investor eligibility, core documents, roles (AIFM, depositary, administrator), custody/insurance of artworks, tax touchpoints, and a clear path from idea to first close.

For sponsors, family offices, wealth managers, and art market professionals • Damalion helps scope the project, prepare a clean file, and coordinate with service providers. Authorisations and approvals remain with the competent parties.

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What makes a Luxembourg art fund work well?

Pick the right vehicle (for example RAIF or SCSp with AIFM), explain the strategy in plain terms, and keep all documents consistent. Set out how you will acquire, hold, insure, value, and sell artworks. Keep cash flows and counterparties clear. A short and complete file helps legal, compliance, fund services, and banking teams work faster.

Common fund options

Vehicle	Supervision	Typical investors	Notes for art strategy
RAIF (Reserved AIF)	Indirect (AIFM is supervised)	Professional / well-informed	Fast launch via authorised AIFM. Multi-compartment possible. Annual reporting and depositary required.
SIF / Part II UCI	CSSF supervised	SIF: qualified; Part II: broader (retail possible with rules)	More oversight, longer lead time. Useful if targeting wider bases under strict conditions.
SCSp (Special Limited Partnership)	Depends (if AIF, then AIFMD applies)	Professional / well-informed	Contractual flexibility in LPA. Often used as master or underlying vehicle. No legal personality.
ELTIF 2.0 label	EU Regulation + AIFM	Wider access (including retail) subject to rules	Long-term assets; new 2.0 rules ease access. Check suitability and disclosure (e.g., PRIIPs KID).

Core documents and roles

• Fund documents: LPA or articles, offering documents, risk factors, valuation and liquidity policy.
• Service providers: authorised AIFM, depositary, central administrator, auditor, legal counsel, valuers.
• Art workflow: acquisition policy, provenance checks, condition reports, storage and insurance terms, sale process.
• AML/CFT: investor onboarding, art-trade counterparties checks, sanctions and PEP screening, transaction monitoring.
• Marketing: AIFMD passport to professionals; other regimes (e.g., ELTIF 2.0) if eligible. Follow local rules in each country.

Holding, storage, and insurance

Describe where and how the fund will hold artworks (freeports, museum-grade storage, galleries, custodians). Set insurance limits and named risks. Explain transport, import/export, and cultural property permits when needed. Keep a simple register of each piece (title, artist, medium, date, purchase data, provenance, location, insurance).

Time and cost – what to expect

• Timing depends on vehicle choice, document readiness, service provider onboarding, and bank account opening.
• Costs vary with supervision level, number of compartments, valuation frequency, insurance cover, and reporting scope.
• Short, consistent documents reduce follow-ups and extra reviews.

Related reading

• Launching your master–feeder fund structure in Luxembourg
• What is a RAIF in Luxembourg?
• Register your company in Switzerland as a non-resident
• More articles on investment funds

Frequently asked legal questions

1) Who may invest in a Luxembourg art fund?

Usually professional or well-informed investors. Retail access may be possible only under permitted frameworks (for example Part II UCI or ELTIF 2.0) and local rules in each country of offer.

2) Do we need an authorised AIFM?

Yes for an AIF that uses AIFMD. A RAIF must appoint an authorised AIFM. Other set-ups depend on the product and investor base.

3) Is a depositary mandatory?

Yes for AIFs. The depositary safekeeps financial instruments (if any) and verifies ownership of other assets. For artworks, the depositary performs oversight and record-keeping checks.

4) How are artworks held and insured?

Through storage or custody arrangements (for example freeports or museum-grade storage) and all-risks insurance. Terms must be documented in the fund policies and provider contracts.

5) What valuation rules apply?

Use fair value and consistent methods. Appoint qualified valuers, define frequency, and disclose methodology and conflicts safeguards in the fund documents.

6) Can a RAIF invest in art directly?

Yes, a RAIF can invest in alternative assets such as art, subject to the strategy, offering terms, and AIFMD risk management.

7) What about an SCSp?

An SCSp is a special limited partnership without legal personality. If it qualifies as an AIF, AIFMD obligations apply (AIFM, depositary, reporting) based on the chosen structure.

8) Can we market across the EU?

With an AIFMD passport to professional investors when the fund has an authorised EU AIFM. Retail marketing needs a suitable product and local permissions.

9) Do we need a PRIIPs KID?

Yes if the product is offered to retail investors in the EEA. For professional-only offers, a KID is generally not required.

10) Are there AML/CFT duties specific to art?

Yes. Perform enhanced provenance checks, screen counterparties (galleries, dealers, auction houses), and document the source of funds. Apply sanctions and PEP controls and monitor transactions.

11) Any import/export rules?

Artworks may need customs declarations and cultural property permits depending on origin, age, and value. Keep shipping and export licences on file.

12) VAT on art transactions in Luxembourg?

Luxembourg applies a standard VAT rate and reduced rates for specific cases. Works of art may benefit from a reduced rate in certain situations. Confirm rate and margin scheme applicability per transaction.

13) How are fund-level taxes handled?

Luxembourg fund vehicles are often tax-efficient (for example RAIF generally subject to subscription tax rather than corporate income tax; exceptions may apply). Confirm based on the exact product.

14) Can we use compartments?

RAIF and some other vehicles allow multiple compartments with separate strategies or investor groups, each with ring-fenced assets and liabilities as set by law.

15) What disclosures apply for sustainability?

Only if you make ESG-related claims. Then SFDR and related rules apply (website, pre-contractual and periodic disclosures). Do not overstate any impact claims for art strategies.

16) How do we manage conflicts of interest?

Define a clear policy (for example related-party sales, adviser holdings, gallery ties). Use independent valuations and disclosure. The AIFM oversees conflicts mitigation.

17) Are NFTs or tokenised interests possible?

Possible within the chosen legal and regulatory framework. Tokens that represent fund interests or asset shares must respect securities laws, AIFMD, and custody/record-keeping standards.

18) How do we document provenance and authenticity?

Collect prior ownership records, exhibition history, catalogues raisonnés, expert opinions, and condition reports. Keep digital files and secure backups. Record any limitations in the valuation notes.

19) Can we lend artworks to museums?

Yes if allowed by the investment policy and insurance terms. Define transport, indemnity, and loan agreements. Ensure valuation and risk are monitored during the loan.

20) How long does setup take?

From a few weeks to several months based on vehicle choice, documents, due diligence, and bank account opening. A complete and consistent file shortens the timeline.