1. Why More American Fund Managers Are Heading to Luxembourg
American asset managers are turning to Luxembourg in record numbers to structure their European fund operations. With its stable legal framework, tax-neutral environment, and full access to EU markets, Luxembourg is the top jurisdiction for U.S.-based managers seeking European capital. Whether launching private equity, private debt, or real asset strategies, Luxembourg offers investment vehicles that match American efficiency with European compliance.
2. The SCSp: An American-Style Partnership with European Validity
At the core of many U.S.-sponsored Luxembourg structures is the Special Limited Partnership (SCSp)—or Société en Commandite Spéciale (SLP). This vehicle closely resembles the U.S. Delaware LP, making it highly intuitive for American general partners and limited partners alike. The SCSp is unregulated in the sense that it is not subject to approval or ongoing supervision by the Luxembourg Financial Sector Supervisory Commission (CSSF). It offers complete contractual freedom, no minimum capital, and high structural flexibility, allowing U.S. sponsors to tailor the partnership agreement to their exact investment needs.
3. Regulatory Oversight Is Achieved Through a CSSF-Registered AIFM
Although the SCSp itself is unregulated, it is typically classified as an Alternative Investment Fund (AIF) under the EU’s AIFMD framework. To meet regulatory obligations and access European professional investors, U.S. managers appoint a Luxembourg-based AIFM (Alternative Investment Fund Manager) that is authorized and supervised by the CSSF.
This CSSF-regulated AIFM handles key functions such as compliance, risk management, and investor reporting—freeing the American sponsor to focus on investment strategy and portfolio management from their U.S. office. The result is a highly efficient transatlantic structure that balances operational control with regulatory trust.
4. Using the RAIF Regime: Speed Without Sacrificing Oversight
Many U.S. managers enhance the SCSp structure by choosing the Reserved Alternative Investment Fund (RAIF) regime. A RAIF is not subject to direct CSSF supervision at the fund level but must always be managed by a fully licensed AIFM. This setup allows for extremely fast time-to-market—often within four to six weeks—because it avoids the delays of direct regulatory approval, while still operating within the scope of the AIFMD.
This makes it particularly attractive for American sponsors under time pressure to raise and deploy capital. The RAIF also allows the use of umbrella structures with multiple compartments, giving managers the ability to run different strategies or investor classes under a single legal fund.
5. When American Sponsors Prefer a Fully Regulated Structure
For certain American managers—especially those raising funds from highly conservative institutional investors like pension funds—regulated fund regimes such as the SIF (Specialised Investment Fund) or SICAR may be preferred. These vehicles require CSSF authorization and are subject to direct supervision. While setup takes longer and costs are higher, they provide an additional layer of regulatory assurance for investors that demand it.
Nonetheless, the vast majority of U.S. alternative fund sponsors are now opting for the RAIF–SCSp combination for its efficiency and alignment with commercial timelines.
6. Tax Transparency and Legal Simplicity: A Perfect Match for U.S. Sponsors
The SCSp is tax transparent by default, meaning no entity-level corporate income tax, wealth tax, or municipal business tax in Luxembourg. For RAIFs structured as SCSp, only a minimal subscription tax of 0.01% applies. Luxembourg’s vast network of double tax treaties further enhances its attractiveness for cross-border structures. For U.S. managers, this level of fiscal neutrality makes it easier to manage tax outcomes at the investor level.
7. Building the U.S.–Luxembourg Bridge: Strategic Advantages
U.S. managers launching Luxembourg funds don’t need to build infrastructure from scratch. By outsourcing regulatory functions to a third-party AIFM, they achieve full compliance with European law without giving up investment discretion. The SCSp provides structural familiarity, while the RAIF regime delivers speed and operational flexibility. For U.S. GPs managing cross-border portfolios, this model supports both scale and agility.
SCSp, RAIF, and the American Expansion into Europe
Luxembourg continues to serve as the European gateway for American fund managers. The unregulated SCSp provides structural familiarity and contractual freedom, while a CSSF-licensed AIFM ensures regulatory alignment. When combined with the RAIF regime, U.S. managers gain rapid access to the European market without compromising investor trust. Whether entering Europe for the first time or optimizing fund strategy, Luxembourg remains the platform of choice for American alternative investment firms. Please contact your Damalion expert now.
