The world of impact investing is growing rapidly, as more and more people look for ways to make a positive difference in the world while also generating a return on their investment. If you’re interested in launching an impact investment fund, Luxembourg is an attractive option, offering a well-established fund industry and a supportive regulatory environment. Here’s what you need to know to get started.
Introduction to the Impact Industry
The impact investment industry is all about making investments that have a positive impact on people and the planet, while also generating financial returns. This can include investments in renewable energy, sustainable agriculture, affordable housing, and more. The goal is to use investment capital to make a positive change in the world, while also generating returns for investors.
Types of Luxembourg Regulated Investment Funds
In Luxembourg, there are several types of regulated investment funds that you can launch for your impact investment fund. The most common types include:
- UCITS (Undertakings for Collective Investment in Transferable Securities) – This is the most common type of regulated investment fund in Luxembourg. UCITS are open-ended funds that are authorized by the CSSF (Commission de Surveillance du Secteur Financier), and they can be marketed to retail investors across the European Union.
- SIF (Specialized Investment Fund) – This type of fund is also authorized by the CSSF, and it can invest in a wide range of assets, including stocks, bonds, and alternative investments. SIFs can be marketed to professional investors, and they are subject to the same rules as UCITS.
- SICAR (Société d’Investissement en Capital à Risque) – This type of fund is designed for investment in high-risk, high-return projects, such as start-ups and early-stage businesses. SICARs are also authorized by the CSSF, and they can be marketed to professional investors.
Types of Luxembourg Unregulated Investment Funds
In addition to the regulated investment funds mentioned above, there are several types of unregulated investment funds that you can launch for your impact investment fund in Luxembourg. These include:
- RAIF (Reserved Alternative Investment Fund) – This type of fund is a relatively new addition to the Luxembourg investment fund landscape, and it offers a streamlined and flexible alternative to traditional regulated funds. RAIFs are not regulated by the CSSF, but they are subject to oversight by an authorized Alternative Investment Fund Manager (AIFM).
- SLP (Special limited partnership or Société en commandite spéciale) – This type of fund is designed for investment in high-risk, high-return projects, similar to SICARs. SLPs are not regulated by the CSSF, and they are subject to oversight by an authorized AIFM.
- SOPARFI (Société de Participations Financières) – This type of company is used for holding and financing activities, and it can be used as an investment vehicle for impact investing. SOPARFIs are not regulated by the CSSF, but they are subject to corporate income tax in Luxembourg.
- Securitization Vehicle – This type of fund is used for securitizing assets, such as loans or mortgages, and it can be used for impact investing. Securitization vehicles are not regulated by the CSSF, but they are subject to oversight by an authorized AIFM.
- SPF (Société de Gestion de Patrimoine Familial) – This type of company is used for holding and managing wealth, and it can be used as an investment vehicle for impact investing.
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Main steps to launch your impact fund in Luxembourg — vehicles, governance, disclosures, marketing, and closing.
For professional managers, entrepreneurs, family offices, PE/VC teams and institutional sponsors • Damalion helps scope options and coordinate providers so files are complete and comparable. Authorizations and approvals remain at regulators’ and counterparties’ discretion.
Last updated:Why Luxembourg for impact funds?
Luxembourg offers a large fund ecosystem, clear rules for alternative funds, and distribution across the EU. Impact strategies can be set up with flexible vehicles while meeting disclosure duties for sustainability.
Common fund options
| Vehicle | Who it fits | Key points |
|---|---|---|
| RAIF (Reserved Alternative Investment Fund) | Professional investors wanting fast time-to-market under an external AIFM | No direct CSSF authorization; requires authorized AIFM, depositary, central admin, auditor. Can apply Article 8/9 sustainability disclosures. |
| SIF (Specialised Investment Fund) | Professional investors; supervised by CSSF | Authorization prior to launch; risk-spreading; low subscription tax; broad asset classes. |
| SICAR | Private equity/venture with risk capital focus | Tax-transparent for risk capital; supervised; not suited to broad asset classes beyond risk capital. |
| SCSp / SCS (Limited partnerships) | Club deals and PE/VC style funds | Contractual flexibility; often combined with AIFM where thresholds exceeded; can opt for RAIF wrapper. |
| ELTIF 2.0 wrapper | Long-term strategies with broader distribution | Reformed rules allow wider retail access via AIFM; useful for sustainable infrastructure or social assets. |
Choose the structure according to investor type, strategy, leverage, and distribution plan.
Main steps
- Define the mandate. Strategy, target assets, impact goals, geography, and expected hold periods.
- Pick the vehicle. RAIF, SIF, SICAR, SCSp/SCS, or ELTIF 2.0 depending on investor base and distribution.
- Assemble the team. AIFM, depositary, central administrator, auditor, legal counsel, and valuation support.
- Draft documentation. LPA/prospectus, PPM, subscription docs, impact policy, SFDR pre-contractual disclosures.
- Set governance. GP/board composition, conflicts policy, delegation, and risk management.
- Finalize operations. Bank accounts, registrar/transfer agent, reporting calendar, impact data model.
- Regulatory checks. CSSF filings where required (e.g., SIF/SICAR authorization, AIFM reporting), ELTIF registration if applicable.
- Marketing. AIFMD passport to professional investors; local notifications; KIIDs/KIDs where required.
- First close. Admit initial investors, confirm capital commitments, and start deployment under investment policy.
Impact and sustainability disclosures
- State impact objectives and how results are measured and verified.
- Align pre-contractual, website, and periodic disclosures with sustainability rules (e.g., SFDR Article 8/9 and related standards).
- Describe data sources, indicators, and limits of methodologies.
Costs and timeline
- Setup costs include legal drafting, service provider onboarding, and registration or authorization fees where applicable.
- Ongoing costs include administration, depositary, audit, AIFM fee, and reporting.
- Typical timing from complete file to launch ranges from a few weeks to several months depending on structure and approvals.
Related reading
Frequently asked questions
Who can invest in a Luxembourg impact fund?
Most impact funds are offered to professional or well-informed investors. Access for retail investors may be possible under specific regimes (e.g., ELTIF 2.0) subject to rules on suitability and disclosures.
Which vehicles are commonly used?
RAIF, SIF, SICAR, and limited partnerships (SCSp/SCS) are widely used. Choice depends on strategy, investor type, and distribution plans.
Is a Luxembourg AIFM required?
Where thresholds or strategy require, an authorized AIFM is appointed. Sub-threshold managers may register but face limits on marketing and leverage. Many RAIFs appoint an external AIFM.
What is the depositary’s role?
The depositary safekeeps assets, monitors cash flows, and oversees compliance with investment and leverage limits as required by law.
How are sustainability claims presented?
Impact objectives and indicators should be set out in pre-contractual documents and reflected in website and periodic reports. Methods, data sources, and limitations must be explained.
Does the fund need CSSF authorization?
RAIFs do not seek prior authorization but operate under an authorized AIFM. SIFs and SICARs are authorized and supervised. Limited partnerships outside a RAIF can fall within AIF rules depending on features.
How are marketing passports obtained?
For professional investors, AIFMD passporting is available via the AIFM after notifications to relevant regulators. Local rules apply for any retail marketing.
Are there minimum capital requirements?
Regimes set minimums (e.g., within a timeframe after launch). Partnership agreements typically define commitments and drawdown schedules consistent with law and practice.
What tax features are typical?
Luxembourg offers options such as low subscription tax for certain funds, participation exemptions at holding levels, and tax neutrality tools. Specific treatment depends on the regime and structure.
Is VAT relevant to fund costs?
Some services may attract VAT; exemptions can apply in line with EU rules. Managers should assess recoverability and cost incidence.
What are the governance expectations?
Clear roles for GP/board, conflict management, documented policies and procedures, and effective oversight of delegates and service providers.
How is impact measured and reported?
Define indicators aligned with the mandate, collect data from portfolio companies, and report outcomes regularly with notes on methodology limits.
Are there rules on leverage and liquidity?
Leverage and liquidity management follow the fund’s legal framework and AIFM risk policies. Disclosure of methods and limits is required.
Can the fund accept non-EU investors?
Yes. Admission depends on the fund terms and any placement rules in the investor’s jurisdiction in addition to EU requirements.
What documents do investors receive?
Offering memorandum or prospectus, partnership agreement or articles, subscription documents, and sustainability disclosures. Periodic reports are delivered as set out in the fund rules.
How long does setup take?
Time depends on the chosen vehicle, service provider onboarding, and any regulatory authorization. Expect several weeks to months once documentation is complete.
Can an impact fund qualify as Article 8 or 9?
Possible if the fund promotes environmental or social characteristics (Article 8) or has sustainable investment as an objective (Article 9) and meets the relevant disclosure standards.
What AML/CFT obligations apply?
Know-your-customer checks for investors and key parties, source-of-funds verification, and ongoing monitoring are required in line with Luxembourg and EU rules.
Is an ELTIF 2.0 route available?
Yes, for eligible long-term assets and subject to ELTIF rules. This may broaden distribution subject to additional disclosures and product governance.
Can a fund pursue blended finance or guarantees?
Yes, if permitted by the fund rules and documented clearly, with appropriate risk, valuation, and disclosure arrangements.
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