Luxembourg is the EU’s flagship UCITS hub. With CSSF authorization, a UCITS may invest in liquid, diversified assets and passport to all EU states. Expect an annual subscription tax of 0.05% of net assets (often reduced to 0.01% for certain classes or assets), robust investor protection, and a pragmatic ecosystem in Luxembourg City’s Kirchberg and Cloche d’Or districts.
What is a UCITS in Luxembourg?
A Luxembourg UCITS is an EU retail investment fund authorized by the CSSF and designed for daily-liquidity strategies in transferable securities. As a result, sponsors use UCITS for equity, bond, multi-asset, and money market strategies that need broad distribution and tight risk controls.
Who can invest and where can you market?
Both retail and professional investors can subscribe, depending on share class terms in each country of offer. After authorization in Luxembourg, you can notify other EU states for public distribution using the UCITS passport, which makes cross-border growth faster.
Which legal forms and service providers do you need?
In Luxembourg, you can launch a UCITS as a corporate SICAV or a contractual FCP, either as a single fund or an umbrella with multiple sub-funds. Then, appoint a Luxembourg depositary bank, a central administrator and transfer agent, an approved auditor, and either a UCITS ManCo or a self-managed SICAV board.
How do you set up a UCITS step by step?
Here is the practical path from idea to authorization; each step builds cleanly on the prior one so you avoid rework.
- Define strategy and target investors.
- Select legal form and umbrella structure.
- Appoint key service providers.
- Draft the prospectus, KID, constitutional documents, and risk policies.
- File with the CSSF and address comments.
- Complete operational readiness for NAV, custody, TA, and reporting.
- Obtain authorization and activate the EU marketing passport.
What assets are eligible and what is restricted?
UCITS portfolios focus on listed equities and bonds, regulated money market instruments, units of eligible funds, cash, and derivatives used for hedging or efficient portfolio management. Conversely, uncovered short selling, direct commodities or precious metals, and lending to third parties are not permitted, and borrowing is strictly limited to temporary needs.
What about costs, taxes, and timelines?
Luxembourg UCITS are generally exempt from Luxembourg income and capital gains taxes. Instead, a subscription tax applies to net assets: typically 0.05% per year, with 0.01% reductions for certain classes or assets. Timelines depend on the file quality and the strategy, and several weeks to a few months is a fair planning range from submission to authorization.
How does Luxembourg’s business context help sponsors?
Luxembourg is compact, international, and well connected. The country counted about 681,973 residents at the start of 2025 and continues to grow with strong migration. Luxembourg City anchors finance around Kirchberg along Avenue John F. Kennedy, while Cloche d’Or, the Gare area, and the Ville Haute core (Grand Rue and Rue Philippe II) round out office and retail nodes. Meanwhile, Esch-sur-Alzette and Belval host the university and innovation campus, which broadens the talent pool for funds and fintech.
Where are the main cities, streets, and growth zones?
Luxembourg City is the capital and financial center. Esch-sur-Alzette is the second city and home to Belval’s innovation cluster. For day-to-day business, sponsors meet in Kirchberg’s banks on Avenue J.F. Kennedy, visit administrators near the main station, and host investors around Ville Haute’s Grand Rue. Because the city is walkable, road-show logistics are smooth and efficient.
UCITS vs AIF: what is different in practice?
To help your decision, here is a fast comparison. It frames the rules and the investor reach so you can pick the right wrapper.
| Feature | UCITS | AIF (RAIF/SIF etc.) |
|---|---|---|
| Investor type | Retail and professional | Professional or well-informed |
| Assets | Liquid securities and listed instruments | Broad, including private assets |
| Leverage and derivatives | Tightly controlled | Flexible, per strategy and AIFMD |
| Regulator | CSSF product authorization | CSSF supervision for AIFM, product varies |
| EU passport | Retail passport across EU | Professional marketing passport |
| Subscription tax | 0.05% standard, 0.01% possible | Often 0.01% for many AIF types |
What should sponsors do next?
Map your strategy to UCITS rules, confirm distribution markets, and line up the ManCo, depositary, and administrator that fit your scale. Then, build the documents with clear risk and liquidity language and file early to smooth the CSSF review.
How to set up a UCITS in Luxembourg
Damalion experts support you in order to move from plan to launch with fewer surprises.
- Define strategy and target investors.
- Select legal form and umbrella structure.
- Appoint key service providers.
- Draft key documents.
- File with CSSF.
- Complete operational readiness.
- Obtain authorization and passport.
Helpful reads on Damalion
- UCITS Luxembourg: structuring high-performance funds
- Setup your Luxembourg UCITS
- Luxembourg fund structures overview
- Luxembourg funds for U.S. managers
- How to choose a Luxembourg AIFM service provider
- RAIF in Luxembourg
Authoritative references
- Guichet.lu: subscription tax for UCIs
- Commission de Surveillance du Secteur Financier (CSSF)
- Luxembourg for Finance: A UCITS fund
Luxembourg UCITS: frequently asked questions
- What is a Luxembourg UCITS fund
A Luxembourg UCITS is an EU retail investment fund that invests in liquid, diversified securities and is authorized by the CSSF for public distribution. - Who can invest in a Luxembourg UCITS
Both retail and professional investors can invest, subject to the share class terms and local marketing rules. - Which legal forms can a UCITS take in Luxembourg
Common forms are SICAV companies and FCP contractual funds, each available as single fund or umbrella with multiple sub-funds. - Do I need CSSF authorization before launch
Yes, a UCITS requires prior product authorization by the CSSF before units or shares can be offered to the public. - What assets are UCITS allowed to invest in
Eligible assets include listed equities and bonds, regulated money market instruments, eligible funds, cash, and derivatives for hedging or efficient portfolio management. - What is restricted for UCITS in Luxembourg
Uncovered short selling, direct commodities, physical precious metals, and loans to third parties are not permitted. Borrowing is limited to temporary financing. - How long does the CSSF approval usually take
Timing varies with file quality and complexity, but several weeks to a few months is common. - What are the typical ongoing taxes for UCITS
UCITS usually pay an annual subscription tax of 0.05 percent of net assets, with possible reductions to 0.01 percent for certain classes or assets. - Do UCITS have access to tax treaties
UCITS generally do not rely on double tax treaties; they are typically exempt from Luxembourg income and capital gains taxes but may face foreign withholding at source. - Can I launch an ESG or Article 8 or 9 UCITS
Yes, provided disclosures, policies, and portfolio alignment meet SFDR and UCITS rules, with documentation reviewed by the CSSF. - Is an AIFM required for a UCITS
UCITS are managed by a UCITS management company or self-managed SICAV that fulfills UCITS management requirements. - What service providers are mandatory
A depositary bank in Luxembourg, a central administrator and transfer agent, an approved auditor, and a management company or board for self-managed funds are required. - Can one umbrella have multiple strategies
Yes, an umbrella UCITS can host several sub-funds with distinct investment policies under one prospectus. - Where can I market a Luxembourg UCITS
Once authorized, a Luxembourg UCITS can be passported across the EU for public distribution, subject to host state notifications. - What is the difference between UCITS and AIF
UCITS are retail funds with strict diversification and liquidity rules, while AIFs target professional or well-informed investors and allow broader asset classes.
Please contact your Damalion experts now to start your UCITS fund in Luxembourg.
10 best things to do in Luxembourg during a 24 hours business trip!
- Explore the Bock Casemates
- Visit the National Museum of History and Art
- Walk through the Old Quarters and Grund
- See the Philharmonie on Kirchberg
- Tour Mudam Contemporary Art Museum
- Coffee at Place d’Armes
- Stop by the Grand Ducal Palace
- Transit via Luxembourg Airport for duty-free
- Walk the Fort Thüngen park
- Quick train to Belval innovation campus
