The Luxembourg SICAV-RAIF merges the open-ended flexibility of a variable capital investment company (SICAV) with the streamlined regime of the Reserved Alternative Investment Fund (RAIF). As a result, fund sponsors can create efficient, multi-compartment platforms that meet institutional investors’ evolving requirements. This article details the core features, structuring possibilities, and practical considerations of the SICAV RAIF structure for real estate, private equity, and other alternative strategies.
What is a Luxembourg SICAV-RAIF?
The SICAV-RAIF designates a variable capital investment company formed under the RAIF regime. Luxembourg introduced the RAIF (Reserved Alternative Investment Fund) by the Law of 23 July 2016. This regime allows fund initiators to launch vehicles rapidly for professional, institutional, or well-informed investors. However, a RAIF must always appoint an authorised Alternative Investment Fund Manager (AIFM) who provides indirect regulatory oversight and manages risk, compliance, and portfolio functions.
A SICAV, or Société d’Investissement à Capital Variable, enables investors to subscribe and redeem shares at net asset value. The variable capital mechanism ensures the fund’s capital changes in line with investor flows. As such, the SICAV-RAIF structure offers open-ended or closed-ended features, depending on the investment strategy and asset class. For example, managers frequently use the SICAV-RAIF for real estate, private equity, infrastructure, and debt strategies.
Unlike regulated SIFs or SICARs, the CSSF does not directly supervise SICAV-RAIFs. Instead, the AIFM registers the fund with the Luxembourg Trade and Companies Register (RCS) and notifies the CSSF. As a result, managers can launch a SICAV RAIF structure within weeks. The RAIF regime allows broad structuring flexibility, including umbrella funds, multiple compartments, and a wide range of eligible assets.
For a deeper overview of eligible investors, structuring advantages, and legal requirements, see the detailed guidance on SICAV-RAIF in Luxembourg.
SICAV-RAIF vs SICAV-SIF: Which structure to choose?
Fund sponsors evaluating Luxembourg fund platforms often compare the SICAV-RAIF and SICAV-SIF. Both offer multi-compartment features and can invest in alternative assets. However, their regulatory frameworks differ significantly. The SICAV-SIF (Specialised Investment Fund) falls under the Law of 13 February 2007. The CSSF directly authorises and supervises every SIF. Therefore, the approval process for a SICAV-SIF typically takes several months.
In contrast, the SICAV-RAIF regime enables managers to launch a fund within days of notarial incorporation and AIFM appointment. The CSSF does not review the RAIF documentation or prospectus at launch. Instead, the AIFM ensures ongoing compliance with AIFMD, anti-money laundering, and risk management rules. As a result, the SICAV RAIF structure appeals to managers seeking speed to market and structuring flexibility.
Notably, both structures can be open-ended or closed-ended, depending on the articles and prospectus. However, only the SIF receives the CSSF ‘regulated fund’ label, which some institutional investors require. In turn, the SICAV-RAIF enables managers to tailor compartments by asset class, investor liquidity, or fee terms, all within an umbrella platform.
For this reason, private equity sponsors seeking a rapid launch, or asset managers aiming for a flexible multi-strategy platform, often choose the SICAV-RAIF. Meanwhile, certain pension funds or insurers may still favour the direct regulatory oversight of the SICAV-SIF.
Multi-compartment structuring with SICAV-RAIF
The SICAV-RAIF structure supports an umbrella fund platform with multiple legally segregated compartments. Article 49 of the Law of 23 July 2016 enshrines the ring-fencing of assets and liabilities at the compartment level. Therefore, each SICAV-RAIF compartment operates as a separate pool of assets and can pursue distinct strategies, currencies, and fee policies.
For example, a SICAV-RAIF umbrella can host one compartment dedicated to real estate investments and another focusing on private equity. Managers can design additional compartments for infrastructure, private debt, or even hedge fund strategies. As such, the structure allows asset managers to serve diverse investor bases, offer tailored liquidity profiles, and optimise operational efficiency across compartments.
Moreover, the RAIF regime places no restriction on the number of compartments, and each can launch independently. Investors benefit from cross-compartment investment opportunities, while sponsors reduce legal and administrative costs by consolidating service providers at the umbrella level.
Specifically, the SICAV-RAIF permits compartment launches in separate closings, aligning capital raising with market opportunities. In practice, this model supports scalable platforms for institutional, family office, and sovereign wealth investors.
SICAV-RAIF real estate and private equity use cases
Managers frequently select the SICAV-RAIF for real estate and private equity strategies. The variable capital model enables them to structure evergreen or finite-life vehicles, as required. For closed-ended private equity strategies, sponsors can establish compartments with fixed or rolling investment periods, waterfall distributions, and carried interest arrangements. In real estate, open-ended compartments can offer periodic liquidity, while closed-ended compartments suit development or opportunistic projects. The flexibility of the SICAV RAIF structure supports the evolving needs of institutional investors.
SICAV-RAIF tax treatment and subscription tax
The SICAV-RAIF benefits from an efficient Luxembourg tax regime. The RAIF does not pay corporate income tax, municipal business tax, or net wealth tax, provided it does not invest in risk capital as a SICAR. Instead, the SICAV-RAIF pays an annual subscription tax (taxe d’abonnement) of 0.01% on its net asset value. The law applies this rate at the compartment level, with certain asset classes—such as money market instruments or pension pool assets—exempt from the tax.
In addition, the SICAV-RAIF can benefit from withholding tax exemptions on distributions to non-residents. However, the structure does not automatically benefit from double tax treaties, except in certain cases where the SICAV-RAIF qualifies as a tax resident and meets substance requirements.
For real estate and private equity, managers often structure investments via intermediate holding companies to optimise tax efficiency. The choice between a SICAV-RAIF and a SICAV-SIF can affect the eligibility for certain tax benefits or investor preferences. Therefore, sponsors should always review the impact of the tax regime on fund strategy and investor returns.
Furthermore, the SICAV-RAIF must comply with FATCA, CRS, and anti-money laundering obligations. The board and AIFM must ensure ongoing tax reporting and transparency for all compartments.
Establishing a SICAV-RAIF platform in Luxembourg
Fund initiators must follow several practical steps to create a SICAV-RAIF. The process begins by drafting the articles of association and appointing an authorised AIFM. The AIFM manages the SICAV-RAIF, oversees risk management, and ensures compliance with the AIFMD framework. The notary incorporates the SICAV-RAIF, and the AIFM notifies the CSSF within 15 days, as required by law. As a result, the SICAV-RAIF can launch compartments and begin investor subscriptions within days.
The SICAV-RAIF may take the form of a public limited company (S.A.) or another corporate type permitted for RAIFs. The minimum share capital is EUR 1,250,000, which the fund must reach within 12 months of launch. The umbrella fund can appoint a depositary, administrator, and other service providers at the umbrella or compartment level.
In addition, the AIFM must prepare a detailed issuing document or prospectus that discloses the investment strategy, fees, risks, and redemption terms. Investors must meet the RAIF’s eligibility criteria as professional, institutional, or well-informed investors. The board of directors is responsible for the fund’s governance, anti-money laundering controls, and overall compliance.
Moreover, the SICAV-RAIF structure allows managers to design tailored share classes for founders, seed investors, or fee arrangements. Sponsors can adapt the redemption policies, gating mechanisms, and distribution terms to fit the asset class and investor base.
Practical insights for SICAV-RAIF formation
- Initiators should select an AIFM with proven experience in the relevant asset class and investor jurisdiction.
- Legal counsel should draft flexible articles to allow the platform to evolve as strategies and compartments change.
- Managers should assess substance requirements for tax residency if treaty access is critical for underlying investments.
- Operational efficiency increases as service providers (depositary, administrator, auditor) scale across multiple compartments.
- Luxembourg SOPARFI structure: Tax benefits, setup guide, and practical insights
In summary, the SICAV-RAIF offers a compelling solution for managers seeking to create open-ended or closed-ended umbrella funds with rapid time to market and strong investor protection. The structure supports real estate, private equity, and other alternative strategies that benefit from the Luxembourg regulatory environment and tax regime.
Damalion supports institutional investors, fund managers, and family offices with compliant Luxembourg structuring solutions. Contact your Damalion experts now.
Related Luxembourg structuring insights
- SICAV-RAIF in Luxembourg
- Luxembourg SOPARFI structure: Tax benefits, setup guide, and practical insights
