Qualifying as the second largest fund center in the world, following the United States, Luxembourg has become essential when it comes to the alternative investment fund industry.
Luxembourg provides a platform of services and structuring opportunities to the private equity as well as the venture capital industry. Luxembourg also provides investment vehicles such as the RAIF, SICAR, and SIF. Besides those vehicles, Luxembourg provides other types of commercial companies, such as the SCS (simple Limited Partnership) and the SCSp (special Limited Partnership), which are not subject to any specific regulatory framework but qualify as AIF.
The société en commandite simple (SCS) or société en commandite spéciale (SCSp), known as ‘Lux LPs’ (the Luxembourg Partnerships) are formed under the law of 10 August 1915 as onshore fund vehicles or co-investment vehicles and can qualify as an alternative investment fund (AIF).
Features of the Luxembourg SCS and SCSp
| Practical use of the SCS and SCSp | They may be used for master-feeder structures, as an acquisition vehicle, or for joint ventures, but their most regular use is for private equity, venture capital and real estate investments. |
| Applicable legislation | Company Law dated 10.08.1915, as amended |
| Eligible investors | Unrestricted. |
| Eligible assets | Unrestricted. Any kind of asset class. |
| Legal Form | simple partnership (société en commandite simple – SCS) or a special limited partnership (société en commandite spéciale – SCSp) |
| Risk diversification requirements | No risk diversifation requirements. |
| Capital | No minimum capital requirement. Contribution in kind and/or in cash is permitted. |
| Compartments/Subfunds | No |
| Tax Regime | SCS and SCSp are tax transparent entities and are not subject to corporate income tax (CIT) in Luxembourg, their business may be regarded as commercial and thus subject to Luxembourg municipal business tax (at a rate of 6.75% in Luxembourg) if they effectively enact a commercial activity or if their activity is commercially contaminated. They are excempt from subscription tax, wealth tax, and aren’t subject to withholding tax |
| Benefit from double tax treaty network | No. Due to its tax transparent status, SCSs and SCSps cannot utilise Luxembourg’s vast double taxation treaty network |
| Benefit from the EU Parent Subsidiary Directive | As tax-transparent entities, the SCS and SCSp cannot benefit from the EU’s Parent-Subsidiary Directive |
| Authorisation and supervision by the CSSF | No (No regulatory approval or supervision is required from the CSSF) |
| Possibility of listing | Yes, (but no public offering) |
| European passport | Non-AIF, except activities fall within the scop of article 1 (39) of the AIFM Law |
| Management | By the general partner or an external manager (i.e., AIFM) |
| Required Luxembourg service providers | AIFM (Alternative Investment Fund Manager ) Depositary not needed unless the relevant entity qualifies as an AIF, which is not a de-minimis AIF. |
Luxembourg Partnerships have been the “go-to” vehicle for private fund structures for years now as they offer investor understanding, freedom from corporate law overrides, limited liability, and a generally more satisfactory tax regime.
Ready to set up your investment fund in Luxembourg?, we can help you establish and administrate your operations from this jurisdiction, so go ahead and contact your Damalion expert now.
Use Luxembourg société en commandite simple (SCS) or société en commandite spéciale (SCSp) — legal features, formation, governance, partners’ liability, accounts, and tax neutrality in private equity, venture capital, and real assets.
For fund initiators, GPs, legal teams, family offices, private equity and venture capital sponsors • Damalion helps align vehicle choice with deal goals, prepare documents, and coordinate with local providers. Final acceptance and outcomes remain with each independent counterparty.
Last updated:Essentials in plain words
Both SCS and SCSp are Luxembourg limited partnerships under the law of 10 August 1915. An SCS has legal personality. An SCSp does not. In practice, each can host private equity, venture capital, real estate, and co-investment strategies with flexible terms agreed in a limited partnership agreement (LPA). Governance is set by the general partner (GP) and any managers named in the LPA. Limited partners (LPs) are liable up to their commitment, provided they do not take part in management beyond permitted actions.
What to prepare for formation and onboarding
- Partners list, GP identity and powers; draft LPA with economics, allocations, and transfers.
- Name, registered office in Luxembourg, object, duration, commitments, capital accounts.
- UBO chart and beneficial owner filing (as required by law and applicable practice).
- Registered address and local notices; RCS registration and, where applicable, AIFM arrangements.
- Banking details for capital calls and distributions; expected cash flows and jurisdictions.
- Auditor and depositary only where required by fund rules or AIFM thresholds.
SCS vs SCSp at a glance
| Topic | SCS (société en commandite simple) | SCSp (société en commandite spéciale) |
|---|---|---|
| Legal personality | Has legal personality. | No legal personality; acts through GP or managers named in LPA. |
| Governing law | Law of 10 August 1915, as amended. | Law of 10 August 1915, as amended (contractual flexibility is prominent). |
| Partners | ≥1 GP (unlimited liability) and ≥1 LP (limited to commitment). | Same partner structure; liability principles align with the LPA and law. |
| LPA freedom | High flexibility; statutory rules still apply. | Very high flexibility; many points are purely contractual. |
| Accounts | Light reporting; commercial activity may influence obligations. | Light reporting; commercial activity may influence obligations. |
| Regulatory status | Unregulated vehicle; may be an AIF depending on setup. | Unregulated vehicle; may be an AIF depending on setup. |
| Depositary | Required only if the partnership is an AIF above de-minimis thresholds. | Same approach. |
| Tax profile | Typically tax transparent; municipal business tax can apply if commercially active. | Typically tax transparent; municipal business tax can apply if commercially active. |
| Treaty/Directive access | As transparent entities, treaty/Directive benefits are generally not available at entity level. | Same approach. |
| Use cases | PE/VC, acquisitions, co-investments, joint ventures, real assets. | Same, with broad LPA-driven customisation. |
Set-up in practice
- Choose the partnership type. Align legal personality needs and investor expectations.
- Draft the LPA and GP terms. Capital commitments, allocations, carry, transfers, conflicts, and governance.
- Register and disclose. RCS filing; beneficial owner disclosures as applicable.
- Service providers. Administrator, registrar, auditor as needed; AIFM/depositary if in scope.
- Open accounts and call capital. Document source of funds; configure controls and signatory rules.
Timing and costs
- Drafting and filings proceed quickly when documents are complete and decisions are recorded clearly.
- Ongoing costs reflect administration, annual filings, and—if relevant—AIFM, depositary, and audit.
- Bank onboarding time varies by partners’ profiles, flows, and jurisdictions involved.
Related reading
Frequently asked questions
Does an SCS have legal personality?
Yes. Under Luxembourg law, an SCS has legal personality distinct from its partners. The partnership can act in its own name through its organs or representatives.
Does an SCSp have legal personality?
No. An SCSp has no legal personality. It acts through the general partner or managers designated in the LPA.
What is the minimum number of partners?
Both forms require at least one general partner (unlimited liability) and at least one limited partner (liability limited to commitment).
Can the LPA override default rules?
The LPA can set most terms, subject to mandatory provisions of the 1915 Law and general principles of Luxembourg law.
How is liability allocated?
The general partner bears unlimited liability for partnership obligations. Limited partners’ liability is limited to their agreed commitment, provided they do not perform management acts beyond what the law and LPA allow.
Are these partnerships tax transparent?
They are typically treated as tax transparent in Luxembourg. If they carry out a commercial activity or are commercially “contaminated”, municipal business tax may apply.
Do SCS or SCSp benefit from tax treaties?
As transparent entities, they generally do not access treaty or Directive benefits at entity level. Relief is assessed at investor level under relevant rules.
Is a depositary always required?
No. A depositary is required only when the partnership qualifies as an AIF that is not de-minimis under applicable AIFM rules.
Is an auditor mandatory?
An audit is not intrinsically required by the form; requirements depend on activity, investor base, regulatory scope, and LPA commitments.
How are accounts and filings handled?
Light accounting and filing apply. Registration with the RCS and beneficial owner disclosures are required as applicable. The LPA sets capital accounts and reporting mechanics.
Can limited partners lend to the partnership?
Yes. A limited partner may lend or transact with the partnership without losing creditor ranking solely by reason of LP status, subject to the LPA and law.
May partnership interests be represented by instruments?
Yes, if provided in the LPA. Interests may be documented in registered form or other forms allowed by law and the LPA.
Can an SCSp own assets in practice if it has no personality?
Assets are held and actions are taken by the GP on behalf of the SCSp, or as otherwise arranged under the LPA and applicable law.
What happens if LPs participate in management?
LPs risk losing limited liability protection if they perform management acts outside the safe areas permitted by law and the LPA.
Is a notarial deed required?
Formation does not inherently require a notarial deed for these partnership forms; filings and documentary formalities must still be met under the 1915 Law and RCS practice.
How quickly can an SCSp or SCS be registered?
Timelines are short with complete documentation, decisive partner approvals, and clear LPA terms. Bank onboarding may take longer depending on partners and money flows.
Can the partnership be structured as an AIF?
Yes. Either form can qualify as an AIF depending on setup. If in scope, AIFM, depository, and reporting rules apply according to thresholds and investor type.
Are compartments or sub-funds available?
These partnership forms are single-fund vehicles under the 1915 Law. Compartment features are not native to SCS/SCSp.
Can interests be listed?
Listing is possible in certain cases without a public offer. The LPA and market rules must permit the form and transfer mechanics.
What sectors and strategies fit best?
Private equity, venture capital, private credit, real assets, and co-investments commonly use SCS/SCSp structures due to flexibility and investor familiarity.
