SCS in Luxembourg: Common Limited Partnership - How It Works and Benefits
Mickaël LOC
Corporate Law Expert ·
SCS in Luxembourg: Common Limited Partnership - How It Works and Benefits
The SCS (Société en Commandite Simple), Luxembourg's common limited partnership, combines a general partner (unlimited liability and active manager of the company) with limited partners whose liability is strictly limited to their contributions. No minimum capital is required, incorporation is possible by private deed and the structure benefits from full tax transparency. It is ideal for family joint ventures, real estate or co-investments between an operator and passive investors.
Two categories of partners
- General partners: jointly and unlimitedly liable, actively manage the company
- Limited partners: liability limited to contributions, cannot interfere in management
- No minimum capital required
- Incorporation possible by private deed
Tax transparency
Like the SNC, the SCS is tax-transparent: results are taxed directly in the hands of partners based on their share. This transparency can allow non-resident limited partners to benefit from the tax treaty advantages of their country of residence.
Typical uses of the SCS
The SCS is often used in family wealth transfer structures, joint ventures between an operator (general partner) and passive investors (limited partners), and as a co-investment vehicle in real estate or alternative assets.
Does the SCS fit your structure? Our specialists guide you in choosing the right legal vehicle for your project.
Frequently Asked Questions
What is the difference between a general partner and a limited partner in a SCS?
The general partner is a partner with unlimited liability who actively manages the company. The limited partner is a passive partner whose liability is limited to their contributions and who cannot intervene in management without risking their liability being triggered.
Is the SCS tax-transparent?
Yes, like the SNC, the SCS is tax-transparent in Luxembourg. Results are taxed directly at the level of the partners according to their pro rata share, which can allow non-resident limited partners to benefit from the tax treaties of their country of residence.
What is the minimum capital of a SCS?
There is no minimum capital required to incorporate a SCS. There is total flexibility as to the amount and nature of contributions.
Is the SCS suitable for family structures?
Yes, the SCS is frequently used in family wealth transmission structures. Parents can be general partners (managers) and children limited partners (passive investors), enabling a gradual transition of assets.
Can a SCS be used as an alternative investment fund vehicle?
Yes, the SCS can be used as a vehicle for alternative funds (RAIF, SIF). However, the SCSp (special limited partnership) is generally preferred for institutional funds because its structure is closer to the Anglo-Saxon Limited Partnership.
