SCSp in Luxembourg: The Ideal Vehicle for Investment Funds
Mickaël LOC
Investment Fund Specialist ·
SCSp in Luxembourg: The Ideal Vehicle for Investment Funds
The SCSp (Société en Commandite Spéciale), Luxembourg's special limited partnership, is the ideal vehicle for investment funds in Luxembourg: tax-transparent, with no minimum capital, no legal personality of its own and internationally recognized as the equivalent of the Anglo-Saxon Limited Partnership. Introduced in 2013, it has become in a few years the benchmark vehicle for private equity, venture capital and infrastructure funds structured in the Grand Duchy.
What is the SCSp?
The SCSp is a company without legal personality, which means it cannot contract in its own name, hold assets or sue in court. It is represented by its general partner. This specificity is precisely what makes it attractive for investment funds: the assets are held directly by the general partner on behalf of the partners.
Benefits for investment funds
- Full tax transparency: no tax at SCSp level
- Flexible structure: no minimum capital, free definition of economic rights
- International recognition: equivalent to the Limited Partnership recognized by Anglo-Saxon investors
- No registration duties on contributions
- Easy structuring of carried interest and co-investments
SCSp and AIFMD regulation
The SCSp can be used as the vehicle of an Alternative Investment Fund (AIF) subject to the AIFMD directive or of a RAIF (Reserved Alternative Investment Fund). In this framework, the general partner acts as the manager or appoints a manager approved by the CSSF (Commission de Surveillance du Secteur Financier, Luxembourg's financial sector regulator).
Structuring a fund or investment vehicle? Our Luxembourg investment fund experts support you from structuring to CSSF approval.
Frequently Asked Questions
Why does the SCSp have no legal personality?
The SCSp was designed to replicate the regime of the Anglo-Saxon Limited Partnership, which is an entity without legal personality. This absence of legal personality is deliberate: it allows full transparency and maximum flexibility for institutional investors.
Must the SCSp always be managed by an authorised AIFM?
Only if the SCSp is used as an alternative fund vehicle (RAIF, AIF). In that case, it must be managed by an alternative investment fund manager (AIFM) authorised by the CSSF. For other uses (JV, co-investment), this is not mandatory.
What are the tax advantages of the SCSp?
The SCSp is tax-transparent: no tax is due at the level of the SCSp itself. Income is taxed directly in the hands of the partners. Furthermore, there are no registration duties on contributions made to a SCSp.
What is the set-up lead time of a SCSp?
The SCSp is one of the fastest forms to incorporate in Luxembourg. When used as a RAIF vehicle (without direct CSSF approval), the launch lead time can be as short as 2 to 4 weeks.
What is the difference between a SCS and a SCSp?
The SCS has legal personality and can therefore contract in its own name, hold assets and sue in court. The SCSp has no legal personality, with assets held by the general partner on behalf of the partners. The SCSp is generally preferred for institutional investment funds.
