Hedge Funds in LuxembourgUpdated on Friday 20th January 2017
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Luxembourg is the perfect location for the investors who are seeking to invest in a fund. Luxembourg has a solid regulatory and legal environment and enjoys of a wide range of financial products and services. At the moment, Luxembourg is the leading economy in Europe in the investment fund domicile with more than 3,900 funds with a value of more than EUR 3,000 billion. Foreign investors can benefit of various investment incentives if they set up a fund here; our experts in Luxembourg can provide you with an in-depth presentation on the local investment environment and business opportunities.
Regulatory frameworks for hedge funds in Luxembourg
Foreign investors who want to open a hedge fund in Luxembourg should know that they can choose from three legal structures:
• Specialized Investment Fund (SIF) structure – under the SIF law;
• Undertaking for Collective Investment (UCI) structure – under the Part II of the 2010 law;
• Undertakings for Collective Investments in Transferable Securities (UCITS) structure – under the Part I of the 2010 law.
The presentation below offers more details related to the hedge funds in Luxembourg:
The legislation in the field specifies the eligible investors for the above mentioned legal structures; as such, a UCI structure will require investors from the institutional and retail sectors; the same are required for a UCITS.
All three types of legal structures must be approved by the Commission de Surveillance du Secteur Financier (CSSF) before they start their operations in Luxembourg; our experts can provide you with further information on the authorization of a hedge fund.
Taxation of a hedge fund in Luxembourg
Investors opening a hedge fund should know that the legislation applicable in Luxembourg doesn’t impose any corporate income tax on the income of such entities. The hedge fund is not the subject of municipal business tax or withholding tax on dividends. It can be taxed with the withholding tax on dividends only if the European Union’s savings directive applies; our financial consultants can offer you more details in this sense.
The hedge fund is charged with a subscription tax, applicable at the rate of 0.1% of the net assets, but there are exceptions in which the subscription tax is charged at the rate of 0.01%.
If you need further information on the hedge funds in Luxembourg, please contact our financial specialists for assistance.