Taxation of SICAF in LuxembourgUpdated on Friday 14th April 2017
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Businessmen who want to open an investment fund as an investment company with fixed capital (SICAF) will need to comply with the taxation requirements established for this type of vehicle by the local authorities. Our team of financial representatives can offer assistance on this matter, as well as on the initial capital requirements.
Taxation aspects for SICAFs in Luxembourg
Investors who want to start a SICAF in Luxembourg should know that the local taxation system is very favourable. Such vehicles are exempted from paying the following types of taxes:
• income tax;
• capital gains tax;
However, the SICAF in Luxembourg is liable to paying the subscription tax, which is applicable at the rate of 0,05%, imposed on an annual basis on their net assets.
SICAFs which are set up as specialized investment funds (SIFs) are also required to pay the subscription tax, imposed at the lower rate of 0,01%.
Investors interested in wealth management in Luxembourg must know that they will not be imposed with the wealth tax, if they operate under a SICAF.
Moreover, the distribution of dividends is exempted from the withholding tax, as long as the respective payment refers to non-resident investors and our team of financial experts can offer more details on this aspect.
Also, investors can benefit from an exemption from paying the value added tax (VAT), if the fund management services are delivered by a management company located in Luxembourg. The exemption from paying the VAT is applicable only in this situation, as other services are imposed with the standard VAT, applicable at the rate of 15%.
Capital requirements for SICAFs in Luxembourg
Luxembourg investment funds registered as SICAFs must have an initial capital of EUR 1,250,000, which can be raised by the investors in a period of one year after the investment vehicle was authorized on the local market by the Commission du Surveillance du Secteur Financier.
Investors are welcomed to contact our team of financial representatives for further information on the taxation of SICAF vehicles.