Domiciled Funds in Luxembourg

Domiciled Funds in Luxembourg

Updated on Wednesday 11th August 2021

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Domiciled-Funds-in-Luxembourg.jpgDomiciled funds in Luxembourg refer to the funds that are incorporated in this country, and which fall under the rules of this jurisdiction. Luxembourg domiciled funds can refer to any category of funds that is prescribed under the national law (and here, Luxembourg provides a wide range of funds investors can select from). 
 
However, when opening an investment fund in Luxembourg, foreign and local businessmen have the right to distribute the respective funds on international markets. Thus, Luxembourg domiciled funds are entitled to carry their investment operations not only in Luxembourg, but in other jurisdictions as well, and this can be done in accordance with the law of the said country. 
 
In this particular case, investors may need to obtain an authorization for their Luxembourg domiciled funds following the rules applicable in those countries. As a member state of the European Union (EU), locally incorporated funds can be marketed to EU countries through a type of authorization that is available only at a EU level; for more details, we invite you to request advice from our team of financial advisors. 
 

Where can one find Luxembourg domiciled funds?

 
Investors who want to become the shareholders of Luxembourg domiciled funds or who want to purchase an investment fund that provides numerous investment opportunities can address not only to the Luxembourg market, but also to foreign markets, where they can find Luxembourg based funds. In the list below, we will present few of the highlights of the Luxembourg domiciled funds operating overseas: 
 
  • according to the Association of the Luxembourg Fund Industry (ALFI), Luxembourg domiciled funds can be currently found in more than 70 countries;
  • over the last 30 years, Luxembourg stands out as country that is excellent at the distribution of funds operating as UCITS;
  • as of December 2020, Germany was the country with the highest number of registrations of Luxembourg funds, accounting for 6,149 funds;
  • from all the UCITS funds available in a market, 57% of them are represented by Luxembourg UCITS funds; 
  • another important jurisdiction that has a very well developed fund market is Ireland (accounting for 33% of the UCITS funds registered elsewhere), but it is well below Luxembourg. 
 

Why are Luxembourg domiciled funds so popular? 

 
Luxembourg has one of the most developed economies in Europe, and one of the most attractive financial markets, despite the small size of the country. It has a long tradition in the fund industry and, given its long history in this field, it has the most developed legal framework address to fund investors. 
 
Besides this, it has numerous persons who are qualified in providing fund services and it is also a jurisdiction that attracts international talent in the financial services sector. At a European level, Luxembourg is the most competitive economy for this industry, and at a global level, it represents the second most important country, after the United States of America (USA). 
 
Investors who want to open a Luxembourg fund will find here lawyers specialized in fund domiciliation, and specialists who have an in-depth knowledge and expertise in cross-border registrations of Luxembourg domiciled funds. Investors can obtain consultancy services on matters related to the law which regulates the registration of fund in this country or elsewhere, advice on the tax laws and tax obligations and they can hire top audit companies, to name just few of the advantages of setting up a fund here. 
 

Highlights of the Luxembourg domiciled funds 

 
A large part of the investment funds that operate at a global level is represented by Luxembourg domiciled funds, which were distributed on international markets and then sold. In the list below, we will present the share of funds registered in Luxembourg among the total share of foreign funds operating in various jurisdictions: 
 
  • in the European region, Luxembourg funds represent 100% of the foreign funds in Greenland, 96% of the ones available in Estonia and Lithuania, 95% of the ones in Hungary and Poland and 94% of the ones in Greece and Cyprus;
  • in the Middle East, the Luxembourg domiciled funds represent 100% of the foreign funds in Turkey, 99% of the ones in Oman and 98% of the ones in Qatar;
  • in South Africa, they represent 100% of the ones in Botswana and they are well represented in Mauritius (94%);
  • in Asia, the highest rate, of 100%, is registered in Brunei and in Korea stands at 92%;
  • in South America, the highest share is in Curacao, of 100%, and Chile, of 59%;
  • in North America, they are present in Canada, with a share of 4%. 
 
If you need more information on how to open an investment fund in Luxembourg, we invite you to address to our team of financial advisors. Our experts can help you with in-depth legal and tax advice on any inquiry you may have related to this subject, so do not hesitate to address to our team.