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Open a FIAR in Luxembourg

Updated on Thursday 26th May 2016

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Open-a-FIAR-in-LuxembourgIn order to provide a more attractive environment to investors, the Luxembourg Government has recently passed a new law which enables the creation of a new type of fund: the Reserved Alternative Investment Fund. Shortly known as FIAR from the French Fond d’Investissement Alternatif Réservé, the new type of Luxembourg structure offers more flexibility as it does not fall under the supervision of the CSSF. The creation of the FIAR and special limited liability partnerships is part of the Government’s plan to increase Luxembourg’s competitiveness in terms of alternative investment funds in an ever changing financial market.

Setting up a FIAR in Luxembourg

In order to open a FIAR in Luxembourg, a qualified investor must inject at least 125,000 euros into the fund. The fund is not required to obtain authorization from the CSSF, but it must be registered with the Chamber of Commerce in Luxembourg and its constitutive documents must specify that its object of activity is limited to investment in risk capital.

The Luxembourg FIAR will be supervised by an authorized alternative investment fund manager (AIFM) who can be a Luxembourg or an EU resident. Third-country nationals can also act as fund managers provided that they meet the AIFM passport requirements. The FIAR can use one of the following structures:

  • -          UCIS funds,
  • -          partnerships,
  • -          SIFs,
  • -          SICARs,
  • -          public or private companies,
  • -          cooperatives.

Our company formation agents in Luxembourg can assist you in setting up any of the type of companies mentioned above.

Taxation of FIARs in Luxembourg

The law provides for two types of tax regimes for Luxembourg FIARs. This type of fund can choose to pay the 0.01% subscription tax calculated based on the value of its net assets, which exempts it from paying the corporate and the municipal taxes, or it can choose to be subject to normal taxation rules. Under the normal tax regime, the FIAR can take advantage of Luxembourg’s double taxation agreements which also provide for substantial tax exemptions or deductions.

With respect to annual accounts, the Luxembourg FIAR must appoint an independent auditor and issue a yearly report.

For assistance in opening a FIAR in Luxembourg, you can contact our local company registration consultants.

 

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