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Invest in Luxembourg Investment Fund

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Invest in Luxembourg Investment Fund

Luxembourg funds favorably differ. Legislative basis regulating them does not prohibit disproportionate assignment of fund’s profits between partners, while in most other countries this is not allowed or is severely limited.

Due to this, it is possible to implement structures in which many investors through one Fund participate in many different projects.

Financing of each project is performed via issuance of a special class of shares being distributed among partners providing monies for these projects.

Investment fund in Luxembourg – attractive talking about reliability and subsequent profitability of the project, in particular when we mean fastest investments’ return.

Money holders can transfer any property to fund: money, real estate, intellectual rights, know-how, and so on.

There isn’t min or max capital for the Fund, but in order to avoid obligation to get a license from local Fiscal Regulator (CSSF), it’s necessary amount of assets managed by fund doesn’t exceed EUR 100 mln.

Investors’ identities (if their share in the fund does not increase 25%) are not public data. Identity of managing partners is kept in public register.

Establishing funds in Luxembourg: basic rules

To register a risk capital company or to obtain a fund manager license, you need to sign a non-disclosure document in a special department.

Managers must submit an issue prospectus and annual performance report to the CSSF. The same set must be transferred to the investor.

After analyzing them, investors should be able to draw the right conclusions about obtaining possible investments and risks.

The annual report is prepared no later than 6 months after the financial period that closes. The same report must be verified by an independent Luxembourg auditor.

The director and manager of an unregulated investment fund in Luxembourg can operate without a license.

These are the requirements for today. However, to manage a SICAR company, you need to be licensed in the CSSF.

For SIF or RAIF regulated management companies organized on a contractual basis, the management team must be approved.

Practically, the work is structured as follows. Luxembourg hosts the management of the above-mentioned funds.

They delegate the responsibility of advising on all investment matters to colleagues residing outside the territory.

You can contact foreign consultants without the permission of the supervisory and control authorities, but you can transfer the affairs of the investment manager only with a special notice to any SIF and SICAR regulated by AIFMD.

Investment funds in Luxembourg: distinctive privileges

Organizations may be created in any existing organizational forms: JSC, LLC, etc.

According to the method of managing authorized capital, they are divided into SICAV and SICAF.

When choosing last, change in funds is regulated by holders decision.

With first one, an increase or decrease in its size occurs at the time of issuance of new securities.

Associations with both capital types should have a permit to operate obtained from the CSSF.

  1. Internationally recognized investment direction.
  2. Authoritative regulative base due to its accessibility, knowledge and regulatory response.
  3. Stability of the political, economic and social spheres, as well as reliable legal ground.
  4. Favorable taxation.
  5. Appealing jurisdiction for corporate executives.
  6. These funds enjoy privileges allowing them to make subscriptions to EU businesspersons.

Luxembourg investment funds are popular for businessmen, as they may be targeted not only to a wide audience, but also to a limited number of executives with private placement of capital.

Funds’ forms are transparent regarding taxes.

This means fund itself is not obliged paying corporate income charges, and fund’s profits taxation is carried out directly for partners – in accordance with the rules that apply to them under the laws of country where they’re recognized as tax residents.

Luxembourg’s legislative basis offers exceptional plasticity in regulating relations between partners.

Almost any issue related to fund functioning may be settled by a partners’ agreement, which is signed when fund is created and is main constituent document of the fund.

Strict enforcement of this agreement by all partners is guaranteed by state’s judicial system.

If you want to try your hand in this direction, you may start with option of fund in Luxembourg.

Turning to this option, you’ll essentially reduce time allotted for licensing, and protect yourself from possible unpleasant nuances.

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