News - 13.07.2023

Luxembourg modernises investment fund legislation

  • Asset Management

Luxembourg has updated its legislative framework relating to investment funds to enhance its competitiveness and thus its leadership in this area.

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The new bill, which was introduced by the Ministry of Finance in the spring of 2023 and passed by Parliament on 11 July, amends important provisions in the five sectoral laws governing investment funds in Luxembourg (SICAR, SIF, UCI, AIFM and RAIF). The amendments are largely targeted towards the alternative funds sector, which has seen significant growth in the country in recent years.

Among the main changes, the investment threshold for recognition as a « well-informed investor » has been lowered from €125,000 to €100,000. The period during which minimum capital must be built up has been extended from 12 to 24 months for SICAR, SIF, UCI (Part II), and RAIF funds. UCI Part II funds may adopt new corporate forms and, under the AIFM Act, alternative fund managers are permitted to use tied agents.

As for the Subscription Tax, it has also been modernised to align with European efforts to promote long-term investment, by creating tax incentives to support the emergence of new European products such as European long-term investment funds (ELTIF) and pan-European retirement savings products (PEPP).

Following the vote, Finance Minister Yuriko Backes said: « By modernising our legislative framework, we are opening the way to new opportunities and consolidating Luxembourg’s role as a major financial centre, while promoting the development of new European products such as ELTIFs and PEPPs. With this modernised legislation, Luxembourg continues to innovate and anticipate market trends, affirming its position as a leader in the field of investment funds. »