We can fully assist clients with the incorporation of SICARs in Luxembourg. The Luxembourg investment company in risk capital (société d’investissement en capital à risqué, SICAR) is regulated by the Law for collective investment schemes, enabled in June 2004. The SICAR company was created for private equity and venture capital investments.
| Quick Facts | |
|---|---|
| What is a SICAR? |
A SICAR refers to an investment company in risk capital. The SICAR is used for private equity/venture capital and it can also be listed on the Stock Exchange. |
|
Legal entities available for a SICAR |
– limited partnership, – public limited company, – private limited liability company, – cooperative set up as a public limited liability company, – partnership limited by shares |
|
Law regulating the SICAR |
SICAR Law of 15 June 2004 |
| Types of investors who can participate in a SICAR | Businessmen who can set up a SICAR in Luxembourg can only be qualified investors (professional/ institutional investors). |
| Minimum investment threshold imposed to investors |
EUR 100,000 (an exemption from this rule is applied when the investor has been assessed by a suitable institution regarding his or her experience in investments in this type of fund.) |
| Appointment of alternative investment fund manager (AIFM) |
It is necessary to appoint an AIFM when the SICAR operates as an alternative investment fund (AIF), regulated under the AIF laws. |
| Minimum share capital for a SICAR |
EUR 1,000,000 |
| Conditions for depositing the minimum share capital |
The minimum share capital does not have to be deposited all at once. The investors must deposit at least 5% during the registration of the fund, and after that, the minimum capital can be submitted in a period of 24 months since the incorporation. |
| Authorization required (yes/no) |
Yes |
| Main regulator of a SICAR | Supervisory Authority for the Financial Sector (Commission de Surveillance du Secteur Financier – CSSF) |
| Umbrella funds allowed (yes/no) |
Yes |
| Subscription tax (yes/no) |
No |
| Obligation to pay the corporate tax |
Yes, SICARs are liable to paying the corporate tax in most cases, but exemptions can apply. |
| Intervals for reporting obligations |
A SICAR must submit financial reports on a monthly basis, once every six months (June 30 and December 31), and at the end of the financial year. |
| Law regulating reporting obligations for SICARs | When you will set up a SICAR in Luxembourg, the reporting obligations mentioned above must be concluded as per the rules of the Circular CSSF 15/627 and Circular CSSF 08/376. |
What is the main purpose of a SICAR in Luxembourg?
Investors who want to open an investment fund in Luxembourg operating as a SICAR should know that the vehicle is usually used for raising private equity or venture capital and it is allowed to list its shares on the Stock Exchange only under certain conditions.
Investments in a Luxembourg SICAR company are required to meet two main criteria, in the sense that they must be of high risk and they will be used to develop the company the SICAR invested in.
The legislation allows for the second condition to be satisfied in different ways, such as modernization or restructuring, hence one of the greatest advantages of setting up a SICAR in Luxembourg is its flexibility, which is also sustained by the fact that both natural persons and legal entities may register this type of fund.
Legislative updates concerning SICARs
At the end of 2025, new measures concerning the functioning of SICARs were introduced by the CSSF, under the Circular CSSF 25/901. The document regulates several aspects for more types of funds, not just SICARs. For instance, investors who want to open a SIF in Luxembourg should verify the new conditions brought by the new law.
For a SIF in Luxembourg, CSSF provides new diversification rules, provided that the SIF follows a risk-spreading investment policy. The Circular brings new rules for UCI funds – SIF, SICAR and UCI Part II regarding their duration.
Thus, it must be noted that those who intent to set up a SICAR in Luxembourg or compartments within the fund can extend the duration of these structures. The new rules state that the duration can be extended by 1 year and the extension can be concluded 3 times. However, CSSF may grant derogations from this rule, but the representatives of the fund must provide a clear motivation as to why the extensions are necessary.
The SICAR must abide by new rules concerning transparency and in this sense, the fund documentation must contain 6 mandatory details (a clear description on the investment policy, the risks associated with the investment, warnings for unsophisticated investors who invest in the SICAR, in which the risks of their investments are fully disclosed, the procedure to amend the investment policy, etc.).
Who can register a SICAR in Luxembourg?
The possibility of opening an investment fund in Luxembourg as a SICAR is limited to well-informed investors, who can be natural persons or legal entities. This category is comprised of institutional investors and of professional investors, but other types of investors may also qualify under this category as long as they comply with specific requirements.
In the latter case, investors can qualify even if they are not professional or institutional investors, as long as they confirm in writing that they can be well-informed investors and if they satisfy a minimum investment threshold, imposed at EUR 100,000; our financial specialists can provide more information on the investment requirements available for this structure.
However, they may also qualify as well-informed investors without investing the minimum capital required for this structure, as long as they have obtained an assessment from an investment structure (such as a management company, investment firm or credit institutions) which states that the investors have the necessary qualifications in order to understand the risks associated with opening a SICAR in Luxembourg.
Which are the business forms available for a Luxembourg SICAR?
This entity can be incorporated under five business forms, as prescribed by the legislation regulating this vehicle, which is given by the Luxembourg Law of 15 June 2004. The legislation was later amended (in 2013) following the introduction of the Alternative Investment Fund Managers Law. The main legal entities available for a SICAR are:
- partnership limited by shares (société en commandite par actions, SCA), which is registered with the Trade and Companies Register and it needs a capital of EUR 31,000;
- limited partnership (société en commandite simple, SCS) – this business form can be used for SICARs in Luxembourg following the adoption of the 2013 legislation;
- private limited liability company (société à responsabilité limitée, Sàrl) – the most common business form operating in Luxembourg;
- public limited company (société anonyme, SA) – this business form is usually chosen for registration by large and medium sized companies;
- cooperative company established as a public limited company (société cooperative organisée sous forme de société anonyme, SCoSA).
In the infographic below, you can find out the main steps to open a SICAR in Luxembourg:
Requirements to register a SICAR in Luxembourg
In order to register a SICAR in Luxembourg, the law stipulates the following:
- the minimum share capital required to set up a SICAR in Luxembourg is EUR 1,000,000 which must be deposited within 24 months from the authorization;
- it is necessary to deposit at least 5% of the company’s capital during its registration (our team of financial advisors can offer more details);
- the company must have a registered address in Luxembourg;
- its trade name must end in the acronym SICAR;
- the Luxembourg SICAR must be authorized by the Supervisory Authority for the Financial Sector (CSSF);
There are no requirements related to the maximum number of shareholders a SICAR in Luxembourg may have. The SICAR will be required to draft a prospectus and an annual report at the end of each financial year, a document that will be audited by an independent qualified auditor and it is important to know that this structure can benefit from several tax exemptions.
What are the authorization requirements for a SICAR in Luxembourg?
As presented above, a Luxembourg SICAR must obtain an authorization for performing investment activities in this country from the CSSF. Once the company was founded, the application for authorization must be submitted with the CSSF in a period of one month. In order to obtain an authorization for a SICAR in Luxembourg, the CSSF has to offer its approval on certain types of documents.
The file should contain the fund’s constitutive documents, information on the appointed auditor and depositary, information on the SICAR’s directors, but also evidence on the fact that the fund’s central administration is located in Luxembourg. All these documents have to be approved by the CSSF in order for the institution to grant the authorization.
What is the tax system applicable for a SICAR in Luxembourg?
The fund can benefit from an exemption on the corporate tax, an exemption which is available only for the income obtained from transferable securities. The fund can also qualify for an exemption on the payment of the value added tax (VAT); this is generally available for the provision of management services.
In the case in which the SICAR in Luxembourg is registered under a partnership, the fund itself will not be liable to taxation; the taxes will apply to its founders and this means that that the corporate tax will not apply. Instead, the founders will be taxed with the personal income tax. In this particular case, the municipal business tax will also be exempt.
We invite investors to find out more details on the SICAR in Luxembourg from the video presented below:
Our clients can also rely on us if they want to open a SICAV in Luxembourg or if they plan to open a SPF in Luxembourg. You can also contact us for advice and assistance on private equity in Luxembourg.