24 February 2016

RAIFs coming to Luxembourg in 2016

Reserved Alternative Investment Fund set for approval in 2016

 

Luxembourg is set to have a new category of alternative investment fund; the Reserved Alternative Investment Fund (RAIF) (Fonds d'Investissements Alternatifs Réservés), which was proposed in a Luxembourg Government draft law on 27 November 2015.

Loosely based on the specialised investment fund, RAIFs will be an attractive proposition for investors as they will not require approval or monitoring from Luxembourg's regulatory authorities while maintaining the adaptable and flexible qualities which make Luxembourg-based investment funds the most favourable in the world.

Investors looking to intelligently structure projects in private equity, property and hedge funds are among those who will benefit most from RAIFs although RAIFs will be able to invest in all asset classes without strict rules on portfolio diversification.

The funds must be managed by an authorised Alternative Investment Fund Manager (AIFM) and are likely to be exempt from corporate income tax and net worth tax. However, where investment is made in risk capital benefits, corporate income tax and municipal business tax may be applicable.

It now remains for the Luxembourg parliament to discuss the proposals and, if agreed, modify the draft law. It is anticipated that the new fund will be approved during the first half of next year.

"The future Luxembourg RAIF Law will provide an additional - complementary - alternative investment fund regime which is similar to both the Specialised Investment Fund and SICAR regimes," commented Denise Voss, Chairperson of Association of the Luxembourg Fund Industry.

 

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