Luxembourg is small enough to cross in an afternoon and central enough that most European capital passes through it at some point. Its position rests on a narrow set of legal shells, a well-understood holding regime, and a fund industry that has had four decades to mature. This guide sets out the shells first, then the vehicles built on top of them, then what the jurisdiction actually asks of the structures it hosts.
The legal shells
Every structure described on this page is built as one of a small number of company forms. The shell comes first; the purpose — holding, wealth, fund — is a wrapper placed around it. Confusing the two is the most common source of misunderstanding about Luxembourg.
The S.à r.l. (société à responsabilité limitée) is the private limited company and the workhorse of the jurisdiction — the Luxembourg GmbH, in the same family as the German form and recognisable to anyone who has used one. Minimum share capital is EUR 12,000, it carries between one and one hundred shareholders, it cannot offer securities to the public, and it is the default shell for both operating businesses and holding companies.
The S.A. (société anonyme) is the public limited company — the AG equivalent. Minimum share capital is EUR 30,000, of which a quarter must be paid up on incorporation. It can be governed by a single board or a two-tier management board and supervisory board, and unlike the S.à r.l. it can issue bonds to the public and list.
Two partnership forms complete the picture. The SCA (société en commandite par actions) is a partnership limited by shares, often used where a general partner needs to retain control of a widely held vehicle. The SCS and SCSp are limited partnerships, and the SCSp in particular has become the standard private capital vehicle — it is dealt with in the vehicle map below.
The vehicle map
Five vehicles account for most of what international clients establish in Luxembourg. They are set out below on identical terms, so they can be read against each other.
- Who it's for
- International groups and family holdings consolidating shareholdings in operating companies.
- Tax character
- Fully taxable company, but the participation exemption can exempt dividends and capital gains from qualifying shareholdings — broadly a 10% holding, or EUR 1.2m acquisition cost for dividends and EUR 6m for gains, held for twelve months.
- Regulation
- Unregulated. No CSSF authorisation or supervision.
- Timeline
- Typically one to two weeks.
- Who it's for
- Individuals and family groups holding passive financial assets.
- Tax character
- Exempt from corporate income tax, municipal business tax and net wealth tax. Subject instead to an annual subscription tax of 0.25%, with a statutory minimum of EUR 1,000 and a maximum of EUR 125,000 a year, declared quarterly.
- Regulation
- Unregulated, but the scope is narrow: passive financial assets only — no commercial activity and no direct real estate holding.
- Timeline
- Typically one to two weeks.
- Who it's for
- Managers who already have an authorised EU AIFM, raising from well-informed investors.
- Tax character
- Subscription tax of 0.01% of net assets.
- Regulation
- No CSSF product approval — supervision runs through the appointed AIFM rather than the fund. Umbrella structures with segregated compartments are available.
- Timeline
- Weeks rather than months, because there is no product authorisation step.
- Who it's for
- Managers and institutional sponsors who want the supervised product badge, raising from well-informed investors.
- Tax character
- Subscription tax of 0.01% of net assets.
- Regulation
- Authorised and supervised directly by the CSSF — the institutional-grade option where investors expect product-level regulation.
- Timeline
- Longer than a RAIF, because CSSF authorisation precedes launch.
- Who it's for
- Private equity, venture and infrastructure sponsors familiar with Anglo-Saxon partnership mechanics.
- Tax character
- Tax-transparent — income is taxed in the hands of the partners rather than at partnership level.
- Regulation
- No legal personality and wide contractual freedom in the limited partnership agreement. The default fund vehicle for closed-ended private capital.
- Timeline
- Days to establish, since it is constituted by contract.
Which vehicle fits your capital? A twenty-minute conversation answers it — the choice usually turns on who the investors are, whether the assets are passive, and how much regulatory weight the structure needs to carry.
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