Setting up an ELTIF in Luxembourg under ELTIF 2.0

The ELTIF has moved from regulatory curiosity to the main retail gateway into European private markets. The label, created by Regulation (EU) 2015/760, allows an alternative investment fund to be marketed to retail investors across the whole Union with a single authorisation. The overhaul by Regulation (EU) 2023/606, applicable since 10 January 2024 and known as ELTIF 2.0, removed the constraints that had kept the first regime marginal.¹

Luxembourg is where that growth is happening. The ESMA register counts 306 authorised ELTIFs in the EU, of which 168 are domiciled in Luxembourg, ahead of France and Ireland. The pace is accelerating, with 56 Luxembourg authorisations in 2025 and 21 more in the first half of 2026.² For a sponsor planning a semi-liquid private markets strategy, the practical questions are the wrapper, the redemption design and the authorisation file.

What the ELTIF label adds to an AIF

An ELTIF is not a legal form. It is a product authorisation placed on an EU AIF managed by an authorised EU AIFM, granted in Luxembourg by the CSSF and valid for marketing across the Union, including to retail investors.³ The label brings a harmonised rulebook on eligible assets, diversification, leverage and disclosure, in exchange for the widest distribution passport available to an alternative fund.

The investment universe is defined by qualifying portfolio undertakings and long-term asset classes. Equity and debt of unlisted companies, listed companies with a market capitalisation up to €1.5 billion, real assets with an intrinsic value, other long-term funds, simple, transparent and standardised securitisations and European green bonds all qualify. At least 55% of capital must be invested in eligible assets, a floor lowered from 70% under the first regime, with the remainder available for liquid UCITS-eligible investments.¹

Diversification follows a retail and a professional track. The 20% limits per portfolio undertaking, per real asset and per target fund apply to funds accessible to retail investors, and are disapplied when the ELTIF is marketed solely to professional investors. Borrowing of cash is capped at 50% of net asset value for retail ELTIFs and 100% for professional-only funds.¹

The changes that made ELTIF 2.0 work

The 2023 reform corrected the three failures of the original regime. The asset side was broadened, with the lower 55% floor, the higher listed-company threshold, the removal of the former €10 million minimum for individual real assets and a genuine fund-of-funds capability targeting UCITS and EU AIFs, subject to a look-through on their own eligible assets. Master-feeder structures and co-investment by the manager’s group alongside the fund became possible.

The retail side was rebuilt around MiFID II. Distribution now relies on the ordinary suitability assessment, the former €10,000 entry ticket and the 10% cap for portfolios below €500,000 disappeared, and the retail investor benefits from a two-week cooling-off period after the initial commitment. A fund whose life exceeds ten years requires a written alert that the product may not be fit for investors unable to sustain a long-term, illiquid commitment.¹

The liquidity side finally received an operating manual. The regulation always permitted redemptions during the life of the fund under conditions, but the calibration arrived with Commission Delegated Regulation (EU) 2024/2759, in force since 26 October 2024.⁴

The design of an open-ended ELTIF

An evergreen or semi-liquid ELTIF rests on four connected parameters. A minimum holding period keeps early capital locked while the portfolio ramps up. A redemption frequency, with quarterly dealing as the reference point, more frequent redemptions requiring justification to the supervisor. A notice period, which can drop below three months only with reasons communicated to the competent authority. A cap on redeemable amounts, expressed by reference to the fund’s liquid assets, with pro-rata gating when requests exceed it.

The technical standards pair the size of the liquidity pocket with the percentage that can be redeemed. A fund offering monthly liquidity needs a materially larger pocket of liquid assets, with a lower redeemable fraction, than a fund dealing every six or twelve months. Anti-dilution tools — levies, swing pricing or redemption fees — are selected at the manager’s discretion, and an optional matching mechanism allows exiting investors to be paired with incoming subscriptions without guaranteeing an exit.⁴

This is where fund design and operations meet. The redemption policy, the liquidity management tools, the valuation cycle and the AIFM’s liquidity stress testing must tell the same story in the constitutional documents, the prospectus and the ELTIF application questionnaire. The cost and timeline of a Luxembourg fund launch are driven by that coherence more than by any single document.

The Luxembourg wrappers for an ELTIF

The label sits on top of a national vehicle, and Luxembourg offers the full range. The CSSF’s own list of the 168 Luxembourg ELTIFs shows 127 Part II UCIs, 37 RAIFs, 3 SIFs and one SICAR.²

The Part II UCI dominates because it is the only Luxembourg regime with no investor restriction of its own, which makes it the natural carrier for a true retail strategy. Its board, its depositary and its prospectus are approved by the CSSF, and the ELTIF authorisation is processed together with the wrapper approval.

The RAIF is the professional alternative. It is not itself subject to CSSF product approval, but the ELTIF authorisation adds product-level supervision, so a RAIF-ELTIF combines fast wrapper structuring with a supervised label. Its own law reserves it to well-informed investors, which fits professional-only ELTIFs that use the label for the EU passport and the disapplied diversification limits rather than for retail access. An SCSp outside any product law can also carry the label, a route the CSSF’s taxonomy expressly contemplates.

In every case the fund needs an authorised EU AIFM, whether proprietary or appointed as a third-party AIFM, and the manager’s approval to run the ELTIF is part of the authorisation file.

The Luxembourg tax treatment

The law of 21 July 2023 modernising the fund toolbox gave ELTIFs a dedicated incentive. Funds authorised as ELTIFs, and the individual compartments of umbrella funds that carry the label, are exempt from the annual subscription tax that would otherwise apply at 0.05% for a Part II UCI or 0.01% for a SIF or RAIF.⁵ For a compartment-level label within an umbrella, the exemption follows the compartment.

Income taxation is unchanged and follows the wrapper. A Part II UCI, a SIF or a standard RAIF pays no Luxembourg tax on income or gains, and distributions leave Luxembourg without withholding tax. There is no ELTIF-specific income tax regime, so the vehicle choice keeps its usual tax logic, including the SICAR-type option available to risk-capital RAIFs.

The CSSF authorisation in practice

The regulation gives the competent authority two months from a complete application to decide on the ELTIF authorisation.³ In Luxembourg the file goes through the CSSF’s eDesk together with the dedicated ELTIF application questionnaire, updated in December 2025, which covers the strategy, the eligible-asset test, the redemption design and, since the 2024 technical standards, a dedicated section on redemption matching.⁶

The realistic critical path is the completeness of the file rather than the two-month clock. The wrapper approval for a Part II UCI, the AIFM’s programme of activity, the depositary agreement and the distribution set-up move in parallel, and an application that arrives with a fully calibrated liquidity framework avoids the rounds of questions that stretch timelines. Funds authorised under the first regime before 10 January 2024 benefit from transitional treatment, being deemed compliant until 11 January 2029, or indefinitely if they raise no additional capital.¹

The ELTIF has become the default answer when a private markets sponsor asks how to reach European retail and wealth-management capital at scale. The label rewards structures where the portfolio, the liquidity design and the operating model were built together, which is a design exercise before it is a filing exercise.

Footnotes

1. Regulation (EU) 2023/606 amending Regulation (EU) 2015/760, applicable from 10 January 2024, including the transitional provisions of its Article 2. ↩ ↩² ↩³ ↩⁴ ↩⁵

2. ESMA register of authorised ELTIFs and the CSSF list of fund units subject to Regulation (EU) 2015/760, both as at 30 June 2026. ↩ ↩²

3. Regulation (EU) 2015/760 in its consolidated version, notably Articles 3, 5, 6, 10 to 18 and 30. ↩ ↩²

4. Commission Delegated Regulation (EU) 2024/2759 of 19 July 2024 on redemption policy and liquidity management tools, in force since 26 October 2024. ↩ ↩²

5. Law of 21 July 2023 amending the SICAR, SIF, UCI, AIFM and RAIF laws, published in Mémorial A No 442 of 24 July 2023. ↩

6. According to the CSSF, applications use the eDesk UCI module and the dedicated ELTIF application questionnaire. ↩