Emerging managers preparing a first Luxembourg fund face a real information gap. Law firm brochures explain the SCSp and the RAIF in detail but never publish a number. Digital platforms publish numbers that rarely match what a real launch ends up costing. The result is a first budget built on guesswork, usually optimistic, and usually focused on the wrong line — the setup fee rather than the recurring cycle.

This guide sets out the honest cost structure of a Luxembourg fund built on the SCSp form, with and without the RAIF wrapper. The figures quoted are orders of magnitude observed in current market practice, not quotations. Actual fees depend on the providers selected, the strategy, the investor base and the negotiation, and any serious launch plan should be priced against real proposals. What does not change from one launch to the next is the structure of the budget, and that structure is what a first-time GP needs to understand before signing anything.

Two budgets, not one

A Luxembourg fund carries two distinct budgets. The setup budget is paid once, mostly to lawyers, the notary where relevant and the providers during onboarding. The run-rate repeats every year for the life of the vehicle, which for a closed-ended private equity or venture fund typically means ten years or more.

The arithmetic deserves to be stated plainly. A run-rate of EUR 150,000 over a ten-year fund life represents EUR 1.5 million of cumulative structural cost, roughly ten times a typical setup budget. For the GP or other Luxembourg capital companies around the fund, the Luxembourg tax simulator can provide a first company-level tax estimate before the annual compliance budget is refined. On a EUR 30 million fund that cumulative cost is about 5% of committed capital; on a EUR 100 million fund it fades into the expense ratio. The setup quote is therefore the least informative number in the whole exercise. The decisions that actually shape the economics are the AIFM route, the wrapper choice and the provider minimums, all of which live in the run-rate.

The one-off setup budget

The setup budget has four main components — legal drafting, the GP company, the constitution formalities and provider onboarding.

Legal drafting is the largest line. The limited partnership agreement carries the entire economics of an SCSp — commitments, drawdowns, waterfall, carry, removal and default mechanics — and a RAIF adds an offering document that must give investors all information necessary for an informed judgement. A short-form LPA for a club deal among a handful of known investors is a different drafting exercise from institutional-grade documents that will be negotiated by LP counsel, and the fee range reflects that spread more than any Luxembourg specificity.

The general partner is almost always a Luxembourg capital company, typically a SARL with a minimum capital of EUR 12,000, incorporated before a notary. The GP setup is a modest but non-optional line, and it brings its own recurring obligations that reappear in the run-rate below.

The constitution formalities differ sharply by wrapper. A plain SCSp is formed by private agreement, with no notarial deed and no minimum capital, and only an extract of the LPA is filed with the RCS and published in the RESA.¹ A RAIF must be constituted by notarial deed, or have its constitution recorded by notarial deed within five working days, and is inscribed on the RAIF list held by the RCS.² Register fees themselves are marginal in the total — the meaningful difference is the notary and the heavier document set.

Provider onboarding is the line first-time budgets forget. The AIFM, the depositary, the central administration and the bank each run their own due diligence on the sponsor, the structure and the investor pipeline before signing, and several charge onboarding or acceptance fees. AML and KYC files for the sponsor and the GP are prepared once but reviewed by every provider.

Setup component	Plain sub-threshold SCSp	SCSp-RAIF
LPA and offering documentation	Lower five figures for a short-form LPA	Substantially higher; PPM added and LP-negotiated
GP incorporation (SARL)	Required — notary plus EUR 12,000 capital	Same
Notarial deed at fund level	Not required	Required
RCS, RESA and RBE filings	Marginal	Marginal
Provider onboarding and KYC	Light — fewer mandatory providers	Heavier — AIFM, depositary, administration

In market practice, a full-scope RAIF setup — structuring advice, documentation, notary and provider onboarding combined — typically lands somewhere between roughly EUR 60,000 and EUR 150,000, with complex strategies and heavily negotiated documents going beyond. A plain SCSp for a compact investor base is regularly launched for a fraction of that. Both figures are orders of magnitude, not prices.

The annual run-rate

The run-rate is where the wrapper choice and the AIFM route translate into recurring cost. Its components are stable across structures even when the amounts differ.

Annual line	What it covers	Market-practice order of magnitude
AIFM	Portfolio and risk management responsibility	Registered AIFM route — internal cost only; third-party authorised AIFM — commonly quoted in single-digit basis points of NAV with fixed annual minimums
Fund administration	Bookkeeping, NAV, capital calls, investor register	Roughly EUR 25,000 to EUR 100,000 depending on activity
Depositary	Safekeeping, ownership verification, cash monitoring	Basis-point fees with fixed minimums; mandatory for a RAIF
Audit	Annual report by a réviseur d’entreprises agréé	Roughly EUR 15,000 to EUR 50,000
Tax compliance	Partner-level returns, subscription tax, FATCA/CRS	Recurring, scales with investor count
Domiciliation and corporate secretarial	Registered office, governance calendar, filings	Roughly EUR 10,000 to EUR 30,000
GP accounts	GP bookkeeping, annual accounts, its own tax returns	A separate, permanent line

Two structural points matter more than any single figure. First, several lines carry fixed annual minimums. A third-party authorised AIFM commonly quotes between three and eight basis points of net assets, but the minimum fee is what a EUR 15 million fund actually pays, and the same logic applies to the depositary and the administrator. Second, the RAIF adds lines that a plain SCSp does not carry at all. The depositary is mandatory for a RAIF, the audit is mandatory regardless of size, and the subscription tax of 0.01% on net assets applies quarterly.² An unregulated SCSp below the AIFMD thresholds needs none of the three by default, and its audit obligation depends on ordinary size criteria.

For a small SCSp-RAIF, market practice typically places the combined service-provider budget in a range of roughly EUR 100,000 to EUR 200,000 per year. A plain sub-threshold SCSp with a compact LP base runs materially below that, because the two largest fixed lines — the authorised AIFM and the depositary — simply fall away.

The AIFM route is the biggest cost decision

No other single choice moves the run-rate as much as the AIFM configuration. A manager whose aggregate assets stay under EUR 100 million — or under EUR 500 million for unleveraged, closed-ended funds without early redemption rights — can operate as a registered, sub-threshold AIFM with a light regime and no recurring platform fee.³ The trade-offs sit in distribution rather than cost, since the registered route carries no EU marketing passport and, decisively, a registered AIFM cannot manage a RAIF.² The Luxembourg AIFM regime and its thresholds are covered in a dedicated guide.

Once the RAIF wrapper or the passport is needed, the realistic first-fund route is a third-party authorised AIFM platform, and its minimum fee usually becomes the largest recurring line in the budget. Setting up a sponsor’s own authorised AIFM — EUR 125,000 of initial capital, approved dirigeants, Luxembourg substance and a CSSF authorisation file measured in months — is an infrastructure investment that market practice reserves for managers with several products or a clear scaling path, not for a first vehicle.

What drives the budget up

Four factors explain most of the spread between a lean launch and an expensive one.

The wrapper is the first. Choosing a RAIF over a plain SCSp buys speed without CSSF product approval and a recognised label for institutional investors, but it hard-wires the authorised AIFM, the depositary, the mandatory audit and the subscription tax into the run-rate. That trade is often right — it should simply be made consciously, and the RAIF versus plain SCSp comparison sets out the two wrappers side by side for that decision.

Umbrella compartments are the second. An umbrella RAIF can host several compartments under one legal shell, but each compartment produces its own NAV, its own audit scope and usually its own fee schedule at the administrator and depositary. The umbrella economics only pay off once several compartments actually launch; a single-strategy manager pays for optionality it may never use.

Investor count is the third. Transfer agency, AML and KYC work scale per investor, not per million of commitments. Fifty smaller LPs cost more to administer than five institutions committing the same total, and FATCA and CRS classification work follows the same logic.

Strategy complexity is the fourth. Hard-to-value assets, layered SPV stacks, credit instruments with bespoke terms or frequent transactions all raise the valuation, depositary oversight and audit effort. A quarterly-valued buyout fund and a high-transaction private debt vehicle sit at opposite ends of the same fee grids.

Realistic launch timelines

The legal mechanics are fast in Luxembourg; the ecosystem around them is what takes time.

A plain SCSp can be legally formed in days. The LPA is signed privately, the extract is filed with the RCS, and no notary or regulator sits in the critical path.¹ One to two weeks is a realistic figure for the incorporation mechanics once documents are final. The genuine launch drivers sit elsewhere — GP documentation, AML files, bank account opening and, where the vehicle is an AIF, the AIFM registration or appointment. If the GP is incorporated as a SARL with deferred payment of its minimum cash capital, its bank account need not delay the GP’s notarial deed.

A RAIF requires no CSSF approval, so its timeline is also execution-driven, but the execution is heavier.² The authorised AIFM must complete its own onboarding and due diligence, the depositary and central administration must contract, and the offering document must reach final form. With providers selected and documents advanced, market practice points to roughly four to six weeks for the launch sequence itself; from a standing start, two to three months is the more honest end-to-end figure. The RAIF must then reach net assets of EUR 1,250,000 within twenty-four months of constitution, a threshold checked on drawn assets rather than commitments.⁴

The outlier is the sponsor’s own authorised AIFM. A CSSF authorisation file is realistically a four-to-six-month project from a complete submission, which is precisely why first launches almost always rent the regulated layer from a third-party platform rather than build it.

The budget mistakes of first-time managers

The recurring mistakes are structural rather than arithmetic. The most common is pricing the launch on the setup quote alone and discovering the run-rate at the first annual invoice cycle. The second is ignoring minimum fees — a fee schedule quoted in basis points reads cheaply until the minimums are applied to a EUR 15 million first closing, which is why market practice treats roughly EUR 20 to 30 million as the level where a RAIF’s fixed cost base stops visibly distorting net returns.

The third is forgetting that the GP is a company with its own life. It keeps books, files annual accounts, files tax returns and maintains substance, every year, independently of the fund’s activity. The fourth is assuming every cost can be charged to the fund. What the vehicle bears and what the sponsor bears is governed by the LPA’s expense clauses, organisational expense caps are standard in institutional negotiations, and LPs read those clauses closely. A cost pushed to the fund without a clean contractual basis becomes a difficult conversation at the first advisory committee meeting.

The last is sequencing. Signing documents before selecting the AIFM and depositary inverts the real critical path, since those providers will re-open service-level and liability provisions during onboarding in any event.

When the cheap setup becomes expensive

A lean launch is legitimate — many strong managers start with a plain SCSp and graduate later. Problems arise not from leanness itself but from three recurring patterns.

Template documents are the first. A generic LPA priced attractively at signing tends to be renegotiated line by line when the first institutional LP arrives with counsel, and amendment rounds plus side letters routinely cost more than proper drafting would have. The second is crossing the AIFMD thresholds mid-life. A registered AIFM whose assets grow past the ceiling must move to the authorised regime, and executing an AIFM appointment under regulatory time pressure, mid-fundraise, is the worst possible negotiating position. The third is wrapper migration — restructuring a plain SCSp into a RAIF later means a notarial deed, an offering document, depositary and AIFM onboarding and investor consents, all at once, on a live vehicle.

None of this argues for over-building a first fund. It argues for pricing the full annual cycle honestly before the first closing, choosing the wrapper and the AIFM route against the realistic investor base rather than against ambition, and treating provider minimums — not headline basis points — as the true cost of the structure. Structuring the launch budget alongside Luxembourg fund formation support keeps the setup decisions and the ten-year run-rate in the same conversation from the start.

Footnotes

1. Articles 320-1 and following of the coordinated law of 10 August 1915 on commercial companies, which govern the SCSp, its formation by private agreement and the publication of an extract. ↩ ↩²

2. Law of 23 July 2016 on reserved alternative investment funds, as amended, including the requirement of an authorised external AIFM, the notarial recording of the constitution, the depositary and audit framework and the 0.01% subscription tax. ↩ ↩² ↩³ ↩⁴

3. Article 3 of the law of 12 July 2013 on alternative investment fund managers, setting the EUR 100 million and EUR 500 million registration thresholds; the EUR 125,000 initial capital of an external authorised AIFM follows from Article 8 of the same law. ↩

4. Law of 21 July 2023 amending several fund product laws, which extended to twenty-four months the period for a RAIF to reach the minimum net assets of EUR 1,250,000. ↩