A reserved alternative investment fund, or RAIF, combines a Luxembourg fund label with indirect supervision. The fund itself does not need product approval from Luxembourg’s financial supervisor, the CSSF. Supervision operates through the external authorised alternative investment fund manager (AIFM) that the RAIF must appoint.
This makes the RAIF different from a plain SCSp, or special limited partnership. It also differs from a regulated specialised investment fund (SIF) or investment company in risk capital (SICAR). It offers a statutory fund framework without direct product authorisation, but it also brings mandatory investor, manager, depositary and audit rules.
The basic legal structure
The RAIF Law of 23 July 2016 requires the vehicle to be an alternative investment fund. It must therefore raise capital from a number of investors and invest it under a defined policy for their benefit.
A RAIF can use several legal forms. In private equity and private debt, the SCSp is common because a limited partnership agreement can define how returns are shared and who makes decisions. The RAIF can also be organised as a company or as a common fund, a pool of assets held jointly for investors.
The constitutive documents, such as the partnership agreement, must expressly place the vehicle under the RAIF Law. The offering document, which explains the proposed investment and its risks, must state clearly that the fund is not supervised by a Luxembourg supervisory authority.
Investors must be well informed
RAIF interests are reserved to well-informed investors. Institutional investors and professional investors qualify directly.
Another investor must accept well-informed status in writing. It must then either invest at least EUR 100,000 or obtain an assessment of its expertise, experience and knowledge from one of the institutions listed in the law. Those institutions include a credit institution, an investment firm or an authorised AIFM. A management company for UCITS, funds covered by the separate EU regime for transferable securities, can also carry out the assessment.
The law exempts directors and other persons involved in managing the RAIF from these investor conditions.
The EUR 100,000 threshold was introduced by the Law of 21 July 2023, replacing the former EUR 125,000 amount. The threshold does not turn the RAIF into a retail product. Distribution rules and the marketing framework under the Alternative Investment Fund Managers Directive (AIFMD) still apply.
An authorised AIFM is mandatory
A RAIF must appoint an external AIFM authorised under the full AIFM Law. A manager registered under the regime for assets below the statutory thresholds is not sufficient. The law preserves a narrow exception for RAIFs managed by the supranational institutions and national central banks excluded from the AIFM Law. That exception does not cover an ordinary sponsor or registered manager.
The AIFM is responsible for managing the investments and their risks, known as portfolio management and risk management. It also operates within the rules on valuation, delegation, conflicts, reporting and marketing. The sponsor, which initiates the fund, may use its own authorised manager or appoint a third-party AIFM, but the regulated responsibility remains with the appointed AIFM.
The RAIF can use the AIFMD marketing passport to professional investors through an authorised EU AIFM. This allows cross-border distribution, subject to the passport conditions and notification process. That passport is a feature of the manager’s authorisation, not a direct CSSF approval of the fund.
Depositary, audit and operating framework
The RAIF must appoint a Luxembourg depositary from the categories permitted by law. The depositary safeguards assets and monitors cash. The depositary’s duties depend on the assets and the AIFM framework, but include the functions assigned by the AIFM and RAIF laws.
The accounting information in the annual report must be audited by an approved statutory auditor, a professional authorised to perform statutory audits. The report must be made available to investors within 6 months of the financial year-end. The annual report and audit analysis explains how valuation, investor accounts and provider responsibilities feed into that deadline.
The relevant statutory amount must reach EUR 1.25 million within 24 months. For a common fund, the test concerns net assets and runs from the effective date of its management regulations. For vehicles under Chapters 3 and 4, the measure depends on the form. It uses the value of the amount constituting partnership interests or subscribed capital, the part of investors’ agreed contributions allocated to the fund’s capital. In the latter case, the issue premium, the difference between the issue price and the nominal value of the interests issued, is added. The period runs from constitution. A variable-capital investment company has capital equal by law to its net asset value, meaning assets less liabilities. The 2023 reform extended the former 12-month period. These are fund-level requirements, separate from each investor’s eligibility test.
Risk spreading and compartments
A standard RAIF must follow the principle of risk spreading, so its investment risks must be diversified. The law does not reduce that principle to one universal concentration percentage. The investment policy and the nature of the assets determine how diversification is assessed.
A RAIF may create compartments, or sub-funds, if its constitutive documents allow them. The law separates each compartment’s assets and liabilities from the others, subject to the wording of those documents. The resulting umbrella fund can hold several strategies or funds launched in different years, known as vintages, without treating them as a single asset pool.
The umbrella still needs consistent rules for making and checking decisions. Allocation of expenses, cross-compartment contracts, valuation and conflicts must follow the segregation described to investors.
Two tax regimes
The standard regime and the Article 48 risk-capital regime should not be mixed.
| Point | Standard RAIF | Article 48 risk-capital RAIF |
|---|---|---|
| Investment scope | Broad, subject to risk spreading | Exclusively investment in risk capital |
| Subscription tax | 0.01% a year on quarterly net assets, subject to exemptions | Not applicable |
| Direct-tax framework | Exemption provided by the RAIF Law | Separate Article 48 treatment, influenced by legal form |
Under the standard regime, no Luxembourg corporate income tax, municipal business tax or net wealth tax is due at fund level apart from taxes expressly preserved by the law. Distributions are not subject to Luxembourg withholding tax. The 0.01% subscription tax is calculated on net assets at the end of each quarter, with exemptions for defined asset categories and structures. Authorisation as an ELTIF, or European long-term investment fund, provides one such exemption, alongside additional investment and distribution rules.
The real-estate levy can nevertheless apply to income from Luxembourg property received or realised by a RAIF with legal personality other than an SCS, an ordinary limited partnership. The fund-level exemptions therefore do not settle every property-tax question.
Article 48 is available to corporate and partnership RAIFs under Chapters 3 and 4, but not to common funds. The constitutive documents must expressly elect it and restrict the object to investment in risk capital. This means contributing assets to businesses to support their launch, development or stock-market listing. Risk spreading is then not required. An approved statutory auditor must certify compliance with that investment policy annually to the tax administration.
This option removes subscription tax and applies a separate direct-tax framework broadly aligned with the SICAR regime. A corporate and a partnership RAIF do not reach the result through the same legal route, so legal form and asset qualification must be reviewed together.
When the RAIF changes the operating model
The RAIF adds a recognised product regime, an authorised AIFM, a depositary, annual audit and statutory compartments. Those features can fit a multi-investor fund that needs the AIFMD marketing passport to professional investors or an institutional operating framework.
They also create fixed governance and service-provider requirements. A smaller vehicle that does not need the RAIF label or passport may instead use a plain SCSp under the AIFM rules that apply to its manager. The distinction is developed in the comparison of a RAIF and a plain SCSp.
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Explore fund formation supportFrequently Asked Questions
Who can invest in a RAIF?
Investment is reserved to well-informed investors. This includes institutional and professional investors. Another investor can qualify by confirming that status in writing and either investing at least EUR 100,000 or obtaining an assessment of its expertise, experience and knowledge from an eligible professional.
Does a RAIF need CSSF approval?
No. There is no product approval before launch and no direct CSSF supervision of the RAIF. The authorised AIFM is supervised, and the RAIF must still appoint the service providers and meet the disclosure, audit and operating rules set by law.
What is the RAIF risk-capital option?
A corporate or partnership RAIF under Chapters 3 or 4 of the RAIF Law can elect Article 48 in its founding documents when its exclusive purpose is investment in risk capital. A common fund cannot use this option. Subscription tax does not apply, and direct-tax treatment depends on legal form. An approved statutory auditor must certify compliance with the risk-capital policy each year.
