The Luxembourg RAIF: a fund regime built on AIFM authorisation

The Luxembourg RAIF — fonds d’investissement alternatif réservé, or reserved alternative investment fund — is a fund product governed by the Law of 23 July 2016. It is reserved to well-informed investors and is not authorised or supervised by the CSSF at product level. It must instead appoint an external AIFM authorised under the AIFMD framework, alongside the other providers required by the RAIF Law.

The RAIF is governed by the law of 23 July 2016 on reserved alternative investment funds and was substantially modernised by the law of 21 July 2023 on the rules governing certain Luxembourg investment vehicles.¹² The 2023 reform extended the period to reach the minimum net assets, lowered the well-informed investor threshold for non-professional investors, opened a marketing channel to Luxembourg retail investors qualifying as well-informed, and refined several procedural and tax exemption points.

No product-level CSSF approval is required before launch, but the AIFM, depositary, auditor, investor-eligibility and offering-document workstreams still determine the launch sequence. The authorised AIFM remains subject to its own AIFMD duties. The RAIF applies a subscription-tax regime unless the vehicle falls within an exemption or elects the separate Article 48 risk-capital route. Setup and ongoing administration usually connect with Luxembourg SPV services for private equity, company formation, Lux GAAP accounting and tax compliance.

1. Legal basis and the 2023 modernisation

Before the 2016 reform, a Luxembourg AIF that wanted a regulated wrapper had to choose between Part II of the UCI Law of 17 December 2010, the SIF regime of 13 February 2007 and the SICAR regime of 15 June 2004.³ Each of these required CSSF authorisation at product level, with a corresponding lead time for launch. The RAIF Law was designed to remove that bottleneck while preserving AIFMD-level investor protection through the manager.

The structure adopted in the 2016 law is straightforward. A RAIF must qualify as an AIF under the AIFM Law of 12 July 2013, must have the collective investment of its assets as its sole object on the basis of risk-spreading, must reserve its securities or partnership interests to well-informed investors, and must explicitly subject itself to the RAIF Law in its constitutive documents.¹ The supervisory layer is then concentrated entirely at the level of the AIFM rather than at the level of the fund.

The law of 21 July 2023 amended several points.² The period to reach minimum net assets of EUR 1,250,000 was extended from twelve to twenty-four months. The monetary threshold used by a non-professional, non-institutional investor to qualify as well-informed was lowered from EUR 125,000 to EUR 100,000, without removing the written-status declaration. The reform also addressed marketing to Luxembourg retail investors who qualify as well-informed, extended specified subscription-tax exemptions and removed the separate constat de constitution requirement for RAIFs established by notarial deed.

2. The well-informed investor test

The investor perimeter is the first point any sponsor checks. Article 2 of the RAIF Law defines the well-informed investor as an institutional investor, a professional investor within the meaning of Annex II of MiFID II, or any other investor that meets two cumulative conditions. The other investor must declare in writing that they adhere to the status of well-informed investor and must either invest a minimum of EUR 100,000 in the fund or obtain a written assessment by a credit institution, an investment firm, a UCITS management company or an authorised AIFM certifying expertise, experience and knowledge sufficient to appraise the investment.¹

The two prongs are alternative, not cumulative. An investor below EUR 100,000 can still qualify if the appropriateness assessment is properly documented by an eligible institution. Directors and other persons involved in the management of the RAIF are exempt from the test, which allows GP and management vehicles to hold their own structuring interests without crossing the threshold.

The RAIF must put in place the mechanisms needed to ensure ongoing compliance with these conditions. In practice, this is handled at subscription stage through the offering document, the subscription form and AML and KYC procedures aligned with the AIFM and the depositary. A breach of the investor perimeter does not automatically trigger fund-level penalties, but it exposes the manager and the directors to significant operational and reputational consequences and can compromise the RAIF status itself.

3. Legal forms and umbrella structures

The RAIF can adopt most Luxembourg fund forms. The 2016 law provides three chapters of legal forms. A RAIF set up as a common fund (FCP) is governed by Chapter 2. A RAIF set up as an investment company with variable capital (SICAV) is governed by Chapter 3. A RAIF set up under any other corporate or partnership form is governed by Chapter 4.¹

Legal form	Governance	Typical fund use case
FCP	Co-ownership, managed by a UCITS-style management company	Income or fixed-income strategies, master-feeder structures
SICAV	Variable capital corporate form (SA, SCA, SCS, SCSp, SARL, SCoSA)	Most fund strategies, including private equity and venture capital
Other corporate or partnership form	Fixed or variable capital, including the SCSp	Closed-ended PE, infrastructure, private debt and real estate

The SCSp is one available legal form for a RAIF and places the product-law requirements on top of a limited partnership agreement. Whether the RAIF is organised as a SICAV or under another Chapter 4 form depends on its capital mechanics, constitutional documents and operating model.

Multi-strategy and multi-investor platforms typically rely on the umbrella structure provided in Article 49 of the RAIF Law. A RAIF can be constituted with multiple compartments, each with its own investment policy, its own assets and liabilities, and a default segregation between compartments enforced by statute.¹ Cross-compartment investments are also permitted under specific conditions, which gives platforms a controlled way to accommodate parallel strategies without duplicating the legal vehicle.

For the most common partnership-based structuring path, the entire RAIF wrapper sits on top of an SCSp limited partnership agreement, with the AIFM operating model layered on top. The SCSp guide covers the partnership mechanics in detail. The RAIF Law adds the product framework, the well-informed investor perimeter and the tax regime described below.

4. The mandatory external authorised AIFM

The RAIF cannot be managed by a registered or sub-threshold AIFM. Article 4 of the RAIF Law requires an external AIFM authorised under Chapter 2 of the AIFM Law of 12 July 2013, or established in another EU Member State, or established in a third country and authorised under Chapter II of the AIFMD subject to Article 66 paragraph 3 of the directive.¹⁴

This is the structural difference between the RAIF and an unregulated AIF set up as a plain SCSp. An unregulated SCSp can rely on the sub-threshold regime when its assets remain below the AIFMD thresholds. A RAIF cannot. The AIFM authorisation is the architectural anchor that justifies the absence of product-level CSSF supervision and gives investors a properly supervised manager, with full AIFMD discipline on portfolio management, risk management, valuation, depositary appointment, delegation rules, conflict-of-interest policies and regulatory reporting.

The AIFM choice has practical consequences for governance, authorisation scope, delegation and substance. A sponsor can establish its own authorised AIFM or appoint an external authorised AIFM. The first route requires the capital, governance, staff and systems attached to an authorisation. Under the second, the allocation of portfolio management, risk management and delegated tasks must be stated in the AIFM and service-provider agreements.

In every case, the AIFM remains responsible for portfolio management and risk management. The general partner of an SCSp-form RAIF acts within the LPA, but the AIFM operating model takes precedence on the regulated functions. Investment committees, valuation committees, key-person clauses and delegation lines must be designed coherently across the LPA and the AIFM agreement.

5. Depositary, auditor and offering document

A RAIF must appoint a depositary established in Luxembourg or with a Luxembourg branch if the depositary’s registered office sits in another EU Member State. Article 5 of the RAIF Law applies the depositary framework of Article 19 of the AIFM Law to the RAIF and reserves a specific category of professional depositary of assets other than financial instruments for closed-ended RAIFs holding non-custodiable assets such as private equity, real estate or infrastructure.¹⁴

The depositary handles safekeeping or asset record-keeping, ownership verification and cash flow monitoring within the AIFMD framework. For a private equity SCSp-RAIF holding shares in unlisted SPVs, the typical configuration is a professional depositary of other assets coordinated with the central administration, with custody arrangements where listed instruments are held.

A réviseur d’entreprises agréé must audit the annual report under Article 43.¹ The annual report itself must be made available to investors within six months of period end under Article 38. The offering document must include all information necessary for an informed judgement on the investment and on its risks, and Article 39 requires a clearly visible statement on its cover page that the RAIF is not subject to supervision by a Luxembourg supervisory authority. The statement is the formal corollary of the absence of product-level CSSF authorisation and must be respected verbatim.

The RAIF annual report and audit calendar follows that six-month cycle across valuation, administration, depositary controls, governing-body approval and the audit file.

Constitution formalities are equally specific. A RAIF must be constituted by notarial deed, or its constitution must be recorded by notarial deed within five working days of its private constitution.¹ The constitution is published in the Recueil électronique des sociétés et associations and the RAIF is inscribed on a list held by the Luxembourg Trade and Companies Register. Any change in the indications communicated for the inscription must be notified within twenty working days.

6. The standard tax regime

The default Luxembourg tax regime of a RAIF is set by Articles 45 and 46 of the RAIF Law.¹ No tax is payable by the RAIF other than the subscription tax referred to in Article 46, without prejudice to the levy of registration and transcription taxes and the application of national VAT law. Distributions made by the RAIF are not subject to Luxembourg withholding tax and are not taxable in the hands of non-residents.

The annual subscription tax rate is 0.01% under Article 46(1). The taxable basis is the aggregate net assets of the RAIF valued on the last day of each quarter, with the tax payable on a quarterly basis. Article 46(2) lists the exemptions. The most frequently used carve-outs in practice cover units held in other Luxembourg UCIs already subject to the subscription tax, vehicles reserved to occupational pension institutions, RAIFs investing at least 50% in microfinance institutions, short-term money market funds with the highest possible rating and RAIFs authorised as ELTIFs.¹²

This regime is what makes the standard RAIF efficient at fund level. Corporate income tax, municipal business tax and net wealth tax do not apply at the level of the RAIF itself. The vehicle is therefore neutral as a holding layer, and the substantive Luxembourg tax conversation moves to the underlying corporate platforms — typically a SOPARFI holding line or single-asset SPVs sitting below the fund — and to the investors in their home jurisdictions. RAIFs also automatically qualify for the CIV carve-out from the reverse hybrid rule of Article 168quater LIR, which keeps the entity-level transparency analysis stable even where the LP base includes investors that treat the partnership form as opaque.

A specific safeguard sits in Article 47. If the Administration de l’enregistrement, des domaines et de la TVA finds that the RAIF is engaging in operations exceeding the framework authorised by the RAIF Law, Articles 45 and 46 cease to apply and a fiscal fine of 0.2% on the aggregate amount of the assets may be levied.¹ This consequence is distinct from the ordinary subscription-tax calculation.

VAT remains a Luxembourg tax point that cannot be ignored. AIFM management services to the RAIF are typically VAT-exempt under the Luxembourg implementation of the management of special investment funds exemption, but the analysis must be reviewed for ancillary services, marketing, distribution and certain advisory chains. Coordination between the AIFM, the central administration and the Luxembourg tax compliance workstream is part of the steady ongoing work.

7. The Risk-Capital RAIF under Article 48

A RAIF whose constitutive documents restrict its object to investment in risk capital may elect the regime of Article 48.¹ In that configuration, Articles 45(1), 46 and 47 do not apply, the subscription tax falls away, and the RAIF is taxed broadly like a SICAR under the Law of 15 June 2004.³ The auditor must establish each financial year a report certifying that the RAIF has complied with the policy of investing in risk capital, and the report is transmitted to the Luxembourg Inland Revenue.

In corporate form, the Risk-Capital RAIF is in principle a normally taxable entity for corporate income tax and municipal business tax purposes. Article 48(2) excludes from its taxable income the income deriving from transferable securities, including the income generated from the transfer, contribution or liquidation of those assets.¹ Article 48(3) excludes income arising from funds held pending investment in risk capital, for a maximum period of twelve months preceding the actual investment. Net wealth tax does not apply, subject to the minimum net wealth tax that affects most Luxembourg corporate taxpayers.

The economic effect mirrors the SICAR. A Risk-Capital RAIF set up as an SCSp remains tax-transparent at entity level for corporate income tax and outside net wealth tax under partnership rules, and is read at investor level for direct tax purposes. A Risk-Capital RAIF set up as a SICAV in corporate form sits in the SICAR-style perimeter described above. The choice between the standard subscription-tax route and the Article 48 route depends on the strategy. Pure venture capital and private equity portfolios with a defined risk-capital perimeter often prefer Article 48. Multi-asset strategies and platforms with mixed exposures usually keep the standard 0.01% subscription-tax regime.

The Risk-Capital RAIF applies a SICAR-style direct-tax framework without product-level CSSF authorisation. Its investment policy must remain within the statutory risk-capital perimeter. Article 1 of the SICAR Law defines investment in risk capital as a direct or indirect contribution to entities in view of their launch, development or listing on a stock exchange.³ Strategies outside that perimeter cannot rely on Article 48 and revert to the standard regime.

8. Setup, governance and ongoing obligations

A RAIF is constituted and operational once the constitutive documents are signed, the AIFM agreement and depositary agreement are in place, the offering document is finalised, the inscription on the RCS list is recorded and the AIFM has notified the relevant regulators. There is no CSSF pre-approval to wait for. The practical lead time is therefore driven by the AIFM appointment, the depositary onboarding and the AML and KYC framework rather than by a product authorisation timeline.

The minimum net assets of EUR 1,250,000 must be reached within twenty-four months of constitution under Articles 20, 25 or 32 depending on the legal form, following the 2023 extension.¹² The threshold is checked on net assets, not on subscribed commitments. For a closed-ended PE strategy that ramps up over a long deployment period, the timing must be planned around the actual capital calls, not around the headline commitment number. A failure to reach the minimum has formal liquidation consequences if the situation persists below the legal floor.

Ongoing obligations are concentrated on accounting, audit and AIFMD-level reporting. The RAIF keeps its own books and records and prepares annual accounts under the framework applicable to its legal form, including the specific financial information schedule annexed to the RAIF Law for vehicles that are not Risk-Capital RAIFs. The annual report must be supplied free of charge on request under Article 42.¹ AIFMD Annex IV reporting is handled by the AIFM. AML and KYC obligations are anchored in the Law of 12 November 2004 and apply at the level of the RAIF, the AIFM and the registrar agent. Substance expectations apply at AIFM level and at the level of the GP for an SCSp-form RAIF, with Luxembourg domiciliation typically used for the fund’s registered office and its operational anchor.

Governance design must remain coherent across the AIFM, the GP, the central administration and the depositary. Investment committees, valuation committees, conflict-of-interest documentation and delegation chains are tested both by the AIFM’s regulator and, increasingly, by institutional LPs during their own ODD process.

9. When the RAIF fits and when it does not

The RAIF may fit when the vehicle is an AIF, the investor base meets the well-informed-investor test and the operating model can support an authorised external AIFM, a depositary and annual audit. The investment strategy must also fit the risk-spreading rule or, for an Article 48 election, the separate risk-capital perimeter.

The RAIF may not meet an investor’s internal eligibility rules where product-level CSSF authorisation is required. Distribution to retail or institution-specific investors must be tested against the applicable rules rather than inferred from the RAIF label. A small group of long-term corporate shareholders may instead require comparison with a SOPARFI, while family-wealth objectives fall within a different perimeter that may involve the SPF.

Conclusion

A RAIF is an AIF reserved to well-informed investors, managed by an authorised external AIFM and subject to depositary, audit and product-law obligations without prior CSSF product approval. The standard and Article 48 regimes carry different investment and tax conditions, while the plain SCSp comparison concerns a vehicle without the RAIF wrapper.

Footnotes

1. Law of 23 July 2016 on reserved alternative investment funds, as amended, including the consolidated articles cited throughout this guide. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹ ↩¹⁰ ↩¹¹ ↩¹² ↩¹³ ↩¹⁴ ↩¹⁵ ↩¹⁶

2. Law of 21 July 2023 amending several Luxembourg fund product laws, including the RAIF Law, the SIF Law, the SICAR Law, the UCI Law and the AIFM Law. ↩ ↩² ↩³ ↩⁴

3. Law of 15 June 2004 on the investment company in risk capital (SICAR), as amended, which the Risk-Capital RAIF regime under Article 48 of the RAIF Law mirrors for direct tax purposes. ↩ ↩² ↩³

4. Law of 12 July 2013 on alternative investment fund managers, transposing the AIFMD into Luxembourg law and framing the AIFM authorisation that anchors the RAIF regime. ↩ ↩²