RAIF or plain SCSp: choosing the Luxembourg wrapper for a new fund

Many Luxembourg alternative funds use the same SCSp legal form. The special limited partnership carries the limited partnership agreement, the GP and LP split and the tax-transparency analysis, whether it remains a plain SCSp or is placed under a product law such as the RAIF regime. The decision at term-sheet stage may therefore be between a plain SCSp governed by company law and an SCSp placed under the RAIF product regime of the law of 23 July 2016.¹

The two options look close on paper. Neither requires CSSF product approval before launch. Both can carry private equity, venture capital, private debt, real estate and infrastructure strategies. Both keep the economics inside a confidential LPA. The differences sit in the regulatory architecture around the vehicle — the manager, the investor perimeter, the depositary, the tax at fund level and the ability to run compartments — and those differences shape the operating model, time to market and distribution reach.

This comparison works through the decision criteria one by one. The detailed mechanics of each vehicle are covered in the dedicated RAIF and SCSp guides; the purpose here is to decide between them.

Two wrappers built on the same partnership

A plain SCSp is a creature of the law of 10 August 1915 on commercial companies alone.² It is formed by private agreement, has no minimum capital, publishes only an extract of its LPA and remains tax-transparent at entity level. When it raises capital from external investors under a defined investment policy, it qualifies as an alternative investment fund and must appoint an AIFM, but no product law sits on top of it. There is no minimum net asset requirement, no mandatory depositary below the authorisation threshold, no subscription tax and no product label.

A RAIF is the same underlying vehicle plus a product law. The law of 23 July 2016 adds a defined investor perimeter, a mandatory external authorised AIFM, a depositary, an annual audit, a minimum net asset floor of EUR 1,250,000 to be reached within twenty-four months, notarial recording formalities and a specific tax regime.¹ The RAIF is still not authorised or supervised by the CSSF at product level. Supervision is indirect, through the authorised manager, which is precisely what gives the wrapper its institutional credibility without the lead time of a SIF or a SICAR.

In private equity practice the RAIF usually takes the SCSp form, so the LPA drafting, the general partner setup and the partnership mechanics are common to both routes. What changes is everything built around the partnership.

The comparison at a glance

Criterion	RAIF (SCSp form)	Plain unregulated SCSp
Legal basis	Law of 23 July 2016 as amended, on top of the 1915 law	Law of 10 August 1915 only, plus AIFM Law where AIF
CSSF product approval	None — indirect supervision via the AIFM	None
AIFM	External authorised AIFM mandatory from day one	Registered sub-threshold AIFM possible below AIFMD thresholds
Investor perimeter	Well-informed investors only, EUR 100,000 alternative threshold	No statutory test — perimeter set by marketing rules and the LPA
Minimum net assets	EUR 1,250,000 within twenty-four months	None
Depositary	Mandatory	Only where the AIFM is authorised
Audit	Mandatory réviseur d’entreprises agréé	Only above size criteria or by contract
Subscription tax	0.01% annually on net assets, quarterly basis	None
Compartments	Statutory umbrella under Article 49	Not available — parallel vehicles instead
EU marketing passport	Yes, through the authorised AIFM	No — national private placement regimes only
Time to market	Weeks, driven by AIFM and depositary onboarding	Days, driven by LPA negotiation

The table already suggests the shape of the decision. The RAIF adds product discipline, distribution reach and platform features. The plain SCSp provides a narrower framework and a shorter formation path. The rest of the analysis is about matching those trade-offs to the investor base and the strategy.

The AIFM requirement on each side

The single most consequential difference is the manager. Article 4 of the RAIF Law requires every RAIF to be managed by an external AIFM authorised under Chapter 2 of the AIFM Law of 12 July 2013, or an equivalently authorised EU or third-country manager.¹³ There is no sub-threshold route, no internal management option and no grace period. The authorised AIFM — whether a dedicated ManCo or a third-party platform — is part of the structure from the first closing.

A plain SCSp faces the AIFM question only through the functional AIF test. Below the thresholds of Article 3(2) of the AIFM Law — EUR 100 million of assets under management including leverage, or EUR 500 million where the AIFs are unleveraged and closed for five years — a registered AIFM regime is available.³ The registered route carries limited reporting, no depositary requirement, no mandatory AIFMD operating framework and no marketing passport. For a first fund with a compact investor group, that distinction can determine the manager, distribution and service-provider architecture.

The dependency runs in one direction only. A sponsor that already needs an authorised AIFM for passporting reasons has less reason to stay outside the RAIF product regime. A sponsor that can genuinely operate sub-threshold gives up the passport either way and should assess whether the additional AIFM, depositary, audit and subscription-tax perimeter serves the intended distribution and governance model.

The well-informed investor test applies only to the RAIF

A RAIF is reserved to well-informed investors. Article 2 of the RAIF Law admits institutional investors, professional investors within the meaning of Annex II of MiFID II, and any other investor who confirms the status in writing and either invests at least EUR 100,000 or obtains a written assessment of expertise from a credit institution, an investment firm, a UCITS management company or an authorised AIFM.¹ The threshold was lowered from EUR 125,000 to EUR 100,000 by the law of 21 July 2023, which also opened marketing to Luxembourg retail investors qualifying as well-informed.⁴ Directors and other persons involved in the management of the RAIF are exempt, which keeps GP commitments and team co-investment outside the test.

The plain SCSp has no statutory investor test. The perimeter is set contractually in the LPA and operationally by the marketing rules that apply to the AIFM, country by country under national private placement regimes. That flexibility matters in specific configurations — a family office club below EUR 100,000 tickets per member, or an employee co-investment vehicle — where the RAIF perimeter would impose eligibility documentation that the deal does not need.

In institutional fundraising the difference fades. Professional investors pass the well-informed test automatically, and subscription documents for unregulated vehicles typically replicate comparable eligibility confirmations anyway for AML and suitability reasons.

Subscription tax and entity-level taxation

Both vehicles are efficient at fund level, but through different mechanics. The standard RAIF is outside corporate income tax, municipal business tax and net wealth tax, and pays instead an annual subscription tax of 0.01% on its aggregate net assets, valued on the last day of each quarter.¹ Exemptions exist for assets already subject to the tax in underlying Luxembourg UCIs and for specific categories such as ELTIF-authorised RAIFs, and a Risk-Capital RAIF electing Article 48 leaves the subscription tax entirely for a SICAR-like regime. The RAIF guide covers those variants in detail.

The plain SCSp pays no subscription tax, because the tax only attaches to vehicles governed by a Luxembourg fund product law. Entity-level treatment rests on partnership transparency. The SCSp is not a corporate income taxpayer and sits outside net wealth tax, with the municipal business tax analysis resolved in most fund configurations by the AIF safe harbour and the sub-5% GP interest, as set out in the SCSp guide. On a EUR 200 million fund, the 0.01% subscription tax represents EUR 20,000 per year. This statutory tax consequence should be recorded alongside the wider AIFM and depositary perimeter without treating it as the sole structuring criterion.

The more meaningful tax observation is what does not differ. Neither wrapper changes the treaty position, which is assessed at investor level and at the level of underlying SOPARFI or SPV platforms in both cases. Neither creates Luxembourg withholding on distributions. The choice of wrapper is therefore driven by regulatory and commercial criteria far more than by Luxembourg tax outcomes.

Compartments and umbrella platforms

The RAIF offers a statutory umbrella. Under Article 49 of the RAIF Law, a RAIF may be constituted with multiple compartments, each corresponding to a distinct part of the assets and liabilities, with segregation between compartments enforced by law and cross-compartment investment possible under conditions.¹ One legal entity, one AIFM appointment, one depositary agreement and one audit relationship can then host successive vintages or parallel sleeves, each with its own offering supplement.

The plain SCSp has nothing equivalent. Ring-fencing between strategies requires separate partnerships, each with its own RCS registration, accounts and administration. Contractual segregation inside a single SCSp is possible on paper but does not deliver statutory protection against cross-liability, and institutional investors generally refuse to rely on it.

For a sponsor planning a platform — a series of club deals or a multi-strategy credit vehicle — the umbrella is often the argument that tips the analysis toward the RAIF. One statutory framework can support several ring-fenced compartments, which changes the operational analysis compared with a series of separate plain partnerships.

Time to market and setup mechanics

Neither wrapper requires prior CSSF product approval. A plain SCSp exists upon signature of the LPA under private seal, and its practical timeline is driven by negotiation, KYC and bank account opening. A RAIF also depends on the appointment and onboarding of its authorised external AIFM and depositary.

The RAIF adds real but bounded lead time. The AIFM agreement and the depositary agreement must be negotiated and signed, the constitution must be recorded by notarial deed within five working days where the fund is formed under private seal, the RCS listing must be obtained and the offering document must carry the required cover-page statement.¹ With a third-party AIFM platform that has capacity, a RAIF can realistically close within several weeks. The critical path is almost always AIFM onboarding and depositary KYC, not the legal work. The Luxembourg fund setup sequence and timeline maps those dependencies across both routes.

Investor perception and distribution reach

Distribution is where the RAIF framework has its clearest effect. Because the RAIF requires an authorised AIFM, it comes with the AIFMD marketing passport, and the fund can be notified for marketing to professional investors across the EU through a single home-regulator channel. A plain SCSp managed by a registered AIFM markets under national private placement regimes, jurisdiction by jurisdiction, with some markets effectively closed to sub-threshold managers. A sponsor whose LP pipeline spans Germany, France, the Nordics and the Benelux will usually find that the passport alone decides the question.

Perception works in the same direction. The RAIF label is recognised by institutional allocators, and the mandatory depositary, audit and product-law discipline answer standard operational due diligence questions before they are asked. Insurance and pension investors whose internal rules key off recognisable fund frameworks often accept a RAIF where an unregulated partnership would trigger extended review, even though some regulated-product allocations still require a SIF or a Part II UCI rather than a RAIF.

The plain SCSp is not a weak signal in every context. Sophisticated PE and VC investors are comfortable with unregulated Luxembourg partnerships, which mirror the Anglo-American limited partnerships they already hold, and single-investor mandates or GP-led co-investment vehicles gain nothing from a product wrapper. The perception question is really a question about the least sophisticated meaningful investor in the target base.

Starting unregulated and converting later

The choice is not permanent. The RAIF regime applies to any eligible AIF whose constitutive documents expressly submit it to the 2016 law, so an existing unregulated SCSp can adopt the RAIF regime. The steps follow from the product law itself — amendment of the LPA to adopt the regime, notarial recording, RCS listing, appointment of an authorised external AIFM and a depositary, an offering document meeting the RAIF standard and the audit relationship.¹

That conversion path changes how first-time managers should read the comparison. A sponsor raising a first vehicle below the AIFMD thresholds from a known investor group can launch as a plain SCSp with a registered AIFM, prove the strategy, and adopt the RAIF wrapper for fund two — or wrap fund one itself — once AUM growth forces the authorisation question anyway. The sequencing keeps the initial operating framework proportionate without closing the institutional route later.

The reverse move is rarer and harder. Leaving the RAIF regime is not a standard practice pattern, and investors who subscribed to a RAIF expect its protections to remain. The asymmetry argues for starting light where the investor base permits it.

Typical choices by strategy and size

Patterns in Luxembourg structuring practice are consistent enough to serve as a starting grid. A single-deal co-investment SPV or a club of two or three known investors takes a plain SCSp, with the AIF analysis sometimes avoided altogether where the vehicle falls outside the functional test. A first-time PE or VC fund below roughly EUR 100 million with a domestic or single-market LP base usually starts as a plain SCSp under a registered AIFM, with the RAIF conversion held in reserve. An institutional raise above the AIFMD thresholds, or any raise that needs the passport, goes to the RAIF because the authorised AIFM is unavoidable and the product framework supports the intended distribution. A multi-compartment platform — deal-by-deal series or successive vintages under one roof — goes to the RAIF for Article 49 alone. Family and proprietary capital with no external fundraising generally belongs in neither wrapper, and a SOPARFI holding architecture serves it better.

Conclusion

The RAIF adds an authorised AIFM, depositary, audit, product-law framework and access to the AIFMD marketing passport. A plain SCSp does not carry that product wrapper and can remain proportionate for a known investor base under the applicable AIFM regime. Investor eligibility, distribution jurisdictions and the intended compartment structure determine which framework fits the vehicle.

Footnotes

1. Law of 23 July 2016 on reserved alternative investment funds, as amended, including Articles 2, 4, 46 and 49 cited in this comparison. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸

2. Articles 320-1 and following of the coordinated law of 10 August 1915 on commercial companies, governing the SCSp. ↩

3. Law of 12 July 2013 on alternative investment fund managers, including the Article 3(2) registration thresholds of EUR 100 million and EUR 500 million. ↩ ↩²

4. Law of 21 July 2023 amending several Luxembourg fund product laws, which lowered the well-informed investor threshold from EUR 125,000 to EUR 100,000. ↩