A reserved alternative investment fund (RAIF) is a fund regime. An SCSp, or special limited partnership, is a legal form under company law. Many RAIFs use the SCSp form.
The useful comparison is therefore between two versions of the same partnership. A plain SCSp relies on the Law of 10 August 1915 and the alternative investment fund manager (AIFM) rules that apply to its activity. A RAIF-SCSp adds the Law of 23 July 2016.
What both structures share
Both structures can use a limited partnership agreement to define commitments, distributions, governance, transfers and the roles of the general and limited partners. Neither has legal personality in SCSp form, so the partnership is not a legal person separate from its partners.
Neither structure needs direct product approval before launch from the Commission de surveillance du secteur financier (CSSF), Luxembourg’s financial supervisor. This does not mean that the wider regulatory framework disappears. If the partnership raises capital from several investors under a defined investment policy, it is normally an alternative investment fund and falls within the AIFM framework.
The main differences come from the additional fund rules that apply to the RAIF.
The comparison
| Point | RAIF in SCSp form | Plain SCSp that is an AIF |
|---|---|---|
| Product law | RAIF Law and company law | Company law only |
| CSSF product approval | None | None |
| AIFM | External authorised AIFM required | Registered AIFM may be available below the thresholds |
| Investors | Well-informed investors only | No RAIF statutory test, subject to marketing and other applicable rules |
| Minimum statutory amount | EUR 1.25 million within 24 months, measured under the applicable RAIF provisions | No statutory fund minimum |
| Depositary | Required | Required under the full authorised-AIFM regime, but not by the plain SCSp form itself |
| Annual audit | Required by the RAIF Law | Required for the annual report under the full AIFM regime, or where another applicable rule or the agreement requires it |
| Subscription tax | 0.01% under the standard regime, subject to exemptions | None |
| Statutory compartments | Available | Not available under the SCSp form alone |
The table does not make one route generally better. It shows which operating duties follow from the chosen fund regime.
The AIFM decision
A RAIF must appoint an external AIFM authorised under the full AIFM Law. It cannot use the lighter registration route.
A plain SCSp that is an AIF has more room. Its manager may use the registration regime while the combined assets under management remain within the thresholds in Article 3. The EUR 100 million threshold includes leverage, which increases investment exposure through borrowing or other arrangements. The threshold is EUR 500 million when every AIF concerned is unleveraged and offers no redemption rights for 5 years after the initial investment in each AIF.
A plain SCSp can still appoint an authorised AIFM. The AIFMD marketing passport to professional investors comes from the authorised manager. It allows cross-border distribution under the Alternative Investment Fund Managers Directive and does not depend on the RAIF label. A plain SCSp with an authorised EU AIFM can use the passport if the legal conditions and notification process are met. A registered manager cannot.
Investor access
The RAIF is reserved to well-informed investors. Institutional and professional investors qualify. Another investor must accept that status in writing and either invest at least EUR 100,000 or obtain the professional assessment required by law. The 2023 reform reduced the monetary threshold from EUR 125,000.
A plain SCSp has no equivalent investor test in company law. It still cannot be marketed without restriction to retail investors, meaning investors who do not qualify as professional investors. AIFMD marketing rules, national placement rules, securities law and the partnership agreement still determine who can invest.
Depositary, audit and minimum assets
The RAIF product regime requires a Luxembourg depositary and an approved statutory auditor. In SCSp form, the value of the amount constituting partnership interests must reach EUR 1.25 million within 24 months of constitution. For a variable-capital investment company, the capital is equal to net asset value, the value of assets after deducting liabilities, under the RAIF Law.
A plain SCSp does not acquire these duties simply because of its legal form. A depositary becomes mandatory when the full AIFMD regime applies through an authorised AIFM, subject to the law’s scope. Under that full regime, Article 20 of the AIFM Law also requires an audited annual report, available to investors within 6 months of year-end. A plain SCSp managed under the registration regime does not acquire that obligation from Article 20, although another applicable rule or its agreement may require an audit.
This difference affects governance as much as administration. The RAIF makes valuation, safekeeping of assets, cash monitoring and annual audit part of its legal fund regime. A plain SCSp can add contractual controls, but they do not become RAIF rules by imitation.
Tax framework
A standard RAIF is exempt from Luxembourg corporate income tax, municipal business tax and net wealth tax under the RAIF Law. It pays annual subscription tax of 0.01% of net assets, calculated quarterly, with statutory exemptions. An Article 48 risk-capital RAIF follows a different direct-tax regime and is not subject to subscription tax.
A plain SCSp has no subscription tax and is ordinarily transparent for corporate income tax, so its income is attributed to the partners rather than taxed at partnership level. Exceptions include the Article 168quater reverse-hybrid rule, which can tax income at partnership level because of differences in how countries classify the partnership. Municipal business tax remains a separate question.
The Luxembourg direct tax authority’s ACD Circular L.I.R. 14/4 addresses both the actual activity and the commercial imprint that treats a partnership as earning business income even without an actual business activity. That treatment can arise when a general partner (GP) that is a capital company holds at least 5%. That test applies to each relevant GP and can also cover a GP that is itself a commercially active partnership.
The RAIF tax regime is therefore more standardised. The plain SCSp result depends more directly on the partnership’s facts and investor analysis.
Compartments and later conversion
The RAIF Law permits compartments when the constitutive documents provide for them. Assets and liabilities are segregated under the law unless those documents provide otherwise. A plain SCSp cannot create the same legal separation of assets and liabilities merely by using separate internal accounts. Separate partnerships are normally needed for legal segregation.
A plain SCSp can later enter the RAIF regime, but the change is not automatic. The limited partnership agreement must submit the vehicle to the RAIF Law. An authorised AIFM and depositary must be in place, the required disclosures and audit framework must be adopted, and the formalities before a notary and the Trade and Companies Register must be completed.
The possibility of a later change should not replace an initial distribution and operating analysis. Contracts, investor consents and the checks needed to appoint service providers can make a later transition more involved than starting with the intended fund regime.
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Explore fund formation supportFrequently Asked Questions
Does a plain SCSp need an authorised AIFM?
Not always. If the SCSp is an AIF, it needs an AIFM. A registered manager may be available below the statutory registration thresholds. A plain SCSp can also appoint an authorised AIFM, while a RAIF must appoint an external authorised AIFM from the outset.
How do the fund-level tax rules differ?
A standard RAIF is subject to annual subscription tax of 0.01% of net assets, with statutory exemptions. A plain SCSp has no subscription tax and is ordinarily transparent for corporate income tax, subject notably to the reverse-hybrid rule. Its activity and the general partner's holding still require a municipal business tax analysis.
