How to create an investment fund in Luxembourg: Overlord guide

Creating an investment fund in Luxembourg represents a strategic opportunity for investors who want to benefit from a stable financial environment, advantageous taxation and flexible regulations. Thanks to its position as a European leader in asset management, Luxembourg attracts numerous project leaders, whether alternative, specialized or institutional funds. In this article, Overlord presents you with the key steps to launch your fund: choice of legal structure (SICAV, FCP, RAIF, SIF...), regulatory requirements, applicable tax regimes and administrative procedures. Whether you are a management company or an entrepreneur, we support you in setting up a solution adapted to your investment objectives.

Why choose Luxembourg to create an investment fund?

For several decades, Luxembourg has been a key player in the world of investment funds. With more than 5,500 billion euros in assets under management, it stands out as the first European center And the Second in the world, just behind the United States. This position is explained by a stable regulatory environment, a favorable taxation, a multilingual and specialized workforce, as well as a reputation for excellence in terms of the structuring of complex financial vehicles.

Create an investment fund in Luxembourg allows you to benefit from:

• Of a modern legal framework, harmonized with European law (AIFM directive, UCITS, etc.);
• With easy access to international investors, whether professional or institutional;
• Of a great flexibility in vehicle structuring based on risk profiles, investment horizons or targeted strategies;
• Of a image of seriousness and conformity with regulators and financial partners.

For management companies, investor families or financial entrepreneurs, Luxembourg is often a strategic choice. It makes it possible to reach a European scale more quickly, while relying on a proven ecosystem.

The main legal forms of investment funds in Luxembourg

Luxembourg offers a wide range of legal structures adapted to different needs: regulation, governance, transparency, minimum capital, or taxation. Here are the main types of funds available:

• UCITS : reserved for retail investors, they allow marketing throughout the European Union. Highly regulated, they are suitable for liquid and standardized strategies.
• FIS (Specialized Investment Fund) : designed for sophisticated investors, these funds benefit from great investment flexibility, while being regulated by the CSSF.
• FIAR (Reserved Alternative Investment Fund) : launched without prior authorization from the CSSF, they are quick to set up, with controlled costs. Ideal for family offices and private equity funds.
• SICAV/SICAF : investment companies with variable or fixed capital, with legal personality, ideal for institutional or thematic funds.
• FCP (Mutual Investment Fund) : funds without their own legal personality, managed by a management company, often used in small structures.

Each of these forms meets specific objectives. The choice depends on the investor profile, the investment strategy, the expected level of governance and the targeted distribution channel. Overlord helps you choose the most appropriate structure for your case.

How to create an investment fund in Luxembourg?

The creation of a fund in Luxembourg is carried out in several stages, which must be carried out in a rigorous order. Here are the main phases of the process:

1. Investment strategy definition : The aim is to establish the targeted asset class (shares, debt, real estate, private equity, etc.), the profile of investors, the degree of liquidity, the duration of the fund, and the geographical areas of intervention. This step also makes it possible to determine the most appropriate legal form.
2. Choice of structure and drafting of constituent documents : This phase includes the drafting of the statutes, the management regulations, the information memorandum, and the agreements with the service providers. These documents define the operation of the fund and its governance rules.
3. Registration or approval with the CSSF : Depending on the type of fund chosen (FIS, FIAR, UCITS), a deposit or prior authorization may be necessary. The CSSF (Commission de Surveillance du Secteur Financier) assesses the conformity of the file and the quality of the stakeholders.
4. Implementation of key functions : The fund must designate a certified manager, a depositary (often a Luxembourg bank), a external auditor, and ensure the function of Compliance. These roles are essential to ensure the supervision and transparency of the vehicle.
5. Operational launch : Once the fund is approved or registered, it can launch its marketing or start its investments according to the planned strategies. Reporting, valuation and publication obligations apply from the start.

Overlord intervenes at all of these stages, with comprehensive legal, administrative and strategic assistance.

Costs associated with setting up an investment fund in Luxembourg

Setting up a fund in Luxembourg involves initial costs and operating costs. It is essential to anticipate them well in order to establish a realistic business plan.

1. Incorporation costs

Initial costs include:

• Les legal fees (drafting of statutes, regulations, contracts)
• Les registration fees or approval by the CSSF
• Les notary fees if the structure chosen is a company
• Les Incorporation fees and opening bank accounts

These costs vary according to the complexity of the fund, but you should plan for a minimum budget of €20,000 to €50,000.

2. Minimum capital requirements

Each type of fund is subject to a minimum capital:

• €1,250,000 for an FIS (to be released within 12 months)
• 1,000,000€ For a FIAR
• No legal minimum for a mutual fund, but a significant amount is expected by the CSSF

The minimum capital is a regulatory requirement but also a signal of credibility for investors.

3. Annual fees

Once launched, a fund incurs recurring costs:

• Subscription fee annual (0.01% to 0.05% of assets)
• Management fees paid to the management company
• Custodian and auditor fees
• Regulatory compliance and reporting costs

Overlord helps you estimate these costs according to your project.

Taxation of investment funds in Luxembourg

Luxembourg taxation is one of the country's major assets for investors.

• Income tax exemption for regulated funds (no tax on dividends received or on capital gains realized).
• No taxation on assets for collective investment vehicles.
• 15% withholding tax on dividends, unless tax treaties allow for an exemption or a reduction (in particular with France, Belgium or Switzerland).

These conditions make Luxembourg particularly attractive for non-residents And the international institutional investors.

Overlord's support in creating your investment fund

Creating an investment fund in Luxembourg requires master a complex chain legal, fiscal and operational decisions. Overlord steps in as global project manager, to secure each stage.

Our services cover:

• Initial strategic advice (choice of structure, fiscal optimization)
• Drafting or validating key documents (regulations, statutes, memorandum)
• Coordination with service providers : lawyers, custodian bank, domiciliation, etc.
• Managing the relationship with the CSSF (submission of the file, answers to questions)
• Post-launch support (reporting, regulatory monitoring, governance)

Our presence in the field and our local network allow us to guarantee a fast, smooth and compliant implementation.

FAQ — Frequently asked questions

What is the legal form of an investment fund in Luxembourg?
Several are possible: UCITS, FIS, FIAR, FCP, SICAV. The choice depends on the profile of your investors and your strategy.

‍How much does it cost to set up a fund in Luxembourg?

‍‍Around €20,000 to €50,000 at launch, then several thousand euros per year depending on the service providers chosen.

How do I launch an investment fund?

‍‍‍By defining the strategy, by structuring the documentation, then by obtaining the approval of the CSSF and by recruiting key service providers.

‍What is the point of having a holding company in Luxembourg?

‍Tax optimization, simplification of shareholding, centralization of investment flows.

What is the tax on dividends in Luxembourg?

‍15% in principle, but often reduced or cancelled via tax treaties.

Conclusion

Luxembourg is the reference jurisdiction for creating a European investment fund. Its regulatory stability, attractive taxation and the diversity of its legal vehicles make it a destination of choice. Whether you are an entrepreneur, family office or asset manager, Overlord helps you structure a fund that is compliant, optimized and ready to welcome your investors.

Our knowledge of the field, combined with a proven methodology, guarantees smooth, fast support that meets the expectations of investors and regulators. From strategic framework to operational launch, we are your single point of contact.

We help you navigate legal complexities, choose the right partners, and secure all key steps: from structuring to marketing the fund. Thanks to our sectoral expertise and our proximity to the Luxembourg authorities, you maximize your chances of success and compliance.

Ready to structure your fund in Luxembourg? Contact Overlord today and Make an appointment with our experts.