LUXEMBOURG Law and Practice Contributed by: Claudia Hoffmann, Daniel Krauspenhaar, Stefanie Samosny and Sascha Wiemann, Luther
ued investor disclosures and updates to the CSSF. All marketing communications must be fair and clear, must not be misleading, and should describe risks and rewards in a balanced way. AIFs may also be marketed to retail investors, subject to additional regulatory requirements. 4.5 High Net Worth or Retail Investors Luxembourg offers several regulated fund products and distribution channels that enable broader access to alternative investment strategies for high net worth and retail investors. For high net worth investors, SIFs and RAIFs are frequently used, as they are open to “well-informed investors”, which may also include high net worth indi - viduals who confirm in writing their adherence to the status of well-informed investors. For retail investors, the most notable vehicles are Lux - embourg Part II funds, which are increasingly set up with an ELTIF layer. Following the recent amendment of the ELTIF Regulation, applicable from 2024, the ELTIF has strengthened its position as a go-to vehicle for asset managers seeking to open private market strategies to a broader investor base, including retail investors – not least as ELTIFs now allow the possi - bility to be structured as a master-feeder structure or fund-of-funds. Co-investments in an ELTIF or with an ELTIF are also allowed, making private markets more accessible beyond the institutional segment. This trend reflects a broader industry movement towards the “democratisation” of alternatives, with Luxem - bourg being at the forefront of this development. For more information see 1.2 Key Trends and 2.2 Regulatory Regime for Funds . 4.6 Private Placements Marketing of AIFs is often undertaken by authorised AIFMs via their dedicated EEA marketing passport. While Luxembourg law recognises reverse solicita - tion – where investors independently approach the AIF or its AIFM on their own initiative without prior solicitation made by the AIF or its AIFM – sponsors should exercise caution in relying on this mechanism.
In practice, a case-by-case analysis is required. Spon - sors must ensure robust documentation demonstrat - ing that investor contact was truly initiated by the investor and that no solicitations or indirect promo - tions occurred. Generally, reverse solicitation shall in no case be invoked to circumvent the requirements contained in the AIFMD. In a nutshell, sponsors should generally plan fundrais - ing within the framework of authorised private place - ment regimes to mitigate regulatory risk. 4.7 Compensation and Placement Agents Under Luxembourg law, AIFMs may be supported by placements agents. Where external professionals are engaged to assist in marketing or investor introduc - tions, they must be appropriately licensed or author - ised if their activities constitute regulated financial services, including distribution or investment advice. The personnel of AIFMs may be compensated for fun - draising or sales efforts, provided that remuneration is structured in accordance with applicable laws and regulations, aligns with the risks and responsibilities associated with the services performed, and does not encourage unnecessary risk-taking. Compensation arrangements must also comply with internal govern - ance and conflict-of-interest policies to ensure align - ment with investor interests. 4.8 Tax Regime for Investors The tax treatment of investors in Luxembourg AIFs depends on whether the investor is resident or non- resident and on the legal form of the AIF. For non-resident investors, Luxembourg offers a highly favourable regime. In general, there is no Luxembourg income or capital gains tax on income or gains derived from AIF interests, and no withholding tax applies to distributions from AIF (under the forms listed above) or liquidation proceeds. Exceptions may arise where the AIF invests in Luxembourg real estate or where the investor holds a substantial participation in the AIF. Holding an interest in a Luxembourg AIF generally does not, by itself, create a permanent establishment in Luxembourg, and no stamp duty applies on the issue or transfer of AIF interests.
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