Interesting framework for regulated and unregulated Real Estate Fund structures
Luxembourg’s tax and legal framework is flexible and so fulfils a wide range of needs for investors in terms of regulated and non-regulated Real Estate Fund Structures
Real Estate Vehicles
Institutional, professional and private investors interested in creating an international real estate portfolio will find a range of sophisticated investment vehicles in Luxembourg to meet their specific preferences. The diversity and flexibility of these opportunities has made Luxembourg the premier European domicile for international real estate investment vehicles.
Such a vehicle can either be set up as a non-regulated entity (a commercial company) or as an entity regulated by the CSSF (for instance, a collective investment scheme). The choice will depend on the method by which capital is to be raised, the type of investor targeted, the investments to be made, and particular tax considerations.
Most Luxembourg real estate funds are regulated collective investment schemes, either set up as a company (a variable capital investment company – SICAV, or a fixed capital investment company – SICAF) or as a common investment fund (Fonds Commun de Placement – FCP).
Two other popular structures are:
the Specialised Investment Fund (SIF), a collective investment vehicle designed for institutional, professional and sophisticated investors; and
the Risk Capital Investment Company (SICAR), a structure designed uniquely for vehicles active in the field of venture capital.
A real estate investment vehicle established in either the form of a collective investment scheme or a risk capital investment company can adopt a multiple compartment structure..
Non-regulated real estate investment vehicles can choose between four legal forms. Most frequently used is the public limited company structure (société anonyme – S.A.), but there is also scope for funds to set up a private limited company (société à responsabilité limitée – Sàrl.). As commercial companies, these can benefit from Luxembourg’s double tax treaty network and the EU Directive on the tax regime applicable to parent companies and their subsidiaries.
A real estate investment vehicle can also be established as a securitisation vehicle.