Briefing note: Reserved Alternative Investment Funds - UPDATE

16 December 2015


On November 27, 2015 the Luxembourg Government Council adopted a draft bill introducing a new type of alternative investment fund : The Reserved Alternative Investment Fund (“RAIF”) / Fonds d’Investissement Alternatif Reservé (“FIAR”). Upon introduction of the RAIF legislation (which is expected in first half of 2016), Luxembourg will have another attractive and cost-efficient type of vehicle at its disposal which is destined for the investment fund management community.


The RAIF will be able to take different legal forms, including Special Corporate Partnerships (“SCSp”) – transparent from a corporate and fiscal perspective or Corporate Partnerships (SCA). The latter form allows the structure to become eligible for treatment as corporation for US tax purposes (so called “check-the-box election”).

The RAIF will be modelled on the existing Specialised Investment Fund (the “SIF”) regime with some notable changes, which arguably render this new vehicle more attractive.

Contrary to the SIF regime, creation of a RAIF will not require prior approval of the Luxembourg regulatory authority (“CSSF”) which will dramatically improve the speed-to-market of a Luxembourg investment fund.  Reserved Alternative Investment Fund will not be supervised by CSSF, meaning that modifications to the fund documents will be less time consuming.


According to the draft legislation, the RAIF will need to be managed by an Alternative Investment Fund Manager (“AIFM”) authorised under the Alternative Investment Fund Managers Directive (“AIFMD”) anywhere in the European Union, thus rendering the RAIF indirectly subject to the regulatory environment of the AIFMD regime.

The RAIF will benefit from the ability to market under a pan-European AIFMD passport.

The current draft of the bill does not restrict a RAIF’s ability to invest in any asset type or class, nor does it require any minimum level of diversification of portfolio risk, resulting in a versatile and flexible investment vehicle.


It is important to note that only sophisticated investors shall be permitted to invest in this type of fund. According to the draft legislation, investors are considered to be “sophisticated”, if they fall within one of the following categories:

  1. Institutional investors;
  2. Professional investors; or
  3. Any other investors who confirm their status in writing, obtain assessment by a professional of a financial sector in respect of their experience and investment knowledge and invest a minimum of EUR 125k.


The applicable tax regime will be largely dependent on the way that the vehicle is established. In case of structure of Fonds Commun de Placement (FCP) – open ended mutual investment fund - it will qualify  for exemption from Corporate, Municipal and Net Worth Taxes. Equally there should be no withholding tax applicable on distributions.

In the case where a RAIF invests solely in risk capital (being understood broadly as “the direct or indirect contribution of assets to entities in view of their launch, development or listing on a stock exchange”) it may be subject to local corporate, municipal and net worth taxes, however should also benefit from exemptions currently applicable to similar type of regulated structures.


Overall, the Reserved Alternative Investment Fund represents a very interesting alternative and allows Luxembourg to offer another attractive solution for the fund management industry.

You can download a pdf of the briefing note here.

For more information speak to one of our experts below:


Szymon Dec | Director, Private Equity
t. +35 27 61 62 45
e. [email protected]


Rhea Hood | Director, Private Equity
t. +44 20 3327 9717
e. [email protected]

PLEASE NOTE: This summary has been prepared for general guidance only. Readers should seek further professional advice before proceeding in all cases.

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