SLPs show Luxembourg remains at the forefront of financial innovation

Luxembourg has long been at the forefront when it comes to providing intelligent legislation in the financial services, securitisation and wealth protection sectors.

Indeed, it was the first nation to transpose the Undertakings for Collective Investment in Transferable Securities (UCITS) into law, a quarter of a century ago, and even today continues to lead the way.

There are many things that make Luxembourg unique for the purposes of the creation of special limited partnerships and more, from legal flexibility, tax transparency and tax neutrality to mitigation of double taxation and favourable treatment of passive income. For example, Luxembourg is a hub of alternative investment fund managers, fund raising vehicles and exciting and innovative special limited partnership (SLP) rules. SLPs can be created to carry a commercial activity or to hold any type of assets but also to be used as alternative investment vehicles.

In cases of corporate taxation, SLPs in Luxembourg are only subject to municipal business tax in the event that they are shown to carry out "commercial activity" in Luxembourg. However, it is important to note that those businesses which qualify as "alternative investment funds" are not categorised as carrying out commercial activity and are therefore immune from this levy (and any other taxes).

Furthermore, exemptions to this tax apply if the general partner is a company (société de capitaux) and holds more than 5% of the partnership's share capital, meaning the SLP is exempt from taxation in Luxembourg. If you would like to find out more about alternative investment funds and special limited partnerships in Luxembourg, contact Creatrust today.

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Links:

>> Securitisation undertakings

>> Special Limited Partnership - SLP

>> Alternative Investment Funds