Luxembourg: Financial Services

The new regime will apply automatically to sub-participation agreements signed after the law takes effect, though parties can contract out of it. For agreements already in place, it doesn't apply automatically, consistent with non-retroactivity, but parties can choose to opt in.

Luxembourg has introduced a landmark legislative reform allowing unregulated alternative investment fund (AIF) limited partnerships to adopt multi-compartment structures. This development enables fund sponsors to consolidate multiple investment strategies, investor classes, and fund-level structures within a single limited partnership, significantly reducing complexity and administrative burden while maintaining creditor protection and investor segregation.

Bill of Law No. 8813 introduces a statutory asset segregation regime for funded sub-participations in Luxembourg, materially improving participant protection by reducing exposure to lender insolvency risk. The reform is expected to increase the attractiveness of Luxembourg-based lending structures across loan, private credit, and structured finance markets.

The European Court of Justice's Advocate General has delivered a significant opinion on whether Luxembourg properly implemented the EU Anti-Tax Avoidance Directive when it classified securitisation entities as exempt financial undertakings. The case examines whether Luxembourg's approach to exclude these entities from interest limitation rules aligns with EU law and the principle of equal treatment, with potential implications for how member states interpret ATAD's financial undertaking exemptions.

Luxembourg's partnership limited by shares (SCA) offers private fund managers a compelling corporate alternative to the special limited partnership structure, particularly for EU family offices and high-net-worth individuals. When combined with the RAIF regime, this vehicle achieves tax neutrality while maintaining the corporate governance framework that certain investors prefer. The SCA-RAIF structure addresses key legal and tax considerations while providing flexibility for secondary strategies, fund-of-f

A proposed bill of law seeks to modernize Luxembourg's securitization framework by expanding financing options beyond traditional instruments, introducing cross-compartment investment mechanisms, and extending active portfolio management capabilities to include equity positions. The reforms aim to enhance legal certainty around asset ring-fencing in insolvency scenarios while aligning the regime with contemporary market practices, particularly for Islamic finance structures and multi-compartment vehicles.

Luxembourg offers a cost-efficient alternative for emerging fund managers through its registered AIFM structure, commonly known as the "small manager" route. This approach allows fund managers to establish Luxembourg AIFs while avoiding the substantial costs associated with authorised host AIFMs, though it comes with specific asset thresholds and marketing limitations.

Wenn die BaFin Immobilien und Immobilienfonds auch im Jahr 2026 erneut als zentrales Fokusrisiko einstuft, spricht vieles dafür, dass sich der bereits laufende Stresstest für alternative Immobilienanlagen fortsetzt.

On 18 March 2026, the CSSF published a Communication to the investment fund industry in relation to the CSSF's reporting tools for the liquidity management requirements for Luxembourg-authorised...