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Understanding Investing 简体中文网页 Members section

Setting up in Luxembourg

Building on the strengths of three pillars

Luxembourg offers a wide range of investment funds, and particularly builds on the strengths of three pillars: UCITS, Alternative Investment Funds and Responsible Investing.

The majority of funds domiciled in Luxembourg are created as UCITS which allow marketing their units/shares freely in all Member States of the European Union. The UCITS brand is recognised as the only truly globally distributed investment fund product being the best in class when it comes to investor protection. As a result, many asset managers are establishing UCITS funds with a clearly defined global distribution strategy.Many corporations, public organisations and financial service providers use Alternative Investment Funds (AIF), whether they wish to hedge risks or invest in specific areas such as real estate, private equity, niche markets or long-term infrastructure. The implementation of the Alternative Investment Funds Manager Directive (AIFMD) further enhanced Luxembourg as a leading domicile for funds and management companies in the alternative sector.Building from strong global market shares in microfinance and carbon funds, Luxembourg became a leading centre in the area of responsible investing (RI). The financial crisis has encouraged investors to reconsider their behaviour and, as a consequence, interest in long-term or socially responsible savings products has increased.

LUXEMBOURG: THE BEST PLACE FOR YOUR FUND

In Luxembourg the regulator and political authorities are fast moving and renowned for their financial innovation and swift adaptation of new rules and regulations. Luxembourg was the first EU Member State to pass the Undertakings for Collective Investment in Transferable Securities (UCITS) legislation into national law, which helped it develop into a major centre for investment funds. UCITS became a true band and is today the most widely accepted retail investment fund structure in the world. A reputation for staying ahead of the game has continued to win Luxembourg new business and in fact turned it into Europe’s number one investment fund centre and the world’s leading hub for global fund distribution.

Luxembourg UCITS are distributed in more than 70 countries around the world, including the Americas, Middle East and Asia. The countries that already invest through Luxembourg funds or have fund managers based in Luxembourg benefit from the cross-border distribution expertise available in that market.

This success story seems to be unique, but Luxembourg has the ambition to replicate this exceptional performance by paving the way for further innovations, particularly in the area of alternative investment funds and responsible investing.

Highest level of support

In addition to its strong and successful business model, Luxembourg offers fund managers a wealth of extra benefits. The regulatory environment is backed by a stable political, economic and social environment and a coherent, stable and predictable tax regime. The Luxembourg economy offers a comparatively good public deficit management and the government is both proactive and reactive to the needs of the financial centre.

Flexible and business friendly authorities and a close working relationship between the business community and the Government will allow Luxembourg to continue to strengthen its position as one of the world’s most attractive investment fund centres.

Many of the industry’s main players are based or have offices in Luxembourg. This has resulted in the country boasting one of the best infrastructure set ups in Europe, with a plethora of management companies, custodians, auditors and law firms on the doorstep. This abundance of service providers has produced a tremendous wealth of knowledge, experience and skills - all geared towards supporting the fund sector.

Gateway to Europe

International fund managers have made great efforts to go multilingual, and investors will normally be able to find someone in Luxembourg who speaks their language. A founding member of the EU, located in the heart of Europe and with geographical borders to Germany, France and Belgium, the Grand Duchy of Luxembourg can count on a multicultural and multilingual workforce.

Re-domicile to Luxembourg

Luxembourg offers a simple, straightforward process for the re-domiciliation of investment funds, meaning the process whereby a fund migrates from one jurisdiction to another. All types of investment vehicles can be re-domiciled – including trusts, which can be merged into Luxembourg-domiciled structures even though they are not legal persons.

Updated on 18/10/16  
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