What is Infrastructure?
Infrastructure generally describes all physical assets, equipment and facilities of interrelated systems and service providers, together with the underlying structures, organisations, business models and rules and regulations, which are used to offer certain sector-specific commodities and services (e.g. transport, energy and water supply, waste water and waste disposal) to individual economic entities or the wider public to enable, sustain or enhance social living conditions.
Typical examples of Infrastructure include roads, airports, ports, oil and gas lines and renewable energy plants (e.g. wind and solar plants) as well as public utilities such as waterworks, power companies and waste disposal companies.
A broader definition of Infrastructure also includes “social Infrastructure”, that is, public facilities such as schools, hospitals, administrative buildings, cultural houses, social housing etc.
Luxembourg regulated infrastructure funds vehicles
The choice of an Infrastructure investment vehicle and structure depends, will depend on the type of funding needs to be raised, the proposed investor base, the type of investments to be made and any specific tax considerations.
The Luxembourg legal framework is diverse and flexible enough to fulfil the needs of a wide range of investors. The taxation regime is also a key factor when considering whether to establish a regulated or un-regulated Infrastructure investment vehicle for international investors.
Luxembourg offers a choice of three different regulated investment vehicles which are appropriate for the structuring of an Infrastructure fund:
- The law of 13 February 2007, on specialised investment funds (SIFs), as amended (the SIF Law);
- The law of 15 June 2004 on the investment company in risk capital (Société d’Investissement en Capital à Risque, SICAR), as amended (the SICAR Law); and
- Part II of the law of 17 December 2010 on undertakings for collective investment (Part II UCIs) (the 2010 Law).
ALFI has issued technical guidelines “Luxembourg Infrastructure Investment Vehicles” providing general information on legal and taxation aspects of regulated and un-regulated infrastructure investment vehicles domiciled in the Grand Duchy of Luxembourg. The document sets out some of the relevant considerations that need to be taken into account when contemplating Infrastructure investments but it is not intended to be a comprehensive guideline to structuring Infrastructure investments through Luxembourg. This document reflects the legal situation as at 2014. The guidelines can be downloaded here. Members only