Funds management in Luxembourg

SICAR

The Risk Capital Investment Company (SICAR)

The law of 15th June 2004 defines this type of company as any company :

whose status is either SCS, SCA, SC (establ. as an SA), Sàrl or SA, and
whose activity is the investment of its funds in risk or venture capital, and
whose shareholders are (well-)informed investors.

Venture or risk capital can be defined as: indirect or direct contributions to entities, with the aim of supplying funds to finance their development, investments, IPO, etc.

The registered headquarters and administrative centre must be located in Luxembourg.

The SICAR must meet other conditions such as minimum capital (1Mio Euro), etc.

The SICAR is monitored by the CSSF and their directors must meet certain conditions. The SICAR must have an external Auditor and a depositary bank.

By (well-)informed, the law understands that not every person can invest into a SICAR. The persons who are allowed to are :

the investments funds
professionnal investors
pension funds
other commercial companies
people for which a bank has certified that they are aware of hte risk they have undertaken
prople who invest more than EUR 125 000,00.

By Placement à Risque, the law includes any funds that are directly or indirectly invested in entities in the aim of an IPO. The law do not limit the type of investments; it can take the form of shares, warrants, debts,... issued by non quoted companies.

Fiscal Regime

All the capital subscribed by investors into a SICAR is not submitted to the 0,5% (from 1/01/2008) of capital duty. However, a EUR 1.250 fixed tax is applicable when the Sicar is set up.

The SICAR which is set up under a form of a company is fully tax exempt on Fortune tax.
The SICAR is a fully taxable company which is completely tax-exempt on profit resulting from the management of funds invested in the above-mentioned participations (and also the funds awaiting to be invested - during 12 months).

Dividends

No withholding taxes charged on the payment of dividends to its shareholders (no matter who they are and where they are located : private/public, company, resident in EU or double tax treaty country or not,...).

The SICAR can enjoy the advantages of the various EC directive (parent -subsidiary and royalties - interests). Directive 2003/49/CE and the various double tax treaties.

No withholding tax is due on the payment of interests or royalties to non resident.