SICAR

The June 15, 2004, law defines a Venture Capital Investment Company (SICAR) as a company with a registered office and central administration in Luxembourg, meeting all of the following criteria:

• Formed as a limited partnership (SCS), special limited partnership (ScSp), limited partnership by shares (SCA), cooperative (SC) organized as a public limited company, limited liability company (s.à.r.l.), or public limited company (S.A.) under Luxembourg law
• Its purpose is to invest its funds in equity interests in non-publicly traded private entities.
• Its shares are reserved for “sophisticated investors” (clearly defined)
• Its articles specify that it is subject to the aforementioned law

The SICAR is a commercial company enjoying specific tax exemptions.

• Articles must specify that the company is subject to the law of 15/06/04, and the term “SICAR” must appear in the name
• The minimum subscribed capital is €1,000,000 (including premiums) and may reflect the net asset value at any time (variable capital)
• Assets must be held by a licensed Luxembourg bank custodian responsible for safeguarding investors’ interests

Investor protection

• The custodian is responsible for asset preservation, monitoring cash flows, and ensuring regulatory compliance. It is liable for any loss of assets
• The SICAR must publish a prospectus with necessary information for assessing investment and associated risks, updated for new share issues
• The CSSF oversees the SICAR’s regulatory compliance, risk management, fund structures, and adherence to Luxembourg financial laws
• The auditor verifies annual accounts, ensuring compliance with accounting and legal standards

• The SICAR must publish a prospectus with necessary information for assessing investment and associated risks, updated for new share issues.
• The CSSF oversees the SICAR’s regulatory compliance, risk management, fund structures, and adherence to Luxembourg financial laws.
• The auditor verifies annual accounts, ensuring compliance with accounting and legal standards.

Since 2009, there is no incorporation tax for SICARs. A minimum wealth tax of €525 (1) / €1,605 (2) / €4,815 (3) applies to SICARs with over 90% of assets in real estate, with a balance sheet of (1) under €350,000 / (2) €2,000,000 / (3) over €2,000,000.

SICARs structured as limited partnerships (SCS) are tax transparent, meaning partners are personally taxed on their share of the investment for wealth tax purposes. They are exempt from income tax on security-based income, as well as gains from disposal, contribution, or liquidation of such assets.

The SICAR benefits from Luxembourg’s double taxation treaties if structured as a Luxembourg company. Management fees are exempt from VAT, while depositary services are subject to 14% VAT (circular 723, December 29, 2006).