Every emerging manager I work with on a Luxembourg fund launch hits the same fork in the road early on: do we go through the CSSF approval process, or do we use a RAIF? It sounds like a procedural question. It is not. It is a strategic one that shapes your timeline, your costs, and how much flexibility you have once the fund is live.
Luxembourg offers three main vehicles for alternative investment funds: the Specialised Investment Fund (SIF), the Investment Company in Risk Capital (SICAR), and the Reserved Alternative Investment Fund (RAIF). The first two are regulated: they require prior authorisation from the CSSF before you can accept a single euro from investors. The RAIF does not. That single difference explains why the RAIF has become the default choice for most first and second-time fund managers setting up in Luxembourg.
The regulated path: SIFs and SICARs
SIFs have been around since the Law of 13 February 2007 [1]. SICARs are governed by the Law of 15 June 2004 [2]. Both require a full CSSF authorisation before launch, and the CSSF has published processing times: as of early 2026, initial authorisation for a regulated investment vehicle takes an average of around four months from submission of a complete file [3]. In practice, I have seen it take longer, especially for first-time sponsors where the CSSF has more questions about the management team and governance arrangements.
What you get in return for that wait is a regulated label. Some institutional investors, particularly insurance companies and pension funds in certain jurisdictions, have internal mandates that require them to invest only in regulated vehicles. If your LP base skews that way, a SIF or SICAR might be worth the time.
SIFs are the more versatile option. They can invest in virtually any asset class: private equity, venture capital, real estate, infrastructure, credit. They are subject to a 0.01% annual subscription tax on net assets but are exempt from corporate income tax, municipal business tax, and net wealth tax [4]. Risk diversification rules apply: the CSSF expects no single position to represent more than 30% of net assets, though this rule is applied with some flexibility for PE and VC strategies.
SICARs are narrower. They must invest in "risk capital," essentially private equity and venture capital [2]. The advantage is tax: SICARs are exempt from corporate income tax on income and gains from qualifying risk capital investments, and there is no subscription tax [5]. The trade-off is that the CSSF applies its own definition of what qualifies as risk capital, set out in Circular 06/241 [6], and investments that fall outside it are taxed at the standard corporate rate.
The RAIF: speed without CSSF oversight
The RAIF regime was introduced by the Law of 23 July 2016 [7]. The concept is straightforward: a RAIF mirrors the investment rules and tax treatment of either a SIF or a SICAR, but it is not directly supervised by the CSSF. Instead, it must appoint an authorised AIFM, either a Luxembourg-authorised AIFM or an EU AIFM passporting into Luxembourg under AIFMD [8].
This means a RAIF can be operational within two to four weeks of completing its constitutional documents, compared to four months or more for a SIF or SICAR. For a first-time manager trying to close investors within a commitment window, those extra months are often the difference between getting the fund off the ground and losing momentum.
The RAIF must be registered with the Luxembourg Trade and Companies Register (RCS) and file its constitutional documents with the notary (if structured as a corporate entity). But there is no CSSF application, no waiting period, and no ongoing CSSF reporting at the fund level. The AIFM handles regulatory compliance.
What a RAIF can and cannot do
RAIFs can take the same legal forms as SIFs: a SICAV (variable capital company), a SICAF (fixed capital company), a common limited partnership (SCS), or a special limited partnership (SCSp) [7]. For venture capital and private equity, the SCSp is by far the most popular. It is tax-transparent, contractually flexible, and familiar to international LPs.
RAIFs inherit the investor eligibility rules of SIFs and SICARs. Only "well-informed investors" can participate: institutional investors, professional investors under MiFID II, or individuals who invest a minimum of EUR 125,000 or have a credit institution certify their expertise [7]. The same standard applies across Luxembourg's alternative fund regime.
One thing RAIFs cannot do: operate without an authorised AIFM. A registered (sub-threshold) AIFM is not sufficient [9]. That matters for very small managers. If you are managing less than EUR 100 million and do not want to go through full AIFM authorisation yourself, you need to appoint a third-party AIFM, which adds cost and reduces your operational autonomy.
The tax election: SIF-like or SICAR-like
The tax election is one of the RAIF's most distinctive features. At formation, you choose whether your RAIF will be taxed under the SIF regime (0.01% subscription tax, no income tax) or the SICAR regime (no subscription tax, income tax on non-qualifying investments only) [7]. The election is made in the fund's constitutional documents and is binding.
For a EUR 50 million venture capital fund investing exclusively in qualifying risk capital, the SICAR-like election means zero subscription tax. The SIF-like path would cost EUR 5,000 per year. For a diversified or real estate strategy, the SIF path is usually better because the subscription tax is modest and you avoid the risk of the CSSF re-characterising some of your investments as non-qualifying.
Practical comparison
The three vehicles stack up like this on the factors that matter most to emerging managers:
- Time to launch: RAIF: 2 to 4 weeks. SIF: 4+ months. SICAR: 4+ months [3][7].
- CSSF approval required: RAIF: No. SIF: Yes. SICAR: Yes.
- Authorised AIFM required: RAIF: Yes. SIF: Only if AUM exceeds AIFMD thresholds. SICAR: Only if AUM exceeds AIFMD thresholds.
- Eligible asset classes: RAIF (SIF-like): any. RAIF (SICAR-like): risk capital only. SIF: any. SICAR: risk capital only.
- Subscription tax: RAIF (SIF-like): 0.01%. RAIF (SICAR-like): none. SIF: 0.01%. SICAR: none [4][5].
- Risk diversification rules: RAIF (SIF-like): yes. RAIF (SICAR-like): no. SIF: yes. SICAR: no.
- Ongoing CSSF reporting: RAIF: no (AIFM reports). SIF: yes. SICAR: yes.
Legal form: SCSp, SICAV, or something else
The choice of legal form is separate from the choice of regulatory regime, but it matters just as much. For venture capital and private equity, the SCSp (special limited partnership) dominates. It is a contractual vehicle, governed by the partnership agreement rather than corporate law, which gives the GP maximum flexibility in structuring distributions, governance, and investor rights. The SCSp has no legal personality, which means it is tax-transparent: each investor is taxed on their share of the fund's income in their home jurisdiction, with no fund-level tax (except the subscription tax for SIF-like RAIFs) [7].
The SICAV (variable capital investment company) is more common for real estate, credit, and multi-asset strategies where investors may need compartmentalisation across sub-funds. A SICAV can create ring-fenced compartments, each with its own investment policy, assets, and liabilities. Useful for umbrella structures, but it adds corporate governance overhead that most emerging VC managers do not need.
I generally advise first-time PE and VC managers to start with an SCSp unless there is a specific reason to go corporate. International LPs are familiar with the partnership model, and the contractual flexibility lets you adapt the fund terms to your specific situation without the formalities of corporate law.
When the regulated path still makes sense
I do not recommend a RAIF in every case. Three scenarios push toward a SIF or SICAR instead:
Institutional LP mandates. If your anchor investors are insurance companies, pension funds, or sovereign wealth funds with internal policies requiring a CSSF-regulated vehicle, the RAIF label will not satisfy them. This is becoming less common as familiarity with RAIFs grows, but it still comes up.
Marketing in certain EU jurisdictions. Some member states apply stricter national private placement rules to unregulated vehicles. A CSSF-regulated SIF or SICAR can sometimes access these markets more easily through the AIFMD marketing passport.
GP preference for direct CSSF oversight. Some managers, particularly those from heavily regulated backgrounds like banking, prefer the discipline and credibility of direct CSSF supervision. That is a legitimate choice, even if it costs more and takes longer.
Setup costs and ongoing fees
Emerging managers always ask what this costs. A RAIF launch in Luxembourg, including legal counsel, notary fees, AIFM appointment, administrator setup, and regulatory filings, typically runs between EUR 50,000 and EUR 100,000, depending on the complexity of the structure and the service providers involved. A SIF or SICAR adds the CSSF application fee (which varies but starts around EUR 5,000) and the additional legal costs associated with preparing the CSSF application file and responding to questions during the review process [3].
Ongoing costs are driven primarily by the AIFM fee (for RAIFs), fund administration, audit, depositary (if required), and the subscription tax (for SIF-like structures). For a first fund of EUR 20-50 million, total annual operating costs including all service providers typically range from EUR 100,000 to EUR 250,000. That is a meaningful drag on a small fund, which is why getting the structure right at the outset matters. You do not want to be paying for services or obligations you did not actually need.
How we help at Infra One
We work with emerging managers launching Luxembourg RAIFs on a regular basis. Our fund administration platform handles the formation process, investor onboarding with KYC/AML checks, NAV calculations, capital call and distribution processing, and the ongoing compliance that the AIFM needs to fulfil its obligations. We coordinate with your legal counsel and AIFM so the fund can move from term sheet to first close as fast as the structure allows.
If you are weighing a RAIF against a regulated structure and want to talk through the specifics of your situation, get in touch. We are happy to walk you through the trade-offs based on your actual investor base, strategy, and timeline.
DISCLOSURE: This communication is on behalf of Infra One GmbH ("Infra One"). This communication is for informational purposes only, and contains general information only. Infra One is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Infra One does not assume any liability for reliance on the information provided herein. © 2026 Infra One GmbH All rights reserved. Reproduction prohibited.