SCSp in Luxembourg, special limited partnership for funds and carry.
The SCSp is a Luxembourg partnership without legal personality, tax transparent, widely used as a fund, co-investment and carried interest vehicle in PE/VC. FSL handles its administration, accounting and partner reporting. FSL handles structuring, substance, accounting and reporting; CSSF authorisation and reserved acts are coordinated with our network of partner lawyers and notaries.
The SCSp (special limited partnership) is a Luxembourg limited partnership without separate legal personality, governed by contract (LPA), tax transparent, introduced by the law of 12 July 2013. It serves as a fund, co-investment or carried interest vehicle.
Special limited partnership introduced by the law of 12 July 2013 (amending the law of 10 August 1915). Tax transparency; contractual freedom of the limited partnership agreement (LPA).
Key takeaway
- The SCSp has no legal personality and is tax transparent.
- Highly flexible: most terms sit in the LPA (drafting = lawyer).
- Ideal for carried interest and co-investment.
How to set up an SCSp in Luxembourg: steps and timeline
The SCSp is created by contract. No notarial deed is required: the limited partnership agreement can be signed privately, which sets the SCSp clearly apart from a SARL or an SA and explains much of its appeal to sponsors used to English law partnerships.
Three building blocks must exist before signature: at least one general partner, at least one limited partner, and a corporate object consistent with the intended strategy. An extract of the agreement is then filed with the Trade and Companies Register and published in the RESA. Only the extract is public: the economic terms of the LPA, waterfall, hurdle and allocation keys, stay confidential. That is a real competitive advantage over vehicles whose constitutional documents are published in full.
In practice, an unregulated SCSp is up and running in two to four weeks once the LPA is settled. The critical path is almost never the registration: it is the negotiation of the LPA with first-close investors and the bank account opening, whose processing sits with the bank.
Capital, contributions and liability: what the SCSp actually requires
There is no legal minimum capital for an SCSp. Partner commitments are set freely in the LPA and drawn down through successive capital calls following the investment schedule. That absence of a floor is structural: it makes it viable to launch a small co-investment vehicle without locking up equity.
The SCSp accepts three types of contribution: cash, in kind, and in industry. Contributions in industry, meaning know-how or services, are closed to Luxembourg capital companies but available here. They are routinely used to house the management team's contribution inside the carried interest vehicle.
The general partner is liable without limit and jointly for the partnership's obligations. The limited partner is bound only up to its subscription, on one condition: that it performs no act of management towards third parties. The law of 12 July 2013 substantially widened the list of acts permitted without losing that limitation, notably participation in advisory committees and the exercise of voting rights on structural decisions. Drafting those clauses is your lawyer's remit: that is where LP protection is actually won or lost.
The general partner: the choice that drives the vehicle's tax position
The GP is almost always a Luxembourg capital company, most often a SARL, so that unlimited liability is ring-fenced in a dedicated entity. That looks like a purely legal choice. It is not.
An SCSp is in principle outside the scope of corporate income tax and net wealth tax, the charge flowing up to the partners. Municipal business tax follows a different logic: the SCSp is deemed to carry on a commercial activity, and therefore becomes liable, where its general partner is a Luxembourg capital company holding at least 5% of the partnership interests. Market practice is to keep the GP's interest below that threshold.
The point deserves case-by-case verification with your tax adviser, because it also depends on the vehicle's actual activity. A strictly passive fund and an operating vehicle are not analysed the same way. FSL documents the ownership structure and produces the records that allow the position to be sustained over time; the qualification itself is your adviser's call.
SCSp and AIFM: when the vehicle crosses into regulated territory
An SCSp is not regulated by nature. It becomes regulated through what it does. As soon as it raises capital from several investors to invest it according to a defined policy in their interest, it meets the definition of an alternative investment fund and falls within the scope of the law of 12 July 2013.
Two regimes then coexist. Below the de minimis thresholds, 100 million euros of assets with leverage or 500 million without leverage and with no redemption rights for five years, the manager can operate under simple registration with the CSSF. Above them, an authorised manager becomes mandatory, with the corresponding consequences for depositary, independent valuation and AIFMD reporting.
Many structures are caught by that switch at the second or third closing. Anticipating it costs little; absorbing it late costs a great deal, because it means rebuilding governance and a valuation chain mid-life. See AIFM and management company support.
SCSp accounting and account filing: what is genuinely mandatory
Every SCSp keeps accounting records and prepares annual accounts. The question that comes up systematically concerns publication: filing with the Trade and Companies Register is not automatic. It applies where all general partners are capital companies, by far the most frequent configuration since the GP is almost always a SARL. Otherwise the accounts stay internal.
Statutory audit by a réviseur d'entreprises agréé, a separate and independent profession from FSL, applies to an unregulated SCSp exceeding two of the three size criteria: 7.5 million euros balance sheet total, 15 million euros net turnover, 50 employees. An SCSp used as a RAIF or as a compartment of a regulated fund is audited regardless of size.
In day-to-day operation, the real workload sits less in the annual accounts than in per-partner capital accounts, drawdown and distribution tracking, and producing LP reporting in the format investors expect. That is precisely FSL's scope, alongside fund accounting and annual accounts.
SCSp, RAIF or SICAR: arbitrating on actual use
The most common confusion sets the SCSp against the RAIF or the SICAR. These are different kinds of object. The SCSp is a legal form; the RAIF, the SIF and the SICAR are product regimes. A RAIF can take the form of an SCSp, and that is in fact the most widespread combination in European private equity.
The useful question is therefore not SCSp or RAIF, but: do I need a product regime at all? A bare SCSp is enough for a club deal, a closed co-investment vehicle or a carried interest structure. The RAIF regime becomes relevant when the institutional investor requires a recognised framework, a depositary and a supervised valuation process.
Running costs differ by a significant multiple between the two, essentially because of the depositary and the auditor. Moving to the regulated regime too early erodes the net return of a small vehicle; moving too late closes off an investor class. See the RAIF, SIF and SICAR comparison and private equity structuring.
SCSp, SCS or SARL: which form for which use?
| SCSp | SCS | SARL | |
|---|---|---|---|
| Legal personality | No, separate estate without distinct personality | Yes | Yes |
| Minimum capital | None | None | EUR 12,000 |
| Investor liability | Limited partners: capped at their commitment | Limited partners: capped at their commitment | Shareholders: capped at their contribution |
| Manager liability | General partner: unlimited and joint | General partner: unlimited and joint | Manager: mandate, no unlimited liability |
| Corporate income tax | Transparent, the charge flows to partners | Transparent, the charge flows to partners | Opaque, taxed in its own name |
| Contractual freedom | Very high, everything sits in the LPA | High, within the limits of the articles | Framed by the 1915 law |
| Typical use | Funds, co-investment, carried interest | Partnership where legal personality is wanted | Operating company, holding, GP of an SCSp |
Who this is for
- PE/VC funds and co-investment vehicles
- Carried interest structures for management teams
- Sponsors seeking broad contractual freedom
What we do
- SCSp administration and partner register maintenance
- Accounting, capital accounts and waterfall
- Carried interest calculation and tracking
- Reporting to limited partners and coordination of the general partner (GP)
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Frequently asked questions
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