SICAR in Luxembourg, risk-capital investment company.
A SICAR is a Luxembourg risk-capital investment company, authorised by the CSSF, dedicated to private equity and venture capital, reserved for well-informed investors and with no diversification constraint. FSL handles accounting, substance and reporting. FSL handles structuring, substance, accounting and reporting; CSSF authorisation and reserved acts are coordinated with our network of partner lawyers and notaries.
The SICAR (risk-capital investment company, law of 15 June 2004) is a Luxembourg vehicle regulated by the CSSF, designed to invest in risk capital (PE/VC), reserved for well-informed investors and benefiting from a specific tax regime.
Law of 15 June 2004 on the risk-capital investment company; CSSF authorisation and supervision. Taxable as a capital company but income from securities exempt; not subject to subscription tax.
Key takeaway
- The SICAR is dedicated to risk capital, with no diversification constraint.
- Specific tax regime: not subject to subscription tax, income from securities exempt.
- FSL operates the SICAR; CSSF authorisation is coordinated with the lawyer.
What counts as risk capital under the SICAR Law?
This is the question that decides eligibility, and it is more restrictive than it looks. CSSF Circular 06/241 defines it as the direct or indirect contribution of assets to entities with a view to their launch, development or listing. Two elements must coexist: high risk and an intention to develop the target entities.
That double test mechanically excludes several strategies. Holding listed securities on a portfolio logic, classic yield real estate and purely passive lending do not qualify as risk capital. Conversely growth capital, buyout, venture, mezzanine coupled with an equity stake and development-phase real estate are admitted where the risk profile and the development intention are documented.
The practical consequence is that the eligibility memorandum submitted to the CSSF is not a formality. A SICAR drifting towards non-eligible assets exposes itself to a challenge on its regime, and therefore on its tax treatment. Asset-by-asset eligibility monitoring must be documented from the first investment onwards.
Minimum capital, legal forms and set-up timeline
Subscribed capital, share premium included, must reach 1,000,000 euros within twelve months of authorisation. That is a materially lower threshold than the 1,250,000 euros of net assets required of a SIF, and it applies to subscribed capital rather than assets, which makes it easier to satisfy in a vehicle with progressive capital calls.
The SICAR can take the form of an SA, a SARL, an SCA, an SCS, an SCSp or a cooperative organised as an SA. That choice is not neutral: corporate form makes the SICAR tax opaque and therefore eligible for Luxembourg's treaty network, whereas the SCSp form makes it transparent and pushes taxation up to the partners.
The timetable follows the same logic as a SIF, with prior CSSF authorisation. Expect three to six months depending on strategy complexity and depositary availability. Incorporation itself sits with the notary for corporate forms; FSL prepares the accounting and substance file in parallel with the review.
SICAR taxation: what is exempt and what is not
A SICAR in corporate form is a fully resident and taxable company, which is precisely the intended outcome. It is exempt on income and gains from transferable securities, and on income from cash held pending investment in risk capital for a maximum of twelve months. It is not subject to subscription tax.
The strategic advantage lies in that combination: the SICAR is resident and liable on paper, and therefore in principle eligible for the double tax treaties concluded by Luxembourg, while being exempt on the substance of its income. That is what distinguishes it from the SIF and the RAIF in fund form, whose treaty access is markedly more uncertain.
Two caveats apply. Effective access to a given treaty depends on the source state's analysis and on the anti-abuse clauses applicable since the multilateral instrument. And the cash exemption is capped at twelve months: uninvested treasury beyond that becomes taxable. These points sit with your tax adviser; FSL produces the records that allow the deadline and the income split to be tracked.
Who can invest in a SICAR?
Access is reserved to well-informed investors, on the same definition used for SIFs. Institutional and professional investors qualify as of right. Any other investor qualifies if it adheres in writing to that status and invests at least 125,000 euros, or produces an assessment from a credit institution, an investment firm or a management company attesting to its expertise.
Directors and persons involved in managing the SICAR are also deemed well-informed, which allows the team's co-investment to be housed without crossing the 125,000 euro threshold per person.
Verification happens at subscription and is documented in the register of shareholders. An incomplete subscription file is an easily avoidable internal control weakness, and one of the most frequently raised observations. See AML and KYC compliance.
SICAR or RAIF investing in risk capital: how to decide
The RAIF can elect a risk capital regime modelled on the SICAR's. The question therefore becomes: why keep an authorised vehicle when an unauthorised one offers comparable treatment in six to ten weeks?
Three arguments still hold. Treaty access for a corporate SICAR is better established in the practice of source states. Some institutional investors require direct supervision of the vehicle rather than of the manager alone. And a SICAR can operate without an authorised AIFM while it stays below the de minimis thresholds, whereas the RAIF requires an authorised manager by construction, which weighs on the cost base of smaller vehicles.
Conversely, where the fundraising timetable is the dominant factor and the investor base is indifferent to the supervision model, the RAIF wins almost every time. See the RAIF, SIF and SICAR comparison and private equity structuring.
Ongoing obligations and governance of a SICAR
A SICAR appoints a Luxembourg depositary and a réviseur d'entreprises agréé, a separate and independent profession from FSL. It publishes an annual report within six months of the year end, with no half-year report requirement and no periodic net asset value imposed by law: valuation frequency is the one set in the constitutional documents.
Governance is the main point of vigilance. The CSSF assesses the effective substance of the directors in Luxembourg, the traceability of investment decisions, and the ability to demonstrate that risk capital eligibility was assessed before each commitment. A generic board minute does not suffice.
FSL runs accounting, valuation, carried interest and distribution tracking, and investor reporting, and coordinates the relationship with the depositary and the auditor. See fund accounting and fund services.
SICAR vs RAIF vs SIF
| Criterion | SICAR | RAIF | SIF |
|---|---|---|---|
| CSSF authorisation | Yes | No (authorised AIFM) | Yes |
| Strategy | Risk capital (PE/VC) | All assets | All, diversified |
| Diversification | Not required | Yes (except option) | Yes |
| Subscription tax | No | 0.01% | 0.01% |
Who this is for
- Private equity and venture capital managers
- Well-informed investors targeting risk capital
- Sponsors seeking a regulated vehicle without a diversification requirement
What we do
- SICAR scoping and two-tier structure with a SOPARFI
- Accounting, valuation and investor reporting
- Substance, governance and CSSF / depositary coordination
- Carried interest and distributions tracking
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Frequently asked questions
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