SICAR in Luxembourg, risk-capital investment company.

Which strategies qualify as risk capital?

This is the question that decides eligibility, and it is more restrictive than it looks. Article 1(2) of the Law of 15 June 2004 defines it as the direct or indirect contribution of assets to entities with a view to their launch, development or listing. CSSF Circular 25/901 of 19 December 2025, which repealed Circular 06/241, sets out the assessment: two elements must coexist, an intention to develop and a risk going beyond mere market risk.

The circular adds two criteria that 06/241 did not carry. Horizon counts: the SICAR acquires assets in order to resell them at a profit after a holding period. So does the degree of control: active involvement in managing the targets supports the qualification, without being required in every case where the other factors are conclusive.

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 twenty-four months of authorisation, under article 4(1). That period was twelve months before the Law of 21 July 2023, a figure still published by several market websites. It 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. Each share must also be paid up by at least 5%, article 5(2).

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; the firm 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; the firm produces the records that allow the deadline and the income split to be tracked.

Well-informed investor: threshold, carve-outs and documentation

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 100,000 euros, a threshold lowered from 125,000 to 100,000 euros by the Law of 21 July 2023, 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 100,000 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 of article 3(2) of the Law of 12 July 2013, namely 100 million euros of assets under management including leverage, or 500 million unleveraged with no redemption right exercisable for five years; the RAIF, by contrast, requires an authorised manager by construction, which weighs on the cost base of smaller vehicles. What follows from that split is covered on the AIFM support page.

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 profession separate from and independent of the firm. It publishes an annual report together with the auditor's report within six months of the year end, article 23(2), with no half-year report requirement and no net asset value frequency imposed by law: valuation periodicity 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.

The firm keeps the books of the manager and the portfolio companies, prepares the inputs required for reporting, and coordinates the relationship with the depositary and the réviseur d'entreprises agréé. Central administration, the net asset value and the registrar agent function sit with an entity authorised by the CSSF under Circular 22/811 as amended by 25/900. See fund accounting and fund services.