- Mindaugas Suklevicius – Founder and Fund Manager at HF Quarters
Luxembourg is Europe’s largest fund centre, and its Special Limited Partnership, or SCSp, has become a familiar structure for private equity and other alternative investment managers raising capital from institutional investors.
For investors seeing an SCSp for the first time, the same three questions usually come up: What exactly is it? How is it taxed? And who oversees it?*
The first one is relatively straightforward.
Luxembourg introduced the SCSp in 2013, drawing on the familiar Anglo-Saxon limited partnership model. The general partner manages the partnership, while limited partners commit capital and generally stay out of its day-to-day management.
If an investor has previously invested through a Delaware, Cayman or similar limited partnership, the structure will feel familiar. The main difference is the legal and regulatory framework in which it operates.
What about tax?
The SCSp is generally tax transparent for Luxembourg income tax purposes. In simple terms, the partnership itself is generally not subject to Luxembourg corporate income tax on its income, with the tax treatment instead determined at investor level according to the investor’s circumstances and applicable jurisdiction.
That does not mean every SCSp investment is automatically tax-free. The actual treatment can depend on the partnership’s activities, the investor’s jurisdiction, and other factors, so investors should always consider their own tax position.
Who is actually overseeing the fund?
This is where the structure becomes more interesting.
An SCSp can be used as an alternative investment fund (AIF). Where it falls within the AIFMD framework, it must have an AIFM responsible for its management and regulatory obligations.
The AIFM is the entity investors should look to when asking who is responsible for the fund’s management and regulatory oversight. Depending on the structure, the AIFM may be subject to authorisation, capital, organisational, risk-management and reporting requirements.
There is also an independent depositary. Its role goes beyond simply holding assets: under the AIFMD framework, the depositary has important custody, cash-monitoring and oversight responsibilities and must act independently in the interests of investors.
And what does this mean for European investors?
One of the key advantages of combining a Luxembourg fund structure with an authorised EU AIFM is access to the EU marketing framework.
An authorised EU AIFM can use the AIFMD passport to market qualifying EU AIFs to professional investors across EU Member States, subject to the relevant notification and regulatory requirements.
The latest AIFMD II amendments were required to be transposed by Member States by 16 April 2026, with the revised framework applying from that date, subject to specific exceptions.
So, what is an SCSp?
Put simply, an SCSp is not an unfamiliar structure for institutional investors.
It is Luxembourg’s version of a limited partnership: investors commit capital, a general partner oversees the partnership, and where the structure is within the AIFMD framework an AIFM and depositary provide the relevant regulatory and oversight framework.
For investors already familiar with private equity and alternative investment structures, the concept is therefore quite straightforward: a familiar limited partnership structure, combined with Luxembourg’s legal framework and, where applicable, European regulatory oversight and market access.