Understanding Luxembourg fund in 10 minutes

Luxembourg fund series - Chapter One

With the increasing need for investor protection and transparency, change in international tax environment, European investors' interest in allocating assets to emerging markets including Mainland China which is matched by managers' desire to source limited partners from Europe, we have seen an increasing interest in fund managers in Asia (including those based in Mainland China) to raise onshore Luxembourg funds. On 18 February 2020, the European Union (EU) added the Cayman Islands to its list of non-cooperative jurisdictions for tax purposes. Even though the direct consequences are limited at present as the EU has not developed comprehensive sanctions, this recent development further draws attention of Asian fund managers to review their current and future fund structures in Cayman Islands and other offshore financial centers, especially those having underlying investments in Europe. In other words, choosing a regulated and recognized fund jurisdiction which provides tax certainty and sustainability has become more important. Luxembourg is one of the locations which possesses the above advantages.