The SICAR Law — Law of 15 June 2004 on investment companies in risk capital
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The SICAR (société d'investissement en capital à risque) is Luxembourg's risk-capital vehicle. It carries no risk-spreading obligation (the one thing every diversified fund must do). In exchange it takes a strict risk-capital-only mandate and a favourable tax regime. The trade is plain: you may concentrate the whole vehicle in one deal, but every euro must be genuine risk capital (private equity, venture). If the portfolio drifts outside that box, the regime and its tax treatment are at risk.
Scope and the core mechanism
The core mechanism is a single swap. The SICAR is released from the risk-diversification rule that defines nearly every other regulated fund. In return, its assets must be invested in risk capital. Risk capital means the direct or indirect contribution of funds to entities for their launch, development or listing (Legilux, loi du 15 juin 2004). This is exactly what separates it from the SIF. The SIF is a diversified vehicle bound by CSSF risk-spreading limits, while the SICAR may hold a single portfolio company. It also differs from the RAIF at the supervision layer. A SICAR is a CSSF product-authorised vehicle, whereas a RAIF is not directly CSSF-supervised (it relies on its AIFM). Notably the RAIF can elect a SICAR-style tax regime, which is how the two are tied together in practice.
Key provisions
| Provision | What it says | The practical point |
|---|---|---|
| Risk-capital-only mandate | Assets must be invested in risk capital (PE/venture); no risk-spreading requirement applies (Legilux). | The defining feature. You can run a concentrated, single-deal vehicle. But "risk capital" is the fence, not a suggestion. |
| Eligible investors | Reserved to well-informed investors: institutional, professional, or others who declare in writing and meet the threshold. The 2023 toolbox law reduced that threshold to €100,000 (DLA Piper on the Law). | No retail. The €100,000 line aligns SICAR, SIF and RAIF. Check the exact declaration mechanics against the consolidated text. |
| Legal forms | May be set up as SA, SCA, SARL, SCS or SCSp; may adopt variable capital (SICAV-style) so subscriptions/redemptions move share capital automatically. | The SCSp (special limited partnership) is the PE workhorse; variable capital removes the notarial friction on capital moves. |
| Depositary + central administration | Assets must be entrusted to a depositary; the registered office and central administration must be in Luxembourg (Legilux). | Substance lives onshore: depositary, admin, audited annual report. Not a letterbox entity. |
| Tax treatment | Not subject to subscription tax (taxe d'abonnement). Fully taxable in principle, but income and gains from transferable securities are exempt from corporate income tax (Elvinger Hoss, secondary; confirm against the consolidated text). | The commercial draw. No taxe d'abonnement, and the securities exemption means most PE returns pass through untaxed at the vehicle. Verify the exact perimeter of "transferable securities." |
| CSSF supervision | Product-authorised and supervised by the CSSF; governance now framed by Circular 25/901 (19 Dec 2025), which consolidated the SIF / SICAR / Part II rulebook (CSSF). | Unlike a RAIF, the SICAR itself is authorised. 25/901 is now the first governance document to read alongside the Law. |
Amendment history
| Date | Instrument | What changed |
|---|---|---|
| 15 Jun 2004 | Loi du 15 juin 2004 | Original SICAR Law: created the risk-capital vehicle with no risk-spreading obligation. |
| 2013 (AIFM era) | AIFMD transposition law | Aligned the SICAR regime with the AIFM Directive (depositary, AIFM, reporting for in-scope SICARs). Confirm the exact amending law and date against Legilux (To verify). |
| 21 Jul 2023 | "Toolbox" law (in force 28 Jul 2023) | Reduced the well-informed-investor threshold from €125,000 to €100,000 and aligned the SICAR / SIF / RAIF definitions (DLA Piper). |
| 19 Dec 2025 | CSSF Circular 25/901 | Not an amendment to the Law, but reframes SICAR governance in a consolidated SIF / SICAR / Part II rulebook; effective on issue (CSSF). |
What it works with
The SICAR sits inside Luxembourg's fund toolbox. The vehicle itself is the SICAR; its natural comparators are the diversified SIF and the unsupervised RAIF. The RAIF's SICAR-style tax election is what ties the two together. A sponsor choosing between them is really weighing CSSF authorisation against speed-to-market for the same tax outcome. Governance now runs through CSSF Circular 25/901, read alongside the RAIF Law. For the structuring decision, see the domicile comparison.
In practice: the risk-capital-only mandate is a live constraint, not a formality. A SICAR that drifts into diversified holdings or non-risk-capital assets (yield plays, listed liquid portfolios held for their own sake) can fall outside the definition. Losing the regime means losing the tax treatment that made the structure worth it. The concentration freedom and the tax exemption are the same coin: keep the portfolio genuinely risk capital, or you keep neither.
To verify
- 2013 AIFM-era amendment: the exact amending law and date that transposed AIFMD into the SICAR Law; confirm against the amendment table on Legilux.
- Tax exemption perimeter: the precise scope of the corporate-income-tax exemption on "income from transferable securities" (and the treatment of other income) is stated here from a secondary source. Confirm the article and wording in the consolidated text and current Luxembourg tax law.
- Well-informed-investor declaration mechanics: the exact conditions under which a sub-€100,000 investor may still qualify (professional / institutional carve-outs); check the definition article in the consolidated Law.
- Circular 25/901 SICAR-specific content: which governance obligations in 25/901 bind SICARs specifically (vs SIF / Part II); confirm in the CSSF circular text.
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