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 for 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), and if the portfolio drifts outside that box the regime — and its tax treatment — is 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, and in return its assets must be invested in risk capital — 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, reduced to €100,000 by the 2023 toolbox law (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 structure. |
| 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 — and the RAIF's SICAR-style tax election is what ties the two together, so 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.
The gotcha: 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 — and 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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