The General Partner: Who Runs Your Luxembourg Fund

The general partner in law

In an SCS or SCSp (Articles 310-1 and 320-1 of the Law of 10 August 1915) one or more general partners are indefinitely, jointly and severally liable for the partnership's obligations, while limited partners are liable only up to their commitment. In an SCA (Article 600-1) the general partner is a shareholder with the same unlimited liability, and the general meeting cannot amend the articles or bind the company towards third parties without the general partners' agreement unless the articles say otherwise (Article 600-9).

The SCSp has no legal personality of its own and acts through its general partner and managers; the SCS and the SCA have legal personality. "General partner" is the term used by guichet.lu for the associé commandité; the managers are the gérants.

Choosing the general partner's legal form

Almost always an S.à r.l. (Articles 710-1 ff.): capital of EUR 12,000, subscribed in full; since the Law of 18 May 2026 the minimum may be paid up within twelve months of incorporation unless the articles say otherwise, while any amount above it, contributions in kind and share premium are paid at incorporation. One to one hundred shareholders, incorporated before a notary, managed by one or more managers who need not be shareholders.

An SA (EUR 30,000, one quarter paid up) is chosen where the sponsor wants a formal board, a two-tier structure or several shareholder groups. The general partner's shares are held by the sponsor, its partners or a sponsor holding company — and that is where control over the fund sits.

Managers, signing powers and the limited partners' safe harbour

Management of an SCS or SCSp belongs to one or more managers, general partners or not, appointed in the partnership agreement (Articles 310-2 and 320-3). Each manager may do everything necessary or useful for the partnership's object and represents it towards third parties and in court; limits on their powers do not bind third parties even when published. The managers and their signing powers appear in the extract filed with the RCS.

A limited partner may not carry out acts of management towards third parties, on pain of unlimited liability for the obligations it took part in. The law lists what is safe: exercising partner rights, advising the partnership, its affiliates or its managers, acts of control and supervision, granting loans, guarantees or security, and authorising the managers for acts beyond their powers (Articles 310-3 and 320-4). A limited partner may also sit on a management body or act as agent of a manager, provided that capacity is disclosed.

Liability

The general partner answers for the partnership's debts without limit, jointly and severally with any other general partner. That is why it is a separate company: the sponsor's exposure is limited to the general partner's own assets and its small interest in the fund.

Managers who are not general partners are liable to the partnership for the performance of their mandate and for faults in their management, and jointly and severally for breaches of the law or the agreement (Article 441-9, by reference); the managers of the S.à r.l. general partner answer under the same standard (Article 710-16). Delegates are liable only for the execution of their mandate.

General partner and AIFM: three models

An AIF is managed either by an external AIFM or, where its legal form allows, by itself (Article 4(1) of the Law of 12 July 2013). An SCSp cannot be internally managed: it must appoint an external AIFM, and that AIFM can be the general partner itself, the manager, or a third-party AIFM appointed by the manager (CSSF FAQ on the AIFM law, version 24 of 20 May 2025, Q1.E). An SCS or SCA may instead opt to be an internally managed AIFM if its manager's purpose is limited to managing that partnership.

Three set-ups follow. Below EUR 100 million of assets including leverage (EUR 500 million where the funds are unleveraged and closed for five years), the general partner can be the registered AIFM: registration with the CSSF, information and annual reporting duties, no marketing passport (Article 3). Above the thresholds, either a third-party or group AIFM authorised under Chapter 2 manages the fund while the general partner keeps corporate control, or the general partner is itself authorised as AIFM: EUR 125,000 of initial capital plus 0.02% of assets above EUR 250 million, a single depositary, the passport and pre-marketing rights (Articles 8, 19, 28-1 and 30).

RAIF, SIF, SICAR: what changes for the general partner

A RAIF must be managed by an authorised external AIFM, established in Luxembourg or another Member State, or a third-country AIFM authorised under the Directive (Article 4 of the Law of 23 July 2016). The general partner remains the partnership's general partner, but a merely registered general partner cannot be the AIFM of a RAIF. The RAIF is entered on the RCS list within twenty working days of its constitution (Article 34).

For a SIF or SICAR in partnership form, the law names the "directors" the CSSF approves: the managers, whether or not they are general partners (Article 42(3) of the SIF law, Article 12(3) of the SICAR law). The CSSF checks their good repute and experience, approves every replacement, and the SICAR application file includes the draft articles of the general partner.

Board, substance and decision-making

No circular tells a general partner that is not an AIFM how to organise itself; Circular CSSF 18/698 applies to authorised managers only. What matters is a board that actually manages, and a central administration in Luxembourg, which is what makes the general partner a Luxembourg-resident company (Article 159 LIR): in practice a majority of managers resident or professionally active here, meetings held and decisions taken here, its own bookkeeping, bank account and registered office, and no second place of management abroad.

Where the general partner is the AIFM, the AIFM rules add their own test: since 16 April 2026 (Law of 3 March 2026, transposing AIFMD II) the business must be conducted by at least two natural persons domiciled in the EU who are full-time employees or members of the governing body (Article 7(1)(c)); delegation must not turn the AIFM into a letter-box entity (Article 18; Article 82 of Regulation 231/2013); and an authorised AIFM needs two conducting officers permanently in Luxembourg, a decision-making and administrative centre here and at least three board members (Circular 18/698, points 59, 78–80 and 115).

Commitment, management fee and carried interest

The economics of the general partner are contractual. The partnership agreement fixes the general partner's own commitment, the management fee or priority profit share, the distribution waterfall, hurdle and catch-up, the key-person and removal clauses, and what happens to carried interest when a team member leaves. Fees between the general partner, the AIFM and the fund must stand at arm's length (Article 56 LIR).

Carried interest is usually held through a separate carry vehicle — typically a Luxembourg SCSp — in which the deal team participates alongside the general partner. Since 2026 the tax treatment of both routes, contractual carry and carry held through a participation, is written into the law (see the FAQ below).

Tax and VAT of the general partner

The general partner is an ordinary, fully taxable company: 23.87% in Luxembourg City for 2025 and 2026 (the 2027 budget bill tabled on 7 October 2026 proposes 15%, not yet adopted), minimum net wealth tax of EUR 535, 1,605 or 4,815 by balance-sheet total, and 15% withholding tax on dividends unless the parent qualifies under Article 147 LIR. A general partner that is a capital company and holds 5% or more of the partnership interests makes an SCS or SCSp liable to municipal business tax (Article 14 no. 4 LIR; Circular L.I.R. 14/4), so its interest is kept below that line; SICARs and RAIFs under Article 48 of the RAIF law are outside the rule.

VAT: the management of alternative investment funds is exempt (Article 44(1)(d) of the VAT law, extended to AIFs in 2013; Circulars 723 and 723ter), so the general partner's fee is exempt to the extent it covers management of the fund in that sense; other services are taxable. Directors who do not act under their own responsibility and bear no economic risk are not VAT taxable persons (Court of Justice, C-288/22 of 21 December 2023; AED Circular 781-2 of 11 December 2024).

AML, RBE and filings

A RAIF or an unregulated AIF that is not supervised by the CSSF falls under the anti-money laundering supervision of the Administration de l'enregistrement, des domaines et de la TVA (Articles 2(1) and 2-1(8) of the Law of 12 November 2004): it appoints a person responsible for compliance (RR) and a compliance officer (RC) (Article 4(1)), answers the AED's annual questionnaire and files the RC's annual report. An AIFM, a SIF or a SICAR answers to the CSSF instead.

The general partner and the SCSp are both registered with the RCS; the extract names the general partners, the managers and their signing powers, and changes are filed within one month. Beneficial owners of both are declared to the RBE within one month (Law of 13 January 2019, Article 4). The S.à r.l. files annual accounts; the SCSp does not.

What does the general partner of a Luxembourg SCSp do?

It is the partner with unlimited liability and, under the partnership agreement, usually the manager: it decides, signs and represents the partnership, calls capital, executes investments and exits — on the AIFM's portfolio decisions where an external AIFM is appointed — keeps the register of partners, convenes the investors and makes the RCS filings. It is normally a Luxembourg S.à r.l. owned by the sponsor, with a small interest in the fund.

Does the general partner need a CSSF licence?

Not as such. Neither the AIFM law nor the financial-sector law of 5 April 1993 contains an authorisation requirement for a general partner that is not itself the AIFM. Supervision attaches to the roles it takes on: as AIFM it registers with or is authorised by the CSSF; as manager of a SIF or SICAR its managers are approved by the CSSF; and for anti-money laundering purposes a RAIF or unregulated AIF answers to the AED.

Can the general partner itself be the AIFM?

Yes. The CSSF's FAQ on the AIFM law confirms that the external AIFM of an SCSp can be the general partner or the manager. Below the thresholds the general partner registers with the CSSF within two months of starting to manage its first AIF and must apply for authorisation within thirty days once it exceeds them; above the thresholds it needs full authorisation, with EUR 125,000 of capital, two conducting officers in Luxembourg and the organisation of Circular 18/698. Many sponsors start with a registered general partner and move to a third-party or group AIFM as the fund grows; a RAIF needs an authorised AIFM from day one.

Who is liable for the fund's obligations?

The general partner, without limit and jointly with any other general partner. Limited partners are liable only up to their commitment as long as they do not perform acts of management towards third parties; advising, voting, sitting on an advisory committee, supervising, lending or guaranteeing, and authorising the managers are all safe by law. Managers who are not general partners answer to the partnership for their management. Because the general partner carries the unlimited liability, it is a limited-liability company whose exposure ends with its own assets.

What should the general partner's board look like?

Like a board that manages. The law does not prescribe its size or residence, but the general partner is a Luxembourg-resident company only if its central administration is here, and investors and foreign tax authorities test exactly that: a majority of managers resident or professionally active in Luxembourg, meetings held and minuted here, decisions actually taken by the board, independent directors where investors expect them, and no second place of management abroad. If the general partner is also the AIFM, at least two EU-domiciled natural persons must conduct the business and, for an authorised AIFM, two conducting officers must be permanently in Luxembourg.

How is carried interest taxed in Luxembourg?

Since tax year 2026 under the Law of 3 February 2026 (Article 99bis(1a) LIR). Carried interest paid on a purely contractual basis to an individual who holds a management function — as employee, partner, manager or director — with an AIFM, a management company or the fund, or who advises them under an advisory contract, directly or through one or more entities, is taxed as extraordinary income at a quarter of the global rate, with no time limit and no requirement that investors have first recovered their capital. Carried interest that is inseparably linked to, or represented by, a direct or indirect participation in the fund — the usual carry vehicle — is a taxable speculation gain only if realised within six months; after that it is not taxable unless the participation is an important one of more than 10% (Article 100). Where the fund is an FCP, an SCS or an SCSp, the carry is always treated as a speculation gain whatever the fund's own income.

How is the general partner itself taxed?

As an ordinary Luxembourg company: 23.87% on its profit in Luxembourg City for 2025 and 2026, minimum net wealth tax from EUR 535, and 15% withholding tax on dividends to its shareholders unless the exemption of Article 147 LIR applies. Its fees must be at arm's length. Management of the fund is VAT-exempt as management of an AIF; other services are not. Its own interest in the fund is kept below 5%, otherwise the SCS or SCSp becomes liable to municipal business tax — unless the fund is a SICAR or a RAIF under Article 48.