The SCSp is a flexible partnership ideal for private equity, joint ventures, and alternative investments, offering tax transparency
The SCSp, or Société en Commandite Spéciale, is a Luxembourg limited partnership introduced by the law of 12 July 2013. It is designed to meet the evolving needs of the investment management industry, combining contractual flexibility with tax transparency. This makes it one of the most popular vehicles for private equity, venture capital, joint ventures, family office platforms, and alternative investments.
Modeled closely on the Anglo-Saxon limited partnership (LP), the SCSp caters to international fund sponsors and institutional investors seeking a flexible, investor-friendly, and unregulated structure.
Structure and Participants
An SCSp consists of two types of partners:
- General Partner (GP): Manages the partnership and holds unlimited liability for its obligations. Typically, the GP is a Luxembourg SARL or another legal entity with nominal ownership.
- Limited Partners (LPs): Passive investors whose liability is limited to their capital contribution. They do not take part in daily management.
There is no minimum capital requirement. The SCSp can be formed with just one GP and one LP. Contributions may be in cash, in kind, or via services, providing maximum structuring flexibility.
Key Features
- No Legal Personality: The SCSp operates as a contractual arrangement between partners, enhancing confidentiality and flexibility.
- Unregulated: Unless it qualifies as an alternative investment fund (AIF) under the AIFM Directive, it remains fully unregulated, allowing faster setup and fewer compliance requirements.
- Contractual Freedom: The partnership agreement governs governance, voting rights, profit sharing, capital commitments, and exit terms.
- Tailored to Institutional Needs: Suited for bespoke investment structures, co-investment platforms, and club deals, allowing alignment with investor expectations.
Use Cases
The SCSp is widely used due to its simplicity and flexibility, commonly for:
- Private equity and venture capital funds
- Joint ventures between strategic partners
- Real estate and infrastructure investments
- Family investment vehicles
- Debt and credit strategies
- Fund-of-funds or master-feeder structures
It is compatible with umbrella fund structures and can support carried interest and performance fee arrangements.
Tax Transparency and Treatment
A key advantage of the SCSp is its tax transparency:
- It is not subject to Luxembourg corporate income tax, municipal business tax, or net wealth tax, provided it does not conduct commercial activities in its own name.
- Profits and losses pass through directly to the partners according to the partnership agreement.
- No subscription tax (taxe d’abonnement) applies.
- No special reporting is required unless it falls under regulated fund regimes (RAIF, SIF, SICAR) or AIFMD.
Setup and Compliance
- Formed by private deed without notary involvement, reducing costs.
- Registered with the Luxembourg Trade and Companies Register (RCS).
- The partnership agreement remains confidential.
- No obligation to publish financial statements unless legally required or under AIFMD.
For AIFs, the SCSp can work with a regulated or registered AIFM to access institutional capital under the EU marketing passport.
Why Use an SCSp?
The SCSp offers a streamlined, investor-friendly framework for alternative investments, joint ventures, and bespoke structures, with benefits including:
- Complete flexibility in structuring rights and obligations
- Tax-transparent treatment for global investors
- No minimum capital or regulatory burdens
- Privacy and confidentiality for partners
- Luxembourg domicile offering legal and tax stability
Whether you are a fund sponsor, family office, or corporate group, the Société en Commandite Spéciale (SCSp) is a flexible and efficient vehicle for pooling and managing capital in Luxembourg. It offers tax transparency, tailored governance, and limited liability for certain partners. Ideal for private equity, real estate, and alternative investments, the SCSp provides a robust platform within a stable and reputable jurisdiction.
