According to a report from private equity and venture capital magazine, Real Deals, the Luxembourg authorities have recently passed legislation which has the potential to "create a unified pan-European fund structure to rival the traditional limited partnership as the vehicle of choice".
The new entity created by the legislation, the Société d’investissement en capital à risque (Sicar) could offer a viable alternative to the traditional limited partnership structure which works well for fund managers and investors in countries such as the United Kingdom, but can pose problems for fund managers in continental Europe.
According to Real Deals, one of the principal advantages of the new fund structure is that firms will be permitted to structure funds onshore without being hit by large tax bills, as although Sicars will be eligible to pay tax, participants will be able to take advantage of tax treaties and EU directives.
The new vehicles will also be lightly regulated, according to the report.
