Luxembourg Tax Authorities clarify which investment funds qualify as ‘Collective Investment Vehicles’ under Article 168quater (2) LITL, outlining conditions for widely held, diversified and regulated entities.
The Luxembourg Tax Authorities issued a circular on 22 August 2025 clarifying the definition of ‘Collective Investment Vehicle’ (CIV) under Article 168quater (2) of the Luxembourg income tax law (LITL).
The guidance aims to provide clarity on the “reverse hybrid rules” and outlines which entities qualify as CIVs for tax purposes.
The circular confirms that Luxembourg Undertakings for Collective Investment (UCI), Specialised Investment Funds (SIF), and Reserved Alternative Investment Funds (RAIF) meet the CIV definition. It also provides detailed guidance for other investment entities, including master-feeder structures, and explains how to assess the three conditions: widely held, diversified portfolio of securities and investor protection.
Widely held means shares or units are offered to a broad group of unrelated investors, with specific rules on related parties and ownership thresholds. Diversification aligns with SIF law limits and investor protection is met by supervision from the CSSF or AIFMD-approved managers. Entities that do not meet the CIV criteria under reverse hybrid rules may be subject to corporate income tax.
