ALFI sees opportunity in AIFMD transposed into Luxembourg law
The Luxembourg Finance Ministry’s draft Bill for transposing the EU’s AIFMD and implementing relevant changes in law has been welcomed by the Association of the Luxembourg Fund Industry (ALFI), which says it will help put the country at the heart of a new regulated environment for alternative investment funds.
“ALFI strongly believes that the AIFMD presents a welcome opportunity for Europe to create a brand in the alternative investment market, similar to the global brand it has created with UCITS,” said Camille Thommes, director general of ALFI.
“Through AIFMD, the European Union is creating the first regulated environment for alternative investment funds worldwide. ALFI believes that the Luxembourg government’s ambition to be a first-mover in transposing the directive puts the Luxembourg financial centre, which is already well-established in the ‘alternative’ sphere, in a strong competitive position to develop the hedge, real estate and private equity activities even further. In Luxembourg, alternative funds have been subject to specific regulation aiming at protecting investors and offering flexible structuring opportunities to asset managers for many years. Therefore, the Luxembourg regulator is already familiar with the specific requirements of this industry sector.
“The AIFMD involves the introduction of a European passport for alternative investment fund managers who wish to access the entire European market, and given Luxembourg’s position as the European leader in the cross-border space, it is expected that implementation of the AIFMD will further enhance Luxembourg as a leading domicile for fund and management companies in the alternative sector.”
The Luxembourg draft Bill incorporates two key features that ALFI believes to be of particular interest.
Firstly, it creates a Limited Partnership structure, which the Association said may appeal to those used to such structures in the Anglo-Saxon financial model.
Secondly, the Bill clarrifies the local taxation regime regarding carried interest.