This is Part 7 of Luxembourg Fund Formation, Translated: A Guide for Non-EU Fund Sponsors. Start here.

Cost is the question every sponsor asks first and almost nobody answers in public. What follows is not a price list. It is the structure of the cost, the things that move it, what really sets your launch date, and a way to work out whether it works for you, which is more useful than a number, and considerably more honest.

This guide is written from the US perspective, because that is the most common case. If you are in London, Singapore, Dubai, Hong Kong, Toronto or São Paulo, the analysis is the same, as your starting point is usually a Cayman vehicle.

The short answer: a Luxembourg structure carries a mandatory annual cost base that does not scale down with your fund. Most of it is driven by decisions you already made in Parts 3, 4 and 5. The binding question is not what it costs in absolute terms but what proportion of your management fee it consumes. For a small first fund, that proportion can be the reason not to proceed yet. On timing, the vehicle itself is quick. The launch date is set by everything around it: the manager’s due diligence on you, the depositary, the bank and your anchor investor.

Why there are no numbers in this article

First, anyone who quotes you a single figure for “a Luxembourg fund” is quoting their last deal. The distance between a lean unregulated partnership with a host manager and a supervised vehicle with a Luxembourg-resident board, an exotic asset class and marketing registrations in six countries is not a range – it is two different businesses.

Second, published figures go stale quietly. Luxembourg salaries are index-linked, providers reprice, and AIFMD II has added reporting that someone has to be paid to do. A stale number is worse than none, because the reader acts on it.

Third, and most usefully: by the time you have chosen the regime, the manager and the countries you raise in (Parts 3, 4 and 5), the cost is largely determined. The number is downstream of choices you can actually control, which is why this article is about those choices rather than about pricing.

The last section explains how to get a real number, from people who are in a position to give you one.

The shift you have to absorb

Sponsors arriving from Delaware and Cayman are not simply surprised by the amount. They are surprised by the category.

In Cayman or Delaware terms: a Delaware limited partnership costs almost nothing to exist. A Cayman private fund adds a registration and an audit, but still leaves you far more choice than Luxembourg does. Your administrator, auditor and counsel are services you choose, at a level you choose, and you can run lean by deciding to. In Luxembourg, a meaningful part of the apparatus is not discretionary. If you want the passport or a RAIF, an authorised manager is not a nice-to-have, and with it comes a depositary, which is not a service you elect to buy. The cost floor is set by the regime rather than by your preferences, and it arrives whether or not the fund performs.

That is the real adjustment. Not “Luxembourg is expensive” but “part of this is fixed, mandatory and indifferent to how your year went.”

What you are actually buying

Split the question in two, because sponsors routinely budget the first and forget the second.

One-off

• Legal (structuring advice and the fund documents, plus negotiation with anchor investors)

• Incorporation and registration of the vehicle and its general partner

• Manager onboarding, including their due diligence on you, which is a real project

• Depositary (if applicable) and administrator onboarding

• Bank account opening

• Tax structuring for the holding companies below the fund

• Regulatory filings, including a marketing notification for each country you intend to raise in

Every year thereafter

• The manager (your own, or a host)

• Depositary (if applicable) and audit

• Central administration and net asset value calculation

• Directors of the general partner and of each company below the fund

• Domiciliation and office

• Independent valuation, where your assets require it

• Regulatory and tax reporting

• Fund-level taxes, where the regime imposes them

• Sustainability reporting, where the fund has committed to it

• Maintenance of each country registration, repeated annually

• Ongoing legal and tax

The seven things that move the number

In rough order of impact:

• The manager route. The single largest driver. Host, own, registered, or your US adviser as a non-EU manager – different cost structures, not different prices. Part 4: The manager question: build, rent, or stay small.

• The regime. A supervised product carries obligations an unregulated partnership does not. Part 3: Regulated or not. Choosing a fund regime.

• How much substance you need. Local directors, an office and, if you run your own manager, real people on the ground. It scales with the structure rather than with your returns. Part 6: Substance: what Luxembourg actually asks of you.

• How many countries you raise in. Each registration is a filing, a fee and an annual maintenance obligation. Starting where your committed investors are and adding countries later is usually cheaper than registering everywhere at launch. Part 5: How you are actually allowed to raise.

• What you hold. Hard-to-value or unusual assets raise depositary and valuation costs sharply and, more importantly, narrow the field of providers willing to take you at all. This constraint binds before price does.

• How many compartments. An umbrella is efficient across several strategies and pure overhead for one. Today, compartments are available to a RAIF or a regulated fund; for an unregulated partnership with an authorised manager, they are expected by the market but not yet law.

• How often you value. Quarterly and annual valuation are different products from monthly.

• How big you are. Not because large funds pay less in absolute terms, but because of the next section.

The arithmetic that actually decides

Most providers price on a percentage with a minimum annual fee, and the rest charge a fixed fee. Above a certain size the percentage governs. Below it, the minimum does, and you are paying a fixed amount regardless of how small you are.

Which means the useful question is not what the structure costs. It is what share of your management fee the structure consumes.

The test is simple enough to do on paper before you engage anyone:

1. Total the annual recurring costs above, using minimums rather than percentages if your fund is small.

2. Calculate your annual management fee on the capital you realistically expect at first close, not at target.

3. Express the first as a percentage of the second.

The resulting figure is the proportion of your economics being spent on being in Luxembourg. Some of these costs will sit with the fund rather than with you, depending on what your investors accept. The test holds either way: investors compare the total with your fee, and with an authorised manager they now see the full figure every year. There is no universal threshold at which that portion becomes unacceptable. That depends on your team, your other costs and how long you expect to stay sub-scale. But most sponsors know the answer as soon as they see it, and a surprising number have never done the calculation before signing.

This is also the arithmetic behind the “not yet” conclusion in Part 1: Why non-EU sponsors end up in Luxembourg, and when they shouldn’t. If the number is uncomfortable at first close and only works at target, you are betting the structure on a raise you have not completed.

In Cayman or Delaware terms: closest to a fund administrator’s minimum fee, which you already know. The difference is that here there are several of them, stacked, from providers you cannot decline to appoint.

The critical path

Timing is where the published guidance is most misleading, because it measures the wrong thing. Unless you chose a supervised product or your own authorised manager, the regulator is rarely what holds you up.

Genuinely fast

• Forming the partnership itself

• A RAIF, which requires no product approval before launch

• Registering a manager below the threshold

What actually sets the date

• The manager’s due diligence on you. Not your due diligence on them. Expect questions about your team, your process, your compliance history and your existing funds, and expect the file to be reopened when an answer is thin.

• Depositary acceptance of your asset class. This can stop the project rather than slow it. Establish it early, as it is the single most common cause of a launch date moving.

• Bank account opening. Reliably slower than anyone budgets, and largely outside anyone’s control.

• Your own documents. Negotiation with an anchor investor takes as long as it takes, and it is usually the longest single item.

• Structuring below the fund. The holding companies and their tax analysis are often started last and needed early.

• Marketing notifications. Per country, and they cannot begin before the fund and manager are in place.

• Onboarding your investors. Due diligence on each investor (ownership, control and source of funds) is done before it can be admitted, and the fund cannot take the commitment and complete the file afterwards. It rarely stops a closing. It regularly moves one, and sponsors notice it late because they assume it is the investor’s problem rather than a gate on their own timetable. Here the market has moved on: many administrators and managers now onboard investors digitally, with online document collection, automated screening and an investor portal, and it shortens the cycle noticeably. It is worth asking how yours does it. Either way, agree the document list early and start collecting at soft commitment, not at closing.

Two of these can be run in parallel with everything else and usually are not: the depositary conversation and the bank account. Starting both in week one is the cheapest schedule improvement available.

In Practice: when a launch slips, the cause is almost never the CSSF. It is a depositary that will not take the asset, an account that has not opened, or an anchor investor still marking up the partnership agreement.

The costs nobody quotes you

• Your own time. Onboarding, due diligence responses and provider management consume real senior capacity for months, and none of it is billed to anyone.

• Changing your mind. Moving regime, changing manager or restructuring after launch costs more than getting it right, and sometimes requires investor consent at the worst possible moment.

• Country maintenance. Each marketing registration is an annual obligation, and deregistering is itself a process.

• Winding up. Liquidation, final audit and deregistration are real costs at the end of the fund’s life, and almost nobody budgets for them at the beginning.

How to get a real number

You will get quotes. Making them comparable is the difficult part, because providers scope differently on purpose. Ask each of them the same five questions:

1. What is the minimum annual fee, separately from the percentage, and at what fund size does the percentage start to govern?

2. What is expressly excluded, and what triggers an additional fee? Extra compartments, additional valuations, unusual assets, out-of-cycle reporting, per-investor onboarding.

3. What is the first-year cost including onboarding, as distinct from the steady-state annual cost?

4. How does the fee change if the fund does not reach target, or if we add a second compartment?

5. Is the fee indexed, and what notice applies to increases?

Then ask your counsel to price the documents against a defined scope rather than an estimate, and to say which parts of the structuring below the fund are included.

A sponsor who asks these five questions gets comparable quotes. A sponsor who asks “what do you charge?” gets five numbers that cannot be placed side by side, and usually picks the wrong one.

The Bottom Line: the cost of a Luxembourg fund is not a number you look up. It is the consequence of the regime, the manager and the countries you chose in Parts 3, 4 and 5. What matters is that a meaningful part of it is mandatory and indifferent to your size, so the honest test is the proportion of your management fee it consumes at first close rather than at target. Do that calculation before you engage anyone. It takes an afternoon and it occasionally saves a year.

Common questions

Is a RAIF cheaper than a SIF?

It removes the product approval process, which saves time and some cost. It does not remove the manager, the depositary or the auditor, which is where the money is.

Is an unregulated partnership the cheapest option?

At the vehicle level, yes. Whether it is cheapest overall depends on the manager, which is a much larger number. See Part 4: The manager question: build, rent, or stay small.

How long does it take?

The vehicle is fast. The project is not, and the constraint is usually the manager’s due diligence on you, the depositary, your bank account and your anchor investor.

Can I reduce cost by using fewer providers?

Some are not optional. Where consolidation is possible it can help, but a single provider doing everything raises questions about independence that some investors will ask about.

What is the biggest avoidable cost?

Building the structure before you have the investor who requires it. See Part 1: Why non-EU sponsors end up in Luxembourg, and when they shouldn’t.

Back to the beginning of the guide: start here.

Last updated 19 October 2026.

Disclaimer: Library articles are provided for general information purposes only and do not constitute legal advice. Accessing or relying on them does not create a lawyer-client relationship. Readers should seek advice on their specific circumstances before acting.