Lux AIF explainer

German Buildings in a Luxembourg Fund

Quick client-facing explainer you can use when an owner in Germany asks why it may be worth moving income-producing German real estate into a Luxembourg alternative investment fund structure.

Use this as a one-page pitch inside v0 or any React app.Designed for: German real-estate owner with income buildings in Germany

Why use a Luxembourg fund instead of holding directly in Germany?

The German rental income will still be taxed in Germany. The value of the Luxembourg structure is in how the owner can exit, bring in partners, refinance and plan succession with less friction and with a format that institutional investors already know.

Liquidity & Exit

Sell fund units instead of triggering German real estate transfer tax (RETT) on the building itself in many structures.
Much easier to bring in minority investors or partners without changing German land registry.
Easier to package and sell the whole portfolio to an institutional buyer in one transaction.

Tax & Transfer Efficiency

Luxembourg AIF can be tax-neutral at the fund level (no extra corporate layer on top of German tax).
Transfers of fund units are generally outside German RETT rules if the German SPV shareholding thresholds are respected.
Potential to structure contributions as share deals to defer capital gains on moving assets into the structure (subject to German tax advice).

Investor Appeal

Luxembourg is the gold standard jurisdiction for European alternative investment funds.
Institutional investors (pensions, insurers, family offices) prefer regulated Lux AIFs over direct German GmbH shares.
Fund units can be issued in different share classes (e.g. for anchor investors, family, co-investors).

Governance & Estate Planning

Fund units are easy to gift, transfer or hold through family vehicles for succession planning.
You can separate economic ownership (investors) from control (general partner / manager).
Avoids tying everything to a single German company and German inheritance procedures.

Structuring Flexibility

Can combine multiple German properties into one professional vehicle.
Easier to add leverage, refinance or cross-collateralise assets at fund or SPV level.
Simpler to add future assets in Germany or other countries under the same umbrella.

Who actually benefits the most?

Not every German landlord needs a fund. This structure is most valuable when there is a real chance of a future sale, partner, refinance or institutional investor entering the picture.

Long-term holder, no partners

If the owner wants to hold one or two buildings forever, never bring in investors, and never sell, the benefits are mostly governance and estate planning. Tax savings are limited but still possible on future transfers.

Estate planningFamily-office style control

Owner planning future sale or partial exit

If the owner may one day sell a stake, bring in a partner or exit the portfolio, a Luxembourg fund makes transfers cleaner and can reduce tax friction on exits and investor rotations.

Future saleMinority investorsRefinancing

Raising institutional capital

If the goal is to attract pensions, insurers or large family offices, a regulated Lux AIF with German SPVs is usually the preferred structure. It looks familiar to investors and their advisors.

Institutional moneyScaling the portfolio

Simple structure you can sketch

German buildings remain in German SPVs (GmbH / property companies).
SPV shares are held by a Luxembourg AIF (e.g. SCSp / RAIF).
The client holds units in the Luxembourg fund instead of direct SPV shares.

Tax treatment depends on German and Luxembourg law at the time of structuring. Always pair this high-level logic with formal advice from German and Luxembourg tax counsel.

View Detailed Visual Structures

How to use this with a client

Walk them through the right-hand column first: which profile matches them?
Then highlight 2–3 benefit blocks that match their situation.
End with: "Germany will still tax your rental income here. The Luxembourg fund is about how you exit, bring partners in and plan the future."