The administrative Circular LIR n°14/4 of 9 January 2015 recalls that SCS (Société en commandite simple) and SCSp (Société en commandite spéciale) are transparent for corporate income tax purposes. These vehicles are also transparent for municipal business tax purposes provided that cumulatively (i) these are not tainted by a commercial general partner holding at least a 5% interest in the vehicle and (ii) the SCS/SCSp does not exercise itself a commercial activity.

The Circular clarifies the concept of “commercial activity” for this purpose with an emphasis on its application to fund structures. Interestingly, the Circular explicitly takes the view that Luxembourg Alternative Investment Funds (within the meaning of Directive 2011/61/EU) under the form of SCS/SCSp are deemed not to exercise a commercial activity.