Luxembourg: Guidance clarifies definition of “collective investment vehicle” (CIV)
Provides guidance on the specific carve-out under the "reverse hybrid rules"
The Luxembourg tax authorities on August 22, 2025, issued a circular regarding the interpretation and concepts of the “collective investment vehicle” (CIV) definition under Article 168quater (2) of the Luxembourg income tax law. The circular provides guidance on the specific carve-out under the "reverse hybrid rules" and supports efforts to clarify complex tax rules.
Article 168quater (2) of the income tax law defines a CIV as an investment fund or vehicle that is widely held, holds a diversified portfolio of securities, and is subject to investor-protection regulation in its country of establishment. Luxembourg entities not meeting this definition and falling under the reverse hybrid rules would be subject to corporate income tax.
The circular specifies that the CIV concept includes Luxembourg-based Undertakings for Collective Investment (UCI), Specialized Investment Funds (SIF), and Reserved Alternative Investment Funds (RAIF). It details the interpretation of the three cumulative conditions to qualify as a CIV:
- Widely held
- Diversified portfolio of securities
- Investor protection
Read an August 2025 report prepared by the KPMG member firm in Luxembourg