Luxembourg On Track For AIFMD II Transposition

The process of transposing AIFMD II¹ has kicked off in Luxembourg. Draft Bill N^o 8628, which amends the UCI Law² and the AIFM Law³ ("Bill") was tabled in Parliament on 3 October 2025.

The Bill implements the various provisions of AIFMD II on a one-to-one basis, without any gold plating and includes the following options given to Member States:

• List of permitted services: The list of authorised services has been extended to includecredit servicing (relevant for AIFMs), benchmark administration (relevant for AIFMs and UCITS management companies ("UCITS ManCos")). It is also specified that AIFMs and UCITS ManCos will be authorised to perform, as an ancillary service for third parties, the same functions and activities that they already perform in relation to the funds they manage, if they have an adequate framework for managing conflicts of interest. For this last point, the preparatory work specifies the broad interpretation to be given to both (i) the activities/functions covered and (ii) third parties to whom these activities/functions may be provided:
  • Targeted functions/activities: they include business services such as human resources and information technology services, as well as IT services for portfolio management and risk management, and, without being exhaustive, the provision of services related to AML, corporate services, administration, risk management or marketing services for funds.
  • Concept of "third party": it covers, for example, not only other UCITS/AIFs but also, without being exhaustive, intermediate vehicles, co-investment vehicles or 'carried interest' vehicles, whether they are linked to funds managed by the UCITS ManCo/AIFM, funds initiated, managed or advised by an entity belonging to the same group as the UCITS ManCo/AIFM, or other legal entities such as pension funds, securitisation vehicles or insurance vehicles.
• Depositary (only relevant for AIFs): Another innovation introduced by AIFMD II is that it gives Member States with a lack of depositary services the possibility to allow their local AIFs to appoint a depositary established in another Member State. This option does not apply to Luxembourg, which benefits from a well-established and competitive market for depositary services. However, an AIF established in a Member State, which has made use of this option, may, under certain conditions, appoint a depositary established in Luxembourg.
• Consumer Loans (only relevant to AIFs): AIFMD II also gives Member States the option of prohibiting AIFs from granting consumer loans to consumers within their territory for reasons of public interest. The Bill reflects this option and prohibits Luxembourg and other AIFs from granting consumer loans to Luxembourg consumers. However, there is no prohibition on Luxembourg AIFs developing these activities in other Member States if permitted.

Finally, to further increase the competitiveness of Luxembourg, the Bill includes a new flexibility for UCITS by introducing a derogation to draw up a report by an approved statutory auditor in case of issuance of shares/units against contributions in kind. This change is particularly relevant for UCITS ETFs for which the creation and redemption of ETF shares on the primary market is not only performed by payment in cash, but also in kind of securities (or a combination of both).

Footnote

1. "AIFMD" II refers to Directive (EU) 2024/927amending Directives 2011/61/EU and 2009/65/EC as regards delegation arrangements, liquidity risk management, supervisory reporting, the provision of depositary and custody services and loan origination by alternative investment funds.

2. "UCI Law" refers to the Law of 17 December 2010 relating to undertakings for collective investment, as amended.

3. "AIFM Law" refers to the Law of 12 July 2013 on alternative investment fund managers, as amended.

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