1. The syndicate in legal terms

A European syndicate run through Luxembourg typically has five parties, and each needs to be named in the documentation:

• The lead, who sources the deal, negotiates with the company, recommends the investment and earns carry.
• The vehicle, one special limited partnership (SCSp) per deal, which holds the shares in the company. The legal form is covered in our SCSp guide.
• The general partner, usually a Sàrl that carries unlimited liability and acts for the partnership under the Law of 10 August 1915. The same GP can act for many deal SCSps where the documentation and the liability model allow it, which is how hosted platforms operate.
• The AIFM, because a vehicle pooling capital from several investors under a defined investment policy is in most configurations an AIF under Article 1(39) of the Law of 12 July 2013 (the test is worked through in Is a Luxembourg SPV an AIF?). In a hosted syndicate the AIFM is the platform's registered AIFM; a larger lead may have its own.
• The co-investors, admitted as limited partners after onboarding by the AIFM.

The most important structural point for the lead: in a typical hosted syndicate, the lead sources and recommends investments, while the appointed AIFM retains responsibility for portfolio and risk management. A lead exercising discretionary investment management functions requires a separate regulatory assessment, including whether a legally compliant delegation arrangement under the AIFM rules, as tightened by AIFMD II, and an appropriate authorisation or registration are available. An advisory agreement alone does not authorise the lead to make investment decisions. The rest of this guide builds on that line.

2. Lead investor economics

A lead's income from a syndicate comes from a short list of sources. Each has a different legal character, and the documents should keep them apart:

Benchmarks for these terms come mostly from the US market. Data from one US administrator's book of roughly 1,800 SPVs formed between October 2024 and October 2025 shows a median carry of 15%, with a quarter of vehicles at the traditional 20%; about half charged a management fee, most commonly 2%, and in 80% of those cases for one year only rather than over the life of the vehicle. Comparable European data is not published on the same basis; the figures describe one US platform's client base, weighted towards venture-stage deals, and are a reference point rather than a European norm.

The vehicle's costs and the investment ratio

Separately from the lead's remuneration, the vehicle has costs: structuring and documentation, the GP and AIFM, investor onboarding, the bank account, accounting, tax filings and the eventual wind-up. They are either deducted from the capital called, so that less than 100% of each commitment reaches the company, or charged on top of the commitment. Both are legitimate; what matters is that the co-investor sees the investment ratio, the share of its money actually invested, before it signs. A syndicate that quotes a ticket of EUR 25,000 and invests EUR 23,750 of it should say so in the term sheet.

A worked example

Assume a syndicate with no commitment from the lead and no costs after closing other than those shown. It raises EUR 1,000,000 in commitments. Vehicle costs of EUR 30,000 are deducted, so EUR 970,000 is invested, an investment ratio of 97%. The company is sold and the vehicle receives three times its investment, EUR 2,910,000. The profit over contributions is EUR 1,910,000; a 20% carry with no hurdle is EUR 382,000. Co-investors receive EUR 2,528,000, a net multiple of 2.53x on a deal that returned 3.0x gross. The difference between the deal multiple and the investor multiple is the economic content of the syndicate's terms, and a lead who shows both builds more trust than one who shows only the first.

3. Designing and taxing the lead's carry

Design

Carry in a deal-by-deal syndicate is simpler than in a fund: there is one investment, one exit and no netting across deals. That simplicity is exactly why the definition in the limited partnership agreement (LPA) has to be precise:

• Basis. Profit over contributions, including or excluding the vehicle's costs. Calculating carry on profit after costs is the investor-friendly and more common reading; the LPA should state it.
• Hurdle. Deal-by-deal syndicates often do not apply a conventional preferred-return hurdle, unlike blind-pool funds. The carry arrangement must nevertheless represent a genuine entitlement to investment outperformance, and its eligibility for the Luxembourg carried interest regime is assessed separately. If a hurdle is offered, the LPA states the rate, whether it compounds and whether there is a catch-up.
• The lead's own ticket. The lead invests alongside the co-investors and is typically carry-free on that ticket; a meaningful personal commitment is the strongest alignment signal a lead can give.
• Sharing. Carry is often split with co-leads, scouts or the platform. The split is a private arrangement on the lead's side, but anyone receiving carry for a role in the investment process takes on the regulatory questions in section 4.
• Partial and in-kind exits. The LPA should say how carry works on a partial sale, a secondary sale of part of the stake, and an in-kind distribution of listed shares after an IPO, including how the shares are valued for the carry calculation.
• Across deals. Deal-by-deal carry is paid on winners without offsetting losers. A lead running many deals for the same investor base can offer carry netted across a series of deals, at the cost of later payment; that is the step towards a fund.

Holding the carry

Carry is commonly held outside the corporate GP to manage municipal business tax risk: a corporate GP holding 5% or more of the partnership interests deems the whole SCSp commercial for municipal business tax under Article 14(4) LITL, whatever its activity. The usual design is a carry entitlement held by the lead, or by a carry vehicle owned by the lead and any co-leads, admitted as a special limited partner of each deal SCSp. The mechanics are explained in Luxembourg SCSp Tax.

Tax

Where the carry is taxed depends first on the lead's tax residence, and also on the source rules of the countries involved and the applicable double tax treaties. For a lead who is a Luxembourg tax-resident individual, the carried interest law resulting from Bill No. 8590, adopted in January 2026 and amending Article 99bis LITL from tax year 2026, is directly relevant: its eligible beneficiaries include individuals who contribute to the management of an AIF under an advisory or service agreement, directly or through intermediary entities. Providing advisory services does not by itself guarantee the preferential treatment; the individual must meet the eligibility criteria, and only qualifying carried interest benefits, not the return on the lead's ordinary co-investment. Contractual carry is taxed at one quarter of the global rate; participation-linked carry may be exempt where more than six months have elapsed between the acquisition of the participation and its realisation, subject to Article 100 LITL. The regime no longer requires investors to recover their full investment first, which suits deal-by-deal carry. A lead resident elsewhere is taxed under its own country's rules on carried interest, partnership income or capital gains, which differ widely and should be checked before the carry structure is fixed.

4. The regulatory status of the lead

"Syndicate lead" is not a legal category. The lead's regulatory status follows from what it actually does, and a lead usually does several things at once. Separating the roles is the way to see which ones need a status:

Advice: the two directions

The advisory question has two directions, and they are analysed differently. Recommending to investors that they subscribe to the SPV concerns interests in an AIF, which are units in a collective investment undertaking and therefore financial instruments under Annex I, Section C of MiFID II (Directive 2014/65/EU); a personal recommendation to an investor on such instruments is investment advice within Article 4(1)(4). Recommending to the AIFM that the vehicle buy shares in a private company concerns the target's shares, whose status as transferable securities depends on whether they are negotiable on the capital market, and on national rules on advisory activity. The cleanest structures keep the lead in the second direction only: an advisory agreement with the AIFM, no personal recommendations to investors, and investor communications issued by the AIFM.

Distribution: the invitation

The lead's network is the syndicate's distribution channel, and that is where most structures are exposed. A lead may introduce prospective investors, but the regulatory characterisation depends on what the lead actually does: general introductions, marketing communications, the placement of AIF interests and personal investment recommendations are assessed separately. Making subscription-ready documents available to investors is marketing within Article 1(9) of the Law of 12 July 2013, for which the appointed AIFM remains responsible; regulated placement or investment advice may require an appropriately authorised intermediary, and cross-border marketing is assessed under the rules of each target jurisdiction. In a hosted model the offer is made by the AIFM through its own process: the lead introduces, the AIFM checks each investor's eligibility, which in Luxembourg means professional investors for a non-authorised AIF, and issues the documents. The pre-marketing and distribution regime is covered in Pre-marketing and distribution rules for Luxembourg AIFs; the country-by-country rules and reverse solicitation are set out in Who Can You Invite to a Luxembourg SPV?

Money and identity

Two further lines follow from the same logic. The lead never collects investor money: subscriptions are paid to the vehicle's account after the investor has been accepted. And investor due diligence (identification, beneficial ownership, screening and source-of-funds checks under the Law of 12 November 2004) is performed through the vehicle's approved AML/CFT framework by the relevant obliged entities or their appointed service providers, with the allocation of tasks and responsibility documented. The lead does not independently accept investors or collect subscription funds outside that process.

VAT on the lead's fees

Where the lead invoices the AIFM for advisory services, VAT follows the service. In GfBk (Case C-275/11, 7 March 2013), the Court of Justice held that advisory services supplied by a third party to a fund's management company, consisting of recommendations to buy and sell assets, can fall within the exemption for the management of special investment funds, provided they are specific and essential to the management of the fund. Since the AIFM Law of 2013, the Luxembourg exemption in Article 44(1)(d) of the VAT Law covers AIFs, so qualifying investment advisory services to the AIFM of an AIF syndicate vehicle can be exempt. The exemption depends on the nature of each service and its link to the management of the fund; deal sourcing, introduction fees, fundraising and general business advice are not covered by default. A lead established in another Member State applies its own country's implementation of the same exemption.

Investors across Europe: what the manager's status allows

A Luxembourg SCSp is a common wrapper for syndicates whose investors sit in several European countries. What decides how far it can be offered is the status of its manager and of the fund:

5. Running the syndicate: from deal to exit

A well-run syndicate repeats the same sequence for every deal. The steps, and who owns each:

1. Deal memo (lead). Company, round, valuation, terms, the lead's own ticket, carry, expected costs and the investment ratio, risks and any conflict of the lead.
2. Investment approval (AIFM). Review of the memo against the vehicle's investment policy, risk assessment and the decision to proceed, minuted. The AIFM also checks its headroom under the aggregated thresholds of Article 3 and the notification of the new AIF under Circular CSSF 25/894, which for a registered AIFM is due within 10 working days of starting to manage it.
3. Investor process (AIFM, lead introducing). Eligibility per investor and country, the offering documents, onboarding and AML checks, FATCA and CRS self-certifications, signed subscriptions.
4. Vehicle and closing (GP and administrator). The SCSp is constituted, the register of partners written, commitments called, and the investment executed against the company's closing conditions.
5. Post-closing reporting (AIFM and administrator). Capital account statements and periodic updates, in practice aligned with the Invest Europe Investor Reporting Guidelines (see portfolio reporting in VC and PE funds), valuation consistent with the IPEV Guidelines where reported, and annual tax information for each partner. The lead supplies company information, the administrator prepares the statements and reports, and the AIFM is responsible for the regulatory content of investor information.
6. Follow-on rounds. A single-asset SCSp can take part in a later round only if its LPA allows further capital calls or the admission of new partners; otherwise the follow-on is made through a new vehicle. The choice affects pro rata rights, dilution of non-participating investors and carry, and should be fixed in the original LPA rather than at the next round. Where one GP serves many SPVs and the same lead runs several deals, each vehicle keeps its own LPA, register and accounts, and a follow-on in one company does not touch the others.
7. Exit and distribution. Proceeds run through the waterfall, carry is calculated and documented, any escrow or earn-out is tracked to the end, and the vehicle is wound up and removed from the RCS and the RBE.

6. Syndicate operations: accounting, capital accounts and investor reporting

Every step of a syndicate deal produces accounting and investor data, and the quality of that data is what investors see for the next five to ten years. Commitments are recorded per investor and vehicle; contributions are matched to calls; costs are allocated between the vehicle and, where agreed, the lead; the investment is valued at each reporting date; distributions run through the waterfall; and carry is calculated, allocated and, where the LPA provides, held back or clawed back.

The lead, the AIFM, the GP and the administrator have different tasks in that chain: the lead supplies company information, the AIFM takes the investment and valuation decisions, the GP signs for the vehicle, and the administrator keeps the books and produces the reports. A well-organised operational infrastructure gives all of them the same data and documentation instead of parallel spreadsheets.

Fundequate combines Luxembourg expert-comptable expertise, specialised SPV operations and a proprietary platform for this. Each vehicle is kept on one set of books from the first closing, partner capital accounts are derived from the LPA's allocation rules, and leads and investors access statements, reports and documents online through the investor portal, according to their access rights. The lead's investor relationships, campaigns and onboarding run on the same platform (investor relations, fundraising), so the investor record created at the first deal is reused at the next.

7. Conflicts of interest and governance

Syndicates create conflicts that a blind-pool fund keeps at arm's length, because the lead is often close to the company. The common ones, and the standard response:

• Compensation from the company. Finder's fees, advisory shares or consulting mandates received by the lead from the company it recommends. The clean answer is a prohibition or a credit to the vehicle; at minimum, full disclosure in the deal memo before investors commit.
• Different terms in the same round. The lead, or a fund the lead manages, invests directly in the same round on better terms, earlier, or in a different share class. Investors are told, and the vehicle's terms are compared with the lead's.
• Board seats and information. A lead on the company's board receives information that the vehicle's investors do not; confidentiality towards the company and fair information to investors are reconciled in the reporting policy.
• Allocation between vehicles. Where demand exceeds the allocation, the rule for scaling back tickets is set before the round, not after.
• The AIFM's independence. The value of the hosted model lies in a manager that can say no. An AIFM that never declines a lead's deal is not exercising the function it is registered for.

8. When the syndicate outgrows the hosted model

A lead running a deal a month for a stable investor base reaches a point where its own manager or a fund makes more sense than a sequence of hosted SPVs. The options, in increasing order of commitment:

• Own registered AIFM. As an alternative to using a hosted registered AIFM, the lead's group registers a sub-threshold AIFM with the CSSF under Article 3 of the Law of 12 July 2013 and manages its own vehicles, taking on the registration, reporting and AML responsibilities; the thresholds are aggregated across all the vehicles it manages.
• A fund or a deal-series vehicle. A blind-pool or annual vehicle, such as an unregulated VC fund, replaces deal-by-deal fundraising, with carry netted across the portfolio; the lead gains speed and loses the investors' deal-by-deal choice.
• EuVECA. A registered manager whose fund qualifies under Regulation (EU) No 345/2013 can use the EuVECA passport to market cross-border, which a registered AIFM otherwise cannot. Qualification is not automatic: the fund must invest at least 70% of its aggregate capital contributions and uncalled committed capital in qualifying investments, calculated under the Regulation's methodology, and the manager and fund must meet its portfolio, investor and registration requirements.

Some syndicates follow a different route altogether, through a crowdfunding service provider authorised under Regulation (EU) 2020/1503, which carries its own passport, an offer limit of EUR 5 million per project owner over 12 months and its own investor-protection rules. It is a separate regime with different trade-offs; this guide covers the AIF route used for SCSp-based syndicates.

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