Luxembourg: Investment Funds Update - May 2026

Our Asset Management and Financial Services Regulation team has prepared this update to highlight key developments in Luxembourg alongside relevant EU regulatory and supervisory trends. We aim to give fund managers, AIFMs, UCITS management companies and other financial institutions clear, practical insights to help them navigate an increasingly dynamic regulatory landscape.

Key topics explored in this edition include:

• CSSF introduced Circular 25 slash 901, reshaping the Luxembourg alternative funds regime by aligning diversification and borrowing rules more closely with investor profiles and asset classes and influencing broader market practice
• Luxembourg enhanced its tax and structuring framework by updating the carried interest regime to improve clarity and competitiveness and by introducing more flexible funding options for private limited liability companies used in fund structures
• The CSSF updated its guidance on digital assets, allowing UCITS to gain limited indirect exposure to crypto assets under defined conditions and in line with the EU MiCAR framework
• Luxembourg implemented AIFMD II and UCITS VI into national law, bringing in new requirements on delegation, liquidity risk management, loan originating funds and enhanced transparency and reporting obligations
• ESMA and EU institutions advanced key regulatory priorities, including risk based supervision, ESG related disclosures and liquidity management standards, while AMLA progressed EU wide AML reforms to strengthen supervisory consistency

This update supports stakeholders across the investment funds sector as they navigate Luxembourg reforms and significant EU regulatory developments shaping the market in 2026 and beyond.

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