Scottish Limited Partnership (SLP)
And Main Advantages


Scotland is part of the United Kingdom, a leading global financial and business centre and an important jurisdiction for international tax planning. The UK is known internationally as a jurisdiction with a standard level of taxation. However, Scottish law provides the opportunity for registration and operation of companies with a zero tax rate by means of a Limited Partnership (L.P.).

The Scottish Limited Partnership (SLP) is governed by the Limited Partnerships Act 1907 and for registration purposes, must have its principal place of business in Scotland.  Unlike LP’s registered under the 1907 Act in England & Wales, a Scottish LP has a separate legal personality meaning that it can amongst other things, contract and hold assets in its own name.

Scottish Limited Partnership (SLP)

A Scottish limited partnership (SLP) is a unique vehicle. Although it has been around for over a century, the SLP has been used in recent times for modern business purposes such as private equity and property investment fund structures. This article looks at the advantages of the SLP which make it so attractive to fund managers, promoters and investors, both domestic and overseas.

Advantages of the SLP

The main advantages of the Scottish Partnership (Scottish Limited Partnership, Scottish LP)

There are no taxes in the UK providing that the partnership does not trade in the UK and partners are not residents of the UK. Partners are taxed in the jurisdiction of their location.

No requirements to submit financial statements in the Register of Enterprises.

No requirements to submit a tax declaration in the Register of Enterprises.

Internationally recognized jurisdiction with an excellent reputation

High confidentiality

The legal requirement that the limited partners are not entitled to participate in the management of the company, makes Scottish LP an ideal mean for investment structures with a large number of partners, where management and control are assigned to the general partner or manager appointed by the general partner.

Uses of a Scottish Limited Partnership

A Scottish L.P. is an ideal solution for those who prefer to operate a company incorporated in the EU and to have a totally tax-free facility at the same time.

Funds structures

SLPs can be used flexibly in funds structures.

SLP as the main fund vehicle

The SLP can be a main funds vehicle because:

It can hold assets in its own name;

There can be multiple but passive investors (the limited partners);

Only one person manages the investments and business of the partnership (the general partner);

Tax transparency means that each partner is taxed on the profits it receives, the amount of which will be determined by the limited partnership agreement.

scottish limited partnership

SLP as a participant

Because it has a separate legal personality, the SLP can also be used in funds or other structures which require ‘persons’ to be members. A common example of this is the use of the SLP as a carried interest partner. A ‘carried interest partner‘ facilitates the filtering of a percentage of the profits of the main fund to the fund manager. An example of a structure is in this diagram.

The above structure comprises the main funds’ vehicle which is a limited partnership (and could be an SLP). The SLP is itself made one of the limited partners in the main funds’ vehicle. This is only possible because the SLP has a separate legal personality: limited partnerships registered in other jurisdictions could not fulfil this function. The fund manager is one of the limited partners of the SLP. The profits from the main funds’ vehicle filter through to the SLP and from there to the fund manager (how and when this happens is determined by the limited partnership agreements). As the SLP is tax transparent, the fund manager is taxed directly on the profits it receives.

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