The fund's jurisdiction determines the law under which the fund itself exists: the powers of the manager, investors' rights to distributions and redemptions, the grounds and limits of asset segregation, and the liquidation procedure. What is registered is a specific product—a partnership, a corporate fund with variable capital, a unit trust, or a sub-fund of an umbrella structure—in one of the statutory categories: private fund, AIF, UCITS, QIAIF, RAIF, VCC, LPF, QIF, PIF.
The fund's domicile does not coincide with the manager's licence and does not in itself confer the right to offer interests to investors. A Cayman fund may be managed by a UK company, a Luxembourg RAIF must appoint an external authorised AIFM, and a Singapore VCC only works with a manager meeting local law requirements. Where the investment team is located and on what basis it manages assets is the subject of a separate article on the management company; the overall map of private funds is collected in the funds hub.
This page proceeds from product to jurisdiction: the legal form and what it actually segregates; the dependence of the regime on assets and the liquidity promised to investors; tax qualification for each group of investors; and only after that—a comparison of specific domiciles in the US, the Caribbean, the Channel Islands, Europe, Asia and the Gulf, the cost of mandatory service providers and the time to first closing.
What the fund domicile determines
The choice of jurisdiction breaks down into four independent decisions, which in ready-made proposals are usually mixed into one:
- Applicable law—which law determines the powers of the general partner or board of directors, investors' rights, the procedure for distributions and the consequences of default on obligations.
- Legal form—partnership, company with variable or fixed capital, trust, contractual fund, umbrella structure with sub-funds, company with segregated portfolios, series.
- Product regime—the statutory category to which the fund belongs and the associated restrictions on investors, assets, leverage and liquidity.
- Intensity of supervision—notification, registration, supervision through a licensed manager or direct approval of the fund by the regulator.
Within one country these decisions are combined very differently. A Luxembourg RAIF is launched without prior approval by the CSSF for each fund, while a UCITS from the same jurisdiction goes through a full procedure and is subject to detailed rules on eligible assets and diversification. In the Cayman Islands, open-ended funds are regulated by the Mutual Funds Act, closed-ended funds by the Private Funds Act, and these are different obligations for valuation, custody of assets and reporting. A Delaware partnership does not in itself constitute a regulated fund: federal exemptions and rules for offering interests are checked separately.
Three levels of construction operate under their own rules and almost never reduce to one country.
| Level | What is determined | Typical example |
|---|---|---|
| Fund jurisdiction | The law under which investors' interests exist, asset segregation and liquidation procedure | Cayman Exempted Limited Partnership |
| Manager jurisdiction | Who makes investment decisions and on the basis of what licence or exemption | Management company under FCA supervision or US RIA |
| Countries of placement of interests | Where investors are located and what legal basis allows an offer to be made to them | Professional investor in France through AIFMD passport or national private placement regime |
Separately determined are the tax residence of the fund and the manager, the jurisdictions of companies holding assets and the carried interest regime. Coincidence of all levels in one country is justified only when the team, investors or assets are actually located there.
Legal forms and what each segregates
The fund's form resolves a single question: between whom and what does the legal boundary run. Everything else is derivative of this choice.
| Form | What it segregates | Natural application | Main limitation |
|---|---|---|---|
| Limited partnership—LP, ELP, SCSp, ILP, LPF, PFLP | Control of the general partner and economic rights of investors through the partnership agreement | Venture and direct investments, private credit, infrastructure, staged capital contributions | Poorly suited to frequent subscriptions and redemptions; investors' tax reporting is more complex |
| Corporate fund with variable capital—SICAV, ICAV, VCC, OFC | Classes of shares, competence of the board of directors, mechanics of subscriptions and redemptions | Open-ended and evergreen strategies, hedge funds, private capital platforms | Corporate law, rules on capital movements and mandatory service providers |
| Contractual fund and unit trust—FCP, CCF, unit trust, FGR | Contractual or trust interests without the usual model of share capital | UCITS, Asian master-feeder structures, pension pools | Tax qualification and recognition of the form differ by investor countries |
| Umbrella structure with sub-funds | Assets and liabilities between sub-funds, if segregation is expressly established by law | Multiple strategies, currencies or investor groups on one platform | Common board of directors, providers and reputation; operational overlap remains |
| Company with segregated portfolios—SPC, PCC, ICC | Circle of creditors between cells | Hedge strategies, insurance risks, captives, structured pools | Segregation must be recognised in the country of the asset, counterparty and in the court in insolvency proceedings |
| Series LLC | Series within one parent company | Deal-by-deal, US syndicates, real estate platforms | Recognition outside the state, willingness of bank and custodian, tax accounting |
| Master and feeder funds | Investor groups through different feeders with a single portfolio | US taxable, US tax-exempt and foreign investors | Dual administration, audit, treasury and reporting |
| Parallel funds | Separate pools investing simultaneously under an agreed deal allocation policy | Tax, regulatory, sharia, sovereign and insurance investor groups | Conflicts in deal allocation and obligation to keep records for each deal |
| Blocker company and AIV | Specific asset, tax consequence, licensing or tort risk | Real estate, operating businesses, ECI and UBTI, restricted jurisdictions | Each additional entity requires a business purpose, cash flow and management |
Classes of interests regulate fees, currency, hedging rules, voting rights, liquidity terms and distributions. They almost never protect the assets of one portfolio from the creditors of another. When different portfolios, different managers or different groups of creditors are needed, a sub-fund, segregated portfolio, parallel fund or separate legal entity is required.
⚠️ Asset segregation only works where it is recognised. A sub-fund of an umbrella structure and an SPC cell are created by the law of the fund's country, but are tested by the court of the country of the asset, the counterparty to the security agreement and the forum in insolvency proceedings. Before opening accounts and signing security documentation, it is necessary to ensure that the bank, custodian and lender enter into relations with the specific sub-fund, not with the umbrella shell as a whole.
A standalone fund is easier to show to an anchor investor as a separate management system and easier to transfer to another manager. An umbrella structure reduces the marginal cost of each subsequent product, but creates a common board of directors, a common set of providers and a common reputation. Savings appear when there are actually several sub-funds; one sub-fund under an expensive umbrella shell costs more than a standalone fund.
Assets, liquidity and product regime
Strategy determines both the permissible form and the volume of regulation. Identically named "alternative funds" are subject to different rules depending on what exactly they buy.
| Strategy | Natural structure | What regulation includes | Critical infrastructure |
|---|---|---|---|
| Venture, growth, buyouts | Closed-ended partnership and SPVs for acquisitions | Private fund regime, control over company, foreign investment screening, antitrust rules | Capital call mechanics, deal allocation, valuation, portfolio company management |
| Listed securities and hedge strategies | Open-ended corporate fund, unit trust or partnership | Market conduct rules, short selling, derivatives, leverage | Prime broker, custodian, pricing, liquidity stress tests, collateral |
| Private credit | Closed-ended fund or tightly restricted evergreen fund | Origination and servicing of loans, usury restrictions, leverage limits, law of borrower's country | Credit agent, security trustee, covenant and cash flow monitoring |
| Real estate | Fund and local companies for properties | Real estate law, REIT and AIF regimes, environmental and tax rules | Local lender, property management company, valuer, title registry |
| Infrastructure | Long-term partnership and project companies | Concessions, public procurement, national security, project finance | Technical consultant, project control, political risk insurance |
| Digital assets | Specialised fund with redemption restrictions and resolved custody | Token qualification, virtual asset management regime, custody, exchanges, AML | Qualified custodian, wallet control, blockchain analytics, independent pricing |
| Funds of funds and secondaries | Partnership or corporate fund | Look-through analysis rules, concentration, restrictions on transfer of interests, conflicts | Commitment model, data collection from underlying funds, valuation of secondary positions |
| Insurance risks, royalties, claims | Cell, specialised fund or SPV for the deal | Insurance law, title in registry, assignment of rights, litigation finance | Specialised custody, verification, modelling and valuation |
Purchasing an existing loan and originating a new loan are different activities. Participation in a syndicated loan usually remains an investment, whereas finding a borrower, agreeing terms, origination, servicing and enforcement may trigger lending regimes, consumer credit, banking activity and local rate restrictions. From 16 April 2026, credit funds in the EU are additionally subject to the rules of Directive (EU) 2024/927: retention of 5 per cent of the nominal value of each originated loan, leverage limit of 175 per cent for open-ended and 300 per cent for closed-ended credit funds, prohibition on an originate-to-distribute model.
The liquidity promised to investors must match the liquidity of the assets. A closed-ended fund with staged capital contributions is appropriate where exit depends on the sale of a private asset. An open-ended product requires observable pricing, settlement, cash management, redemption restrictions, suspension rights, segregated positions for illiquid assets and stress testing. An evergreen private markets fund only works with an honest mechanism between incoming, outgoing and remaining investors: valuation lag, redemption queue and excess cash balance are not hidden by marketing wording.
Tax qualification of the fund
Tax transparency determines who is recognised as the recipient of income—the fund itself or its investors. In a transparent structure, income is attributed directly to investors, sometimes regardless of actual distribution. In an opaque structure, the fund is considered an independent taxpayer, and the investor is taxed on distribution of profit or sale of an interest.
Legal form does not provide an answer. One country recognises a partnership as transparent, another as a separate taxpayer, and hybrid qualifications are also encountered. Therefore, the regime is checked three times: under the law of the fund's country, under the law of each significant investor group and under the law of the countries where the assets are located. The result determines access to tax treaties, withholding at source, application of CFC, PFIC, ECI and UBTI rules, the procedure for accounting for losses and the volume of reporting.
| Where tax arises | What is checked |
|---|---|
| The fund itself | Tax residence, exemption, transparent or opaque qualification, subscription tax and tax on net assets |
| Companies holding assets | Withholding at source, tax on operating profit and capital gains, taxes on real estate transactions, interest deduction limitation |
| Investor | Flow-through taxation, ECI and UBTI, PFIC and CFC, foreign fund rules, tax credit, reporting |
| Manager and adviser | Income tax, permanent establishment risk, VAT or GST on services, transfer pricing, deduction of fees |
| Recipients of carried interest | Qualification as employment, business income or capital gain, vesting conditions, social contributions |
There is no universal "international feeder". US taxable investors, US tax-exempt organisations, foreign investors in US assets, EU institutional investors, individuals and family offices, insurers, sovereign funds, charities, employees of the manager and investors requiring sharia compliance are analysed separately. Differences in fees, currency and redemption terms are formalised by classes of interests. When the taxpayer, the obligation to file returns, the permissible composition of assets or the legal basis for placement changes, a feeder fund, blocker company, parallel fund or AIV is needed.
A feeder fund collects capital from one group of investors and directs it to the master fund, preserving the tax wrapper appropriate for that group. A blocker company changes the qualification of income and separates investors from ECI, UBTI or the obligation to file local returns; it does not eliminate the tax itself. A parallel fund invests simultaneously with the master under an agreed policy, but holds its own portfolio. An AIV is created for a specific deal when it is necessary to isolate jurisdictional, licensing or tax risk. Each such entity means separate audit, administration, banking, FATCA and CRS obligations, directors and reconciliation of operations.
The right to benefits under tax treaties is checked by tax residence, beneficial owner status, limitation on benefits provisions, principal purpose test, anti-hybrid rules and substance. A registered office and nominee board of directors are not sufficient for this.
USA: Delaware and federal exemptions
Delaware remains the standard for US private funds. The usual construction is a fund in the form of a limited partnership, a separate LLC for the general partner, a management or advisory company and a structure for receiving carried interest. The partnership agreement sets out in detail the obligations of investors, capital requirements, distribution procedure, powers of the investor advisory committee, consequences of key person departure, removal of the manager and transfer of interests; the mechanics of the agreement itself are analysed in the materials on LPA and capital calls.
Registration in Delaware does not exempt from the federal regime. The SEC considers the fund, the manager and capital raising separately: a private fund relies on the 3(c)(1) or 3(c)(7) exemption of the Investment Company Act, and offers interests under Rule 506(b), Rule 506(c) or Regulation S. The 3(c)(1) exemption limits the circle to beneficial owners—no more than one hundred, or no more than two hundred and fifty for a qualifying venture capital fund with aggregate contributions up to $12 million—and does not permit public offering. The 3(c)(7) exemption removes the limit on the number of owners, but only admits qualified purchasers: for an individual this is investments of at least $5 million. An accredited investor under Regulation D and a qualified purchaser for 3(c)(7) are different statuses, and confusion of these thresholds in practice is more common than errors in the structure itself.
A Series LLC suits platforms working deal-by-deal, but the segregation of series, their fate in bankruptcy, the willingness of the bank and custodian and tax accounting are checked for each series separately: details in the article on Delaware Series LLC, and the typical fund construction in the article on Delaware LP. For foreign investors and US tax-exempt organisations, a Cayman feeder or blocker company is usually added to the Delaware fund, but only after calculating ECI, UBTI and the full cost of additional entities.
Common law domiciles: Cayman Islands, BVI, Jersey, Guernsey
Cayman Islands
The main international domicile for hedge funds, master-feeder structures, direct investments and private credit. Forms: exempted limited partnership for closed-ended strategies with staged capital contributions, exempted company for corporate and open-ended funds, unit trust for part of Asian and institutional capital, segregated portfolio company for multiple portfolios.
Classification determines obligations. Open-ended funds, where the investor has the right to demand redemption, fall under the Mutual Funds Act; closed-ended pools under the Private Funds Act. CIMA guidance separates categories by specific features: a registered fund under section 4(3) requires a minimum initial investment of CI$80,000 per investor, a fund with a limited number of investors under section 4(4) admits no more than fifteen investors, the majority of whom have the right to appoint and remove the fund operator, and a private fund under the Private Funds Act requires no minimum investment at all. The registration fee for a private fund is CI$4,125 plus CI$300 for filing the application, and to this are added annual audit by an approved local auditor, independent valuation, cash monitoring and verification of title to assets.
A Cayman fund does not have a European passport: offering interests in the EU, UK, Singapore and Hong Kong requires an independent basis. Tax neutrality at the fund level does not create entitlement to benefits under tax treaties in respect of portfolio assets. Details in Cayman fund.
British Virgin Islands
BVI offers calibrated categories for small and emerging managers. Under BVI FSC guidance, an incubator fund admits no more than twenty investors, a minimum initial investment of $20,000 and net assets up to $20 million, and approval is valid for two years with the possibility of extension for no more than twelve months. An approved fund is also limited to twenty investors, but admits net assets up to $100 million and operates indefinitely. In addition, private fund and professional fund operate for open-ended strategies and the private investment fund regime for closed-ended.
Both concessionary regimes cease to be suitable as soon as the strategy, assets or number of investors exceed the limits, so the path of conversion to a professional fund is laid down at launch, not after exceeding the threshold. Review of the category in offshore incubator funds.
Jersey
Jersey Private Fund—a simplified regime for professional and other eligible investors: up to fifty investors, application submitted through a local designated service provider, consent with a full set of documents issued by fast-track procedure within 48 hours. The current edition of the JPF Guide clarified key practical matters: investor compliance is assessed at the time of admission and is preserved upon subsequent change of status, in the case of forced transfer of an interest the acquirer must independently meet the criteria, and the fund's governing body is expected to have at least one director resident in Jersey. The fund may be established as a company, partnership, unit trust or cell structure.
Guernsey
The Private Investment Fund regime provides several routes with different intensity of requirements: through a designated manager, through qualified private investor status and through family connection between investors. Applications meeting GFSC requirements are considered on a fast-track basis; companies, partnerships, trusts and cell structures are permitted. There is no European passport, so placement under AIFMD and UK financial promotion rules are analysed separately, and the cost of service providers is compared with Jersey, BVI and the Cayman Islands.
Europe: AIFMD II, RAIF, QIAIF and ELTIF
From 16 April 2026, Member States apply Directive (EU) 2024/927, which revised AIFMD: rules on delegation of functions, requirements for disclosure of fees and expenses, mandatory set of liquidity management tools for open-ended funds and a separate regime for credit funds. Requirements are the same in all Member States and increase the permanent burden on the manager regardless of the country chosen.
Luxembourg
The law of 23 July 2016 on RAIF removes prior approval of each fund by the CSSF, but requires an external authorised AIFM (Article 4) and leaves the fund within the AIFMD regime. The circle of investors is limited to well-informed: institutional and professional investors or persons who have confirmed their status in writing and invested at least 100,000 euros or received confirmation of competence from a bank, investment firm or AIFM. Minimum net assets are 1,250,000 euros, to be reached within 24 months of establishment. Subscription tax is 0.01 per cent per annum of net assets, and the risk diversification requirement is removed only for a RAIF investing exclusively in venture capital (Article 48).
In addition to RAIF, Luxembourg offers SIF under direct CSSF supervision, SICAR for venture capital, Part II UCI as a regulated product outside the UCITS regime and UCITS itself. Cost is formed by AIFM, depositary, central administrator, conducting officers, audit and regulatory fees, so a small first fund makes sense only on someone else's licensed platform. Details in Luxembourg funds and SCSp.
Ireland
English-language EU platform with the largest market for administration and depositary services. Central Bank of Ireland supervises alternative funds and their managers. A Qualifying Investor AIF is aimed at qualified investors and requires a minimum initial subscription of 100,000 euros; with a full set of documents, authorisation is issued on a fast-track basis. The fund is structured as an ICAV—a corporate form created specifically for investment funds—or as an investment company, unit trust, Common Contractual Fund or Investment Limited Partnership. A Retail Investor AIF admits a wider circle of investors at the cost of product restrictions and closer scrutiny.
ELTIF and United Kingdom
European Long-Term Investment Fund—the only European regime allowing long-term illiquid assets to be offered by passport including to retail investors. Revised rules have been in force since 10 January 2024, technical standards for them were published in October 2024; the fund requires an authorised AIFM and approval under product rules, and CSSF describes procedures for the fund and the manager separately.
The United Kingdom after leaving the EU has no passport. Private Fund Limited Partnership serves UK direct and venture capital funds, Long-Term Asset Fund—an authorised regime for illiquid assets with enhanced valuation and liquidity control requirements, investment trust provides permanent capital and exchange liquidity instead of redemption at net asset value. Raising capital in the EEA requires European AIFM and fund or analysis of national private placement regimes; in the opposite direction the FCA notification regime operates.
Malta offers authorised AIF, notified NAIF, as well as PIF and NPIF for professional and private capital; Cyprus—authorised AIF and registered RAIF under external AIFM. Swiss L-QIF is available only to qualified investors and does without FINMA product approval, since supervision goes through the management or administration organisation. In the Netherlands, from 1 January 2025, a reform of the tax qualification of legal forms is in force: the "open" CV regime has been abolished, the definition of FGR has been narrowed, and the former presumptions of transparency from old templates no longer apply.
Asia and the Gulf: VCC, LPF, OFC, ADGM and DIFC
Singapore
Variable Capital Company—a corporate fund form operating as a standalone or umbrella fund with statutorily segregated sub-funds; each sub-fund is registered and taxed separately. A VCC must appoint directors, a corporate secretary, an auditor and a manager meeting Singapore law requirements. Registration costs S$8,015, each sub-fund another S$400.
The VCC itself does not provide a manager's licence, approval for offering interests by MAS, or automatic tax exemption. Notification of a scheme with a restricted circle of investors is submitted through the MAS collective investment schemes register and does not mean verification of product quality. Tax regimes Section 13O and 13U have their own criteria for assets under management, local expenses and number of investment professionals; launch practice is described in the article on private fund in Singapore.
Hong Kong
Limited Partnership Fund has existed since 31 August 2020 under a separate ordinance. Companies Registry confirms that an LPF has no separate legal personality and operates through the general partner, investment manager and authorised representative. Registration does not replace SFC product approval or Type 9 licence for asset management; Type 1 and Type 4 licences may be required for placement and advisory. Open-ended Fund Company—a corporate fund with variable capital under SFC supervision, public or private, with the possibility of sub-funds; this form is more natural for liquid strategies.
International investors often prefer the familiar Cayman shell, and the Hong Kong LPF holds mainland China and Greater Bay Area assets or admits local investors. Then deal allocation, expenses and taxation of both structures are agreed in advance.
ADGM and DIFC
Both financial zones operate under English common law and distinguish public fund, exempt fund for professional clients and qualified investor fund with increased minimum investment and proportionate regulation. In ADGM, a fund may be an investment company, limited partnership or cell structure; FSRA forms provide for separate procedures for manager, fund, marketing and foreign manager. DFSA in DIFC admits an external manager if its home regulation is acceptable and local conditions are met. Both zones remain financial free zones: marketing in the mainland UAE requires separate analysis.
⚠️ Fund registration and manager admission to work are two different documents. VCC, LPF, RAIF, JPF and BVI approved fund create a product, but the right to make investment decisions is given by another document and often another jurisdiction: Singapore manager regime, Hong Kong Type 9 licence, AIFM authorisation, FSRA or DFSA permission. Establishing a fund before confirming the manager's status means a paid shell with no one to manage it.
Service providers, cost and time to first closing
The cost of a fund is set by mandatory providers; the registration fee is almost invisible in this sum. A depositary is required for European AIFs and UCITS and costs more than a simple custodian. An administrator calculates net asset value, maintains the investor register and services capital calls; its willingness to work with a specific strategy is checked before fund establishment, not after. An auditor in a number of jurisdictions must be local and approved by the regulator—in the Cayman Islands this is a direct requirement. Directors, MLRO, registered office and corporate secretary add permanent expenses regardless of asset volume.
Time to first closing is determined by the slowest element. Partnership registration takes days, AIFM authorisation takes months, opening bank and custodial accounts for a fund with digital assets or an exotic portfolio sometimes takes longer than all the rest combined. A ready-made shell only speeds up registration: it does not resolve issues of form suitability, lawful basis for placement and operational readiness.
First closing is possible when the fund is established and registered, the manager has the right to act, contracts with providers are signed, accounts are open and working, documents have passed review by the anchor investor, and the capital call and valuation procedure is described and reproducible. A step-by-step breakdown of launch is in the ultimate guide to fund formation.
Typical mistakes
| Mistake | Why it doesn't work |
|---|---|
| Fund domicile is chosen before the investor map is compiled | Fund jurisdiction does not create the right to offer interests. When it turns out that half the capital is in the EEA and the fund is Cayman and there is no AIFM, a European feeder has to be built or national private placement regimes launched for each country. The cost of this retrofit usually exceeds all the savings on establishment |
| Zero rate at fund level is taken as the tax result | Absence of tax in the domicile says nothing about withholding in asset countries, about PFIC and CFC for investors, about ECI and UBTI for US groups and about VAT on manager services. The final burden is formed at five levels, and the fund is only one of them |
| A class of interests is used to try to segregate risk | A class divides economics: fees, currency, distribution rights. A creditor of portfolio A as a general rule reaches the assets attributable to class B unless segregation is expressly established by law. For real separation, a sub-fund, cell, parallel fund or separate entity is needed |
| A concessionary regime for beginners is used without a transition plan | BVI incubator fund is limited to twenty investors, net assets of $20 million and a term of two years with extension up to twelve months. A successful strategy hits the limit precisely when raising capital is easiest, and conversion to professional fund requires a new administrator, auditor and documentation |
| Fund registration is considered product approval | MAS notification of a scheme with a restricted circle of investors, LPF registration with Companies Registry and RAIF filing with the notary do not mean that the regulator has checked the strategy, documents or manager. Responsibility remains with the AIFM, general partner and directors |
| Open liquidity is promised for an illiquid portfolio | Quarterly redemption with assets with a realisation period of several years works until the first large outflow. Without a redemption queue, suspension right, segregation of illiquid positions and anti-dilution mechanism, exiting investors receive money at the expense of remaining ones |
| Budget is calculated by establishment cost | Registration fee is the smallest of the items. Annual audit, depositary, administrator, directors, regulatory fees, parallel structures and liquidation expenses form the cost of ownership for the entire life of the fund, including years after the last deal |
Scenarios
First venture fund in the US
Team from San Francisco, investors predominantly American, target size $60 million. Delaware LP, 3(c)(1) exemption with a limit of one hundred beneficial owners, placement under Rule 506(b), manager operates as exempt reporting adviser.
Key risk: the appearance of foreign or US tax-exempt investors requires a Cayman feeder or blocker company, and the decision is made before first closing.
Credit fund for EU investors
Direct lending strategy to mid-market businesses, investors are European insurers and pension funds. Luxembourg RAIF in SCSp form under external authorised AIFM, minimum net assets 1,250,000 euros within 24 months.
Key risk: from 16 April 2026, retention of 5 per cent on each loan and leverage limit of 300 per cent for closed-ended credit fund apply.
Asian family office platform
Several families, different strategies, common management system. Singapore umbrella VCC with segregated sub-funds, manager under Singapore regime, application for Section 13U tax regime.
Key risk: VCC registration does not provide a manager's licence or tax exemption—both statuses are confirmed independently and before launch.
Q/A
Can I choose a jurisdiction with zero tax and finish tax planning there?
No. Neutrality at fund level removes tax at one of five levels. Withholding in asset countries, investor taxation under PFIC, CFC, ECI and UBTI rules, tax on the manager and carried interest regime are determined by other jurisdictions and do not depend on the fund's domicile.
Does a Luxembourg or Irish fund give automatic access to all EU investors?
The passport belongs to the manager, not the country of fund establishment. The right to offer interests to professional investors in the EEA arises for an authorised AIFM upon compliance with the notification procedure. Retail placement requires a separate product—UCITS, ELTIF or national retail regime.
How does a class of interests differ from a sub-fund and a cell?
A class divides economic terms within one pool of assets. A sub-fund of an umbrella structure and an SPC cell divide the assets and liabilities themselves, but only if segregation is established by the law of the fund's country and recognised by the court of the country of the asset and counterparty.
Is a depositary always needed?
A depositary is mandatory for European AIFs and UCITS and costs more than an ordinary custodian. Cayman, Jersey and Guernsey private funds do not require a depositary, but are subject to their own rules on valuation, custody of assets, cash monitoring and verification of title to assets.
Can an open-ended fund be filled with illiquid assets?
Technically yes, legally—only with working liquidity management tools. Directive (EU) 2024/927 from 16 April 2026 expressly requires open-ended funds in the EU to have a set of such tools; outside the EU the same role is played by document terms on suspension of redemptions, queues and segregation of illiquid positions.
What changed for credit funds in the EU in 2026?
A credit fund retains 5 per cent of the nominal value of each originated loan, is limited to leverage of 175 per cent for open-ended and 300 per cent for closed-ended form and cannot originate loans exclusively for immediate resale. The model built on origination for portfolio disposal has ceased to work.
FAQ
Can I choose a jurisdiction with zero tax and finish tax planning there?
No. Neutrality at fund level removes tax at one of five levels. Withholding in asset countries, investor taxation under PFIC, CFC, ECI and UBTI rules, tax on the manager and carried interest regime are determined by other jurisdictions and do not depend on the fund's domicile.
Does a Luxembourg or Irish fund give automatic access to all EU investors?
The passport belongs to the manager, not the country of fund establishment. The right to offer interests to professional investors in the EEA arises for an authorised AIFM upon compliance with the notification procedure. Retail placement requires a separate product—UCITS, ELTIF or national retail regime.
How does a class of interests differ from a sub-fund and a cell?
A class divides economic terms within one pool of assets. A sub-fund of an umbrella structure and an SPC cell divide the assets and liabilities themselves, but only if segregation is established by the law of the fund's country and recognised by the court of the country of the asset and counterparty.
Is a depositary always needed?
A depositary is mandatory for European AIFs and UCITS and costs more than an ordinary custodian. Cayman, Jersey and Guernsey private funds do not require a depositary, but are subject to their own rules on valuation, custody of assets, cash monitoring and verification of title to assets.
Can an open-ended fund be filled with illiquid assets?
Technically yes, legally—only with working liquidity management tools. Directive (EU) 2024/927 from 16 April 2026 expressly requires open-ended funds in the EU to have a set of such tools; outside the EU the same role is played by document terms on suspension of redemptions, queues and segregation of illiquid positions.
What changed for credit funds in the EU in 2026?
A credit fund retains 5 per cent of the nominal value of each originated loan, is limited to leverage of 175 per cent for open-ended and 300 per cent for closed-ended form and cannot originate loans exclusively for immediate resale. The model built on origination for portfolio disposal has ceased to work.
Fund jurisdiction resolves four questions—applicable law, legal form, product regime and intensity of supervision—and none of them provides a manager's licence or the right to offer interests. Specifics distinguish domiciles more strongly than general words: a Cayman registered fund requires CI$80,000 per investor or a maximum of fifteen investors under section 4(4); BVI incubator fund is limited to twenty investors, $20 million net assets and two years; JPF admits fifty investors and consent within 48 hours; Luxembourg RAIF under the law of 23 July 2016 must appoint an external AIFM, raise 1,250,000 euros within 24 months and pay 0.01 per cent subscription tax; Irish QIAIF starts at 100,000 euros subscription; Singapore VCC costs S$8,015 plus S$400 per sub-fund. From 16 April 2026, Directive (EU) 2024/927 added to European credit funds retention of 5 per cent and leverage limits of 175 and 300 per cent.
Key factual claims
- The law of 23 July 2016 on RAIFs removes prior CSSF approval of each fund, but requires an external authorised AIFM (Article 4) and keeps the fund within the AIFMD regime.
- A Variable Capital Company is a corporate fund form operating as a standalone or umbrella fund with statutorily segregated sub-funds; each sub-fund is registered and taxed separately.
- The Limited Partnership Fund has existed since 31 August 2020 under a separate ordinance.
- As a launchpad — yes, with twenty investors, a minimum commitment of $20,000 and net assets up to $20 million.