Private Investment Fund Creation: Favorable Jurisdictions

Contents:

1. The most favorable jurisdictions for private investment;
2. Features of the jurisdiction of the Isle of Man;
3. Features of jurisdiction in Panama;
4. Features of jurisdiction in Nevis;
5. Features of jurisdiction in Malta.

Private Investment Fund Creation: Favorable Jurisdictions

The main purpose of creating a private investment fund is to protect assets. After the registration of the foundation, the founders of which can be individuals and companies, the property is transferred to the ownership of the new organization. From a legal point of view, the founder is deprived of his right to capital and assets, which allows him to effectively manage his property, protect it from legal claims, and ensure the confidentiality of ownership.  

To ensure these benefits, private equity funds should be established in favorable jurisdictions. The most popular of them are the Isle of Man, Nevis, Malta and Panama. We invite you to learn more about the specifics of the legislation of each jurisdiction.

Features of the jurisdiction of the Isle of Man

To register a fund in this jurisdiction, you must contact a licensed agent. He will accept the application from the founder and submit the application to the state registrar. In the future, if the founder wishes so, the agent can become a member of the Fund Council.

If you register a foundation as a charitable organization, the position of a defender becomes optional. At the same time, private foundations on the Isle of Man are allowed to engage in activities aimed at making a profit. This structure can exist for any period of time.

According to the current requirements, the fund can own any assets. Requirements for min. the amount of the initial authorized capital is absent. If income is generated on the territory of foreign countries, it is not taxed. The tax burden on income received within the jurisdiction will be 10 or 20%, depending on the amount. The fund can invest in its own assets without a license, but other types of investments may require a permit. Each year, 380 EUR must be paid as deductible tax.

By law, foundations are required to maintain accounting records, but they are requested only in certain cases.

Features of jurisdiction in Panama

As in the previous case, to register a fund, you need to contact authorized agents. It is mandatory to open an office in Panama. According to the laws of jurisdiction, the founder of the foundation is not its beneficiary.

Fund management principles, the names of beneficiaries and other information are spelled out in the Regulations. This document, unlike the Charter, is not public.

Funds can own securities and real estate, but they are not allowed to engage in commercial activities. At the same time, the fund can be the sole owner of shares in a company whose activities are aimed at making a profit and increasing the fund's assets.

Minimum amount of the authorized capital is 10 thousand dollars, but this money can be deposited in stages. As with other offshore zones, Panama has no taxes on overseas income. With regard to income within the jurisdiction, they are taxed under applicable law. Franchise tax is payable annually and is $ 400.

Third-party lawsuits against Panamanian funds can only be brought up 3 years after establishment. Further, the law prohibits blocking an account or freezing fund assets.

Panama provides information on the financial activities of the fund to foreign countries only upon request, if there is a convincing justification.

Features of jurisdiction in Nevis

A private investment fund in Nevis can be established by a group of individuals or one legal entity through a licensed agent. This is an effective way to keep the identity of the beneficiaries and the founder secret, as they are not known in public records. The foundation does not need to pay taxes when doing business outside Nevis. The tax rate for residents is 1%, and the amount cannot be less than $ 1,000. The Nevis franchise fee is $ 250.

When establishing a foundation in Nevis, an office is required where the reporting is kept. Meetings of the Fund Council should be held annually, however, meetings can be really implemented in any country.

Features of jurisdiction in Malta

Minimum share capital for a private Maltese foundation is 1,165 euros. Unlike previous jurisdictions, Malta foundations pay taxes on all income received, including foreign ones. At the same time, it is possible to use the taxation scheme that applies to trusts and provides a basis for exemption from the tax burden if the assets are located abroad and the income received by the fund is also generated abroad.

When you contact A4 Law Firm, you will receive the most effective tools for protecting property and capital. We will analyze the features of each jurisdiction and help you choose the best option.