Insights Resources The Domicile Report

VC Domicile Update – Q4 2021

Following up on our Domicile Report, here is a quick update on the most popular domiciles around the world.

The following information is provided for illustrative purposes only and is based on publicly available information as of September 2021. The complexity and evolving nature of securities regulations and global tax law may change the analysis below. There may be other factors to consider when choosing where to domicile your fund, so you should consult legal counsel or a tax advisor when determining where and how to structure your fund.


Since releasing our Domicile Report, jurisdictions in the Americas have not seen much radical change. Delaware continues to be the most popular domicile in the Americas, thanks to its superior speed, efficiency and cost.


Delaware is the clear winner out of all the domiciles globally. Forming a fund is relatively quick, cheap and easy. There are many affordable advisory, tax and legal services available to fund managers.

Key updates:

Conclusion: Delaware continues to be a  popular domicile for venture capital funds. It has a great set of legal precedents and US LPs will expect you to domicile here. Since most LPs are US citizens there is a high likelihood of this happening. Delaware is also starting to gain traction from fund managers across the globe due to increased KYC and AML measures in other fund domiciles.  

Cayman Islands

The Cayman Islands was ‘blacklisted’ by the EU council in early 2020. The Cayman Islands has since enacted the Private Funds Law 2020 and implemented new reforms to its framework on Collective Investment Funds in an attempt to shed its “tax haven” moniker, as mentioned in our domicile report. Doing so has meant that the EU council removed the Cayman Islands from its blacklist. However, this development has resulted in stricter and more onerous compliance measures for fund managers and LPs who are domiciled there.  

Key updates:

  • Fund managers are required to register with the CIMA and face ongoing operations obligations which adds administrative costs for the fund
    • Yearly audits of the fund’s financial statement
    • Implement a compliance regime
    • Annual fees to CIMA
  • Increased KYC & AML regulations

Conclusion: The Caymans, since being blacklisted by Europe and subsequently removed from the blacklist, have lost their appeal to some LPs. Also, the increased costs and onerous compliance procedures make it unviable for funds smaller than $15 MM.


Notable developments in Asia are coming from Hong Kong which is developing new and streamlining existing regulations. In Singapore, the Monetary Authority of Singapore is also working to streamline the VCFM licensing processes.

Hong Kong

After the creation of the Limited Partnership Fund in 2020, Hong Kong is now working to capture formation opportunities after streamlining some new regulations. Fund managers looking to domicile in Hong Kong should note the costs and time associated with the application process.

Key updates:

  • GPs need to set up :
  • Time to set up a fund is from 3-4 weeks, and an additional 3-4 weeks to set up a bank account 
    • GPs have unlimited liability under this structure
    • Only one LP needs to be listed on the LPF
      • Subsequent LPs are anonymous in government filings
      • These LPs only have an investment agreement with the LPF

Conclusion: Hong Kong’s time to market is relatively quick for the region, which is seeing an increase in licensing procedures.


Fund managers considering domiciling in Singapore should take note of recent developments and key requirements of the Venture Capital Fund Manager (VCFM) license application process. The Monetary Authority of Singapore (MAS) is actively working to educate emerging fund managers about their requirements and streamline the process.

Key updates:

  • VCFM license application process nowadays takes 2-3 months in most cases 
    • Longer when applicants fail to comply with Monetary Authority of Singapore rules and/or are less responsive to regulators
  • To domicile in Singapore, the management company must have at least 2 full-time resident professionals or representatives
    • A fund’s director could serve as representative (there is a minimum requirement of 2 directors, at least 1 of whom must reside in Singapore)
  • Monetary Authority of Singapore requires GPs to:
    • Have a physical office in Singapore
    • Fulfill AML/KYC requirements
    • Preferably have backgrounds in investing/financial services

Conclusion: Historically, Singapore has been the most popular domicile in Asia. Currently, It is suboptimal for a fund under $15MM to domicile in Singapore as the fund formation and operating costs are relatively high. However, MAS is trying to streamline the process for venture funds to set up in Singapore. 


The EU council has gone on to label and blacklist, domiciles that have not met guidelines regarding tax evasion, fraud and avoidance as well as money laundering.  As a consequence of this crackdown, we are seeing increased KYC and AML procedures across the world. This is substantially increasing the time to market for new funds, making jurisdictions less desirable for both LPs and GPs.


The Netherlands’ ‘Small Managers Regime’ is great for new funds with less than €100m. Both the costs of setting up and advisory services are relatively affordable for Europe. However, the speed to market has continued to be an issue across Europe and the Netherlands.

Key updates:

  • New KYC and AML regulations increasing an already complex process
  • It takes around two months to obtain a license under the ‘Small Managers Regime’ 
    • Can be extended if additional documentation is required

Conclusion: The Netherlands offers good value to new fund managers in Europe via its ‘Small Managers Regime’. Advisory and legal services are ample and relatively affordable. However, the application process is complicated and arduous. Nevertheless,  with the regulatory climate in Europe, the Netherlands may be the best option for new fund managers.


Though Luxembourg has been one the most reputable domiciles in Europe and has flexible fund vehicles, recently both the cost and time to market have been increasing. Establishing a fund in Luxembourg is two to three times more expensive than Delaware and is mostly viable for large established funds.

Key updates:

  • Labelled by the EU alongside the Cayman Islands and Estonia 
  • Increased KYC regulations by the CSSF, similar to the rest of Europe
    • Even with quick and unregulated vehicles such as the RAIF, time to market has gone up considerably 
    • If a single LP holds more than 10% of the fund, further time-consuming KYC requirements are triggered
    • Currently takes a couple of months to set up a fund
  • Regulated funds should conduct independent yearly audits and submit accounts and NAV data to the CSSF

Conclusion: Luxembourg’s long-standing reputation was somewhat tarnished due to the EU council labeling. Additionally, new KYC / AML procedures have significantly increased what was an already expensive licensing process.


Though Estonia has been emerging as a fast and cheap alternative domicile in Europe, there have been some notable developments. The EU council and other regulatory entities have put restrictions on Estonia due to reports / allegations of questionable activities. Consequently, fund managers should be warned that the time to set up a fund has increased considerably.

Key updates:

  • Labeled the same way as Luxembourg and the Cayman Islands
  • In response, EFSA has increased KYC measures and licensing approval process
    • Now application process may take longer than 120 days, whereas before it was as quick as a week
  • GPs must also gain approval from the FIU
    • Funds must have a compliance officer on their payroll

Conclusion: Currently, it is really hard to get a license from EFSA and FIU, as the domicile is cleaning up and conducting reviews of the funds there. The process which was previously seamless has become considerably complicated, long and expensive.

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Insights Resources The Domicile Report

Venture Capital Domicile Report by VC Lab

The following information is provided for illustrative purposes only and is based on publicly available information as of September 2021. The complexity and evolving nature of securities regulations and global tax law may change the analysis below. There may be other factors to consider when choosing where to domicile your fund, so you should consult legal counsel or a tax advisor when determining where and how to structure your fund. 


Launching a venture capital fund can be challenging due to the complexity of the factors to consider, which often creates a high barrier to entry for emerging fund managers. In particular, fund structuring and determining where to domicile the fund can be confusing, costly, and time consuming due to the lack of forthcoming information available. This report aims to provide some guidance regarding potential fund domiciles for venture capital funds. The jurisdictions included here are not exhaustive, however they include commonly used and established fund domiciles. 

Below are the factors that are frequently considered when determining where to domicile a fund:

  • Tax Optimization
    • Where are your investors located?
    • Where do you intend to invest?
  • Cost
    • What are the set up and formation costs?
    • What are the annual maintenance costs?
  • Timing
    • How long does it take for formation?
    • How long does setting up bank accounts and other fund support activities take?
  • Fund Marketing Regulations
    • Do you need registration or licenses to market the fund and how long to these take to get?
    • What are the requirements about who you can market to and how many investors can you have in a fund?
North America

Popular > Delaware, Caymans

Canada > Canada

USA > Delaware

Mexico > USA, Canada, Caymans, Mexico

Central & South America

Popular > USA, Canada, Caymans

Brazil > Brazil

Australia & New Zealand

Popular > Local


Popular > Local, Luxembourg, Netherlands


Middle East

Popular > Local


Popular > Mauritius, Delaware


Popular > Singapore, Caymans

Hong Kong > Caymans

Singapore > Singapore

73 Next Gen Venture Capital Firms launched with VC Lab

A first time fund manager will likely have limited resources (both time and money) to devote to determining where to domicile their fund. While fund formation costs can be paid from fund expenses, engaging legal counsel or a tax advisor can be costly and so most fund managers have some sensitivity when it comes to the cost of seeking fund structuring advice. In addition, the time to form a fund differs across jurisdictions as some jurisdictions have more onerous filing requirements. There are some service providers that can handle fund formation on behalf of a fund manager, however these services often come at a hefty price.

Broadly, fund managers should consider the regulatory regimes that apply to the fund because this will inform how a fund manager can engage potential investors and approach fundraising activities. Fund managers should also be aware of compliance requirements related to securities laws and any ongoing compliance requirements for the fund or its affiliates. Some jurisdictions also have physical presence requirements that fund managers should be aware of before proceeding with forming their fund. 

Perhaps the most important factor to consider is tax treatment. Fund managers should be optimizing for tax efficiency for the fund and its investors. This can be a sticking point for potential investors, so fund managers should consider where the fund’s potential investors are located, where the fund will be investing, and whether there are any applicable tax treaties that make a certain jurisdiction an attractive option for the fund’s investors.

It is important to note as well that fund managers may structure their fund entirely in one jurisdiction or they may take a “hybrid approach” in which the fund entity, the general partner entity, and the management company are formed in different jurisdictions. Taking a hybrid approach may be more tax efficient for the fund manager.   

There are some valuable resources online that can be helpful, particularly free templates or guides published by law firms or the official venture capital association of a jurisdiction. For example, the National Venture Capital Association in the US publishes helpful guidance and template documents on their website. The breakdowns linked to below include links to the relevant venture capital associations, if any. 

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Fund Domicile – Delaware, United States

Delaware Summary

Fund Structure Limited Partnership or Limited Liability Company
Costs$200 to form a limited partnership plus an additional $50 for a certified copy of the formation certificate
$90 to form a limited liability company plus an additional $50 for a certified copy of the formation certificate
$300 annual LLC/Partnership Tax 
Ongoing securities filings are also relatively cheap 
Formation can become costly depending on the law firm or tax advisor engaged
TimingEntity formation can be done quickly and can be expedited on a same day turn-around for an additional fee
Fund Marketing Investment Advisers Act of 1940
Securities Act of 1933
Typically no general solicitation and all investors must be US Accredited Investors
If you do engage in general solicitation, a third party must verify all investors’ Accredited Investor status (additional cost and risk to the fund)  
Tax TreatmentLimited Partnerships and LLCs are pass-through entities and investors will be asked to claim a US tax withholding rate. 
Non-US investors are typically not subject to income tax on capital gains unless the fund is engaged in a U.S. trade or business. 
National Venture Capital Association

Delaware Overview

In the United States, Delaware is a commonly used jurisdiction to set up a venture capital fund due to the state’s business friendly laws. In addition to having pro-business laws Delaware also has a long history of court precedents, which makes it an appealing jurisdiction to form entities. For funds in particular, Delaware law offers a “clean slate upon which managers can build an entity that works”. Because of this, many fund managers opt for a Delaware fund structure and there are many reputable service providers that can handle setting up a Delaware fund structure efficiently. Funds formed in Delaware are typically formed as Limited Partnerships (LP) or Limited Liability Companies (LLC) (though this is less common). Delaware LPs and LLCs are both pass through entities for tax purposes, which means gains and losses flow through to the underlying investors. 

Delaware LPs must be formed by the fund’s General Partner, which is typically a Delaware LLC. US-based funds are also required to have a management company that acts as the investment adviser to the fund. The management company is also typically structured as a Delaware LLC. 

Investment funds are regulated by the Securities and Exchange Commissions (SEC) and are required to be registered with the SEC. However, VC funds can claim certain exemptions to get around these registration requirements. 

If you are fundraising primarily in the US and investing in the US, setting up a fund in Delaware could be a good option. However, if you are primarily fundraising and investing outside of the US, you may be interested in exploring other jurisdictions. Below is a list of non-US countries that are often used as fund domiciles. Again, this is not an exhaustive list, however the countries listed below are highlighted as potential alternatives to Delaware.

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Fund Domicile – Cayman Islands

Cayman Islands Summary

Fund Structure Exempted Limited Partnership
CostUS$1220 to form the ELP
Annual registration fees
Audited financial statements to file with CIMA
Since ongoing compliance is onerous, most funds engage a service provider to fulfill the fund’s compliance requirements. Costs for these services can be high. 
TimingConfirmation of registration can take ~2-4 weeks to receive
Fund Marketing Marketing documents are not required, however if the fund has marketing materials then they must be registered with CIMA to ensure compliance with Rule on Contents of Marketing Material
Tax TreatmentTax neutral – neither an ELP nor any partner is subject to any form of direct taxation in the Cayman Islands

Cayman Islands Overview

For decades, the Cayman Islands have been one of the leading domiciles for investment funds due to the political and economic stability of the area, the existing solid legal infrastructure, tax neutrality, and copious amounts of expertise in the investment fund space. One notable difference between Delaware and the Cayman Islands with respect to forming your venture fund is the way laws work in each jurisdiction. In Delaware, the Delaware Limited Partnership Law thoroughly outlines the rights and remedies in its provisions. In Cayman, the Cayman Islands Exempted Limited Partnership Law presumes that where the regulation is silent, the fund’s agreement shall control. Cayman funds are typically formed as an Exempted Limited Partnership (ELP). An ELP is not a distinct entity from its underlying owners and does not have a separate legal personality and neither the ELP nor any underlying investors are subjected to taxation in the Cayman Islands. Fund managers can opt for a fully Cayman fund structure or a hybrid structure (usually a Delaware General Partner with a Cayman ELP). 

In February 2020, the Cayman Islands enacted the Private Funds Law 2020 in an attempt to shed its “tax haven” moniker. Doing so has imposed stricter and more onerous compliance measures on fund managers. Fund managers are now required to register with the Cayman Islands Monetary Authority (CIMA) and also face ongoing operating obligations that include implementing a compliance regime for the fund and an annual fee payable to CIMA. Cayman also has stricter KYC regulations, which results in more work for investors to subscribe to a fund. 

The Private Funds Act does not require a venture capital fund to have an offering document or other marketing materials, however, if there are marketing materials for the fund to solicit investments, the marketing materials must be filed with CIMA. CIMA’s Rule on Contents of Marketing Material requires detailed disclosures be provided to prospective investors. As such, fund managers who wish to domicile their fund in the Cayman Islands should seek the advice of counsel before providing prospective investors with any marketing materials. 

It is worth noting that many investors are not comfortable investing in a Cayman domiciled fund. The Cayman Islands was blacklisted by the EU Council in February 2020 for being a non-cooperative jurisdiction in tax matters. The EU Council subsequently removed Cayman from its blacklist in October 2020 given the tax reforms instituted by the Cayman Islands. Despite this, some prospective investors may still have reputational concerns about investing in funds formed in the Cayman Islands. Another consideration is that FIRRMA regulations may lead some US investors to opt for Delaware over Caymans to have easier access to US mega-tech deal flow.

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Fund Domicile – Ontario, Canada

Ontario, Canada Summary

Fund Structure Limited Partnership
Cost$210 for the initial registration fee and renewal fee
$360 late renewal fee
Formation can become costly depending on the law firm or tax advisor engaged
TimingImmediate turn-around if filed in person
~20 business days if filed by mail
Fund Marketing Funds offering securities to the public in Ontario are required to file a prospectus with the OSC. Once the fund becomes a reporting issuer, there are ongoing reporting obligations. In some instances a fund may not be required to file a prospectus with the OSC.  
Tax TreatmentLimited Partnerships are tax transparent so capital gains flow through to the underlying investors. Residents are subject to tax. Non-residents are not subject to withholding tax on profits. 
Canadian Venture Capital & Private Equity Association

Ontario, Canada Overview

The venture capital ecosystem in Canada is growing and since 2013 more than CAD$185B has been invested in over 4000 Canadian companies. Q1 2021 was the strongest quarter on record with CAD$2.7B invested across the following sectors: information, communications, and technology (ICT), life sciences, and clean tech. VC activity is centered in urban areas that also have strong tech sectors, however this report will focus on Ontario as Ontario has the majority of registered venture funds compared to the other provinces. Funds formed in Ontario are mostly structured as limited partnerships. Gains and losses flow through to underlying owners. Fund managers can opt for a fully Canadian fund structure or a hybrid structure if they are located outside of Canada. 

The benefits of domiciling a fund in Ontario include effective and efficient tax codes, reliable government, and a growing startup ecosystem. In addition, compared to jurisdictions like the Cayman Islands, Ontario has less onerous KYC requirements for investors. Anecdotally, there is an interest from fund managers in LatAm in forming their funds in Ontario given the business friendly regulations and that investors are comfortable investing in a Canadian domiciled fund (i.e. there are no reputational concerns as with Cayman funds). 

Fund offerings made to the public in Ontario require that the fund’s prospectus be registered with the Ontario Securities Commission (OSC) however, venture capital funds may be able to rely on exemptions that preclude them from government registration. VC funds typically rely on the accredited investor exemption and the minimum amount investment exemption. Note the accredited investor definition in Ontario differs from definition in the United States. In addition, if an offering is being made to investors in another province, the fund may be subject to the securities laws of the other province. 

Limited Partnerships are tax transparent so capital gains flow through to the underlying investors. Capital gains may be taxed in Canada if such gains result from business carried out in Canada. Resident taxpayers are subject to Canadian tax, but non-residents are not subject to withholding tax on the profits received from the fund. 

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Fund Domicile – Hong Kong

Hong Kong Summary

Fund Structure Limited Partnership Fund
CostRegistration with the Companies Registry: approx. US$390

Business registration fee and levy: approx. US$32 (1-year certificate) or approx. US$508 (3-year certificate)

Formation can become costly depending on the law firm and other advisors engaged
TimingEntity registration can be completed in one week, but it can take up to two months in unusual circumstances if the application requires additional governmental review
Fund Marketing There is no requirement for a LPF to have a private placement memorandum or an offering document
Tax TreatmentThe unified fund tax exemption provides a jurisdictionally neutral tax treatment for private funds in Hong Kong

No stamp duty is payable when an interest in a LPF is contributed, transferred, or withdrawn
Hong Kong Venture Capital and Private Equity Association

Hong Kong Overview

With its proximity to Mainland China and its membership in the Greater Bay Area, Hong Kong is regarded as a fertile ground for venture capital investment opportunities in rapidly growing sectors ranging from technology to healthcare. As part of its government’s efforts to attract investment funds and enhance Hong Kong’s position as a premier asset management hub, the Limited Partnership Fund Ordinance came into effect on August 31, 2020. It made the long-awaited Hong Kong Limited Partnership Fund (LPF) structure available to investment managers. This structure enables fund managers to benefit from flexible features typically only allowed through fund structures in domiciles other than Hong Kong. Until recently, many investors in Mainland China have preferred to domicile funds in places like the Cayman Islands and Singapore for that reason.

Under the LPF regime, the GP is required to delegate investment management functions to an investment manager, which can be the GP of the LPF, a Hong Kong incorporated company, a registered non-Hong Kong company, or a Hong Kong resident who is at least 18 years old. If investment management activities regulated by the Securities and Futures Commission (SFC) are carried out in Hong Kong, then the investment manager must be a licensed entity or person. The SFC requires the investment manager applying for an asset management license to have at least two responsible officers with at least five years of industry experience. These responsible officers are required to pass regulatory exams before the license application can be submitted.

The LPF regime has an opt-in registration schedule. In order to register an LPF, an application package must be submitted to the Companies Registrar by a Hong Kong law firm or solicitor. Regarding the fund offering, you should consult legal counsel if you have any questions about offering securities in foreign jurisdictions to ensure you are complying with local fund marketing regulations.

Venture funds using the LPF structure are eligible for the unified fund tax exemption (UFE). The UFE exempts private funds from profits tax in Hong Kong as long as they satisfy certain conditions. The relevant profits of the fund must be derived from “qualifying transactions” as defined in the Inland Revenue Ordinance to qualify for this treatment. Note there is no pre-approval requirement with the Hong Kong authorities to benefit from the UFE. Also, the Hong Kong Government recently introduced the carried interest tax concession regime, which provides tax concessions for eligible carried interest received by qualifying persons or qualifying employees distributed by a certified investment fund operating in Hong Kong.

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Fund Domicile – Singapore

Singapore Summary

Fund Structure Singapore Limited Partnership
CostS$115 for 1-year registration
S$175 for 3-year registration
S$30 for a renewal fee
S$60 for amendments
Formation can become costly depending on the law firm or tax advisor engaged
There is a S$1,000 non-refundable application fee and S$4,000 annual corporate fee for a Venture Capital Fund Manager license
TimingEntity registration can be completed in 1 day, but it can take up to 2 months in unusual circumstances if the application requires additional governmental review
Fund Marketing Register the fund offering with MAS 
Tax TreatmentOne-tier corporate tax system so once corporate income tax is paid by a Singaporean tax-resident company, shareholders are not taxed on dividends
No capital gains tax devised the disposal of capital investments
Gains from the disposal of ordinary share are tax exempt if certain standards are met
Singapore Venture Capital & Private Equity Association

Singapore Overview

Singapore is a leading global domicile for venture capital funds. In 2019, Singapore authorised 45 new VC funds to operate under the Venture Capital Fund Manager (VCFM) regime. Tech companies are driving most of the new investment, and key sectors are fintech, manufacturing, eCommerce, and biotech. The government is promoting innovation and trying to establish itself as a regional and global leader in the venture space, so regulations are typically pro-funds. Venture funds are typically structured as limited partnerships. Limited partnerships in Singapore do not have a separate legal personality and investors are not personally liable for debts or obligations beyond their capital commitment to the fund provided the investor is not involved in the management of the fund. Note that obtaining a VCFM license is a 2-3 month process in most cases. In order to receive approval for the license, the Monetary Authority of Singapore (MAS) requires funds to have at least two full-time employees in Singapore and a physical office there. Foreign workers would need to apply for employment passes.

There are prospectus and registration requirements in Singapore related to the offering of fund interests to investors located in Singapore, though a venture fund may rely on an exemption from registration. Typically, an offer to sell securities must be registered with MAS. If the fund is a collective investment scheme, the fund must be approved by MAS. Note this applies to both funds organized in Singapore and outside of Singapore. You should consult legal counsel if you have any questions related to offering securities in foreign jurisdictions to ensure you are complying with local fund marketing regulations.

There are several tax incentive schemes that venture funds may qualify for. For example, funds that have the necessary approvals and licenses from MAS and commit to investing a certain percentage of capital in Singapore based companies may qualify for the Section 13H tax incentive. Funds approved for this tax incentive are exempt from certain taxes for up to 15 years on specified income from certain types of investments that include but are not limited to gains from the divestment of portfolio holdings and dividend income from foreign portfolio companies. The Section 13R tax incentive is another popular scheme for venture funds that exempts them from specified income on designated investments. In order to be eligible for the Section 13R tax incentive, venture funds are required to use a Singapore-based fund administrator, and there is a minimum required annual business spend of S$200,000.

Singapore’s access to the fast-growing markets in APAC and its well-developed infrastructure has  made it an attractive jurisdiction to domicile funds in the region. Singapore and Mauritius (see below) are both attractive jurisdictions for funds investing in India. In 2020, over 950 foreign portfolio investors registered in Mauritius and Singapore managed more than $100B in assets under custody in India. 

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Fund Domicile – Mauritius

Mauritius Summary

Fund Structure Limited Partnership (most common)
CostPayable to FSC:
USD$1,000 registration fee
USD$3,000 annual fee 
Payable to Registrar of Companies:
USD$107 incorporation fee USD$64 annual fee 
Additional costs may be incurred depending on the service providers engaged
Timing~60 business days
Fund Marketing Fund managers may not solicit investments from persons in Mauritius, unless the fund manager is licensed in Mauritius. Fund managers may be required to register the offering with the FSC before marketing the fund to investors.
Tax TreatmentCompanies are tax opaque, LPs are tax transparent
An investor who is not tax resident in Mauritius and who does not otherwise derive any income from Mauritius is not required to pay any tax in Mauritius
There is no withholding tax on the following payments by a fund established as a company or a limited partnership: distribution by the fund to its resident and non-resident investors; in respect of a fund holding a GBL, interest paid to non-residents out of the foreign source income of the fund; or interest paid to a company resident in Mauritius.
African Private Equity and Venture Capital Association

Mauritius Overview

Mauritius is a leading jurisdiction for forming funds given its investor-friendly tax regime, the flexibility of its legislation, political stability, and the strength of its legal system. There is no capital gains tax in Mauritius. Many fund managers looking to invest in Africa, Asia, and India choose to organize their funds in Mauritius. Funds in Mauritius can be structured as a company, protected cell company, trust, or limited partnership, though typically funds are structured as limited partnerships. A limited partnership can be set up with or without legal personality. The liability of an investor is limited to their capital contribution to the fund, provided the investor is not involved in the management of the fund.

Mauritius is a common choice of domicile to access the Indian market given its tax and regulatory framework and historical ties with India. Key sectors include tech, eCommerce, healthcare, financial services, and hospitality. The India-Mauritius tax treaty is what makes Mauritius such an attractive domicile for accessing the Indian market, as there is no capital gains tax in either India or Mauritius on the sale of the shares of the Indian company by a Mauritius entity. 

Funds are regulated by the Financial Services Commission (FSC) and fund authorization is required before setting up a fund in Mauritius. The application for authorization includes the following: 

  • proposed fund prospectus; 
  • fund formation documents;
  • fund governance documents;
  • KYC documents on the beneficial owners and proposed fund directors; 
  • “Fit and Proper” person questionnaire; 
  • any certificates/confirmations required by law; and
  • registration and processing fees (USD$1,000 for registration and USD$3,000 annually)

In addition, funds are required to pay a registration fee of USD$107 and annual fee of USD$64 to the Registrar of Companies in Mauritius.  

Fund managers may not solicit investments from investors located in Mauritius unless the fund manager is licensed in Mauritius. Funds authorized in Mauritius may be required to file an offering document with the FSC that contains the necessary information on the securities being offered in order to market the fund to investors. The FSC issued guidelines to regulate the content of marketing materials and all marketing materials must include certain disclosures and disclaimers in connection with the offering and the persons making the offering. 

It is worth noting that in May 2020 the EU included Mauritius on its list of high-risk countries that have “strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks”. As such, some investors, particularly in the EU, may be wary of investing in a Mauritius fund.

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Fund Domicile – Luxembourg

Luxembourg Summary

Fund Structure Funds can be structured as: Specialized Investment Fund (SIF)Société d’Investissement en Capital à Risque SICAR)Reserved Alternative Investment Fund (RAIF)Luxembourg European Venture Capital Fund (EUVECA)Société de Participations Financiéres (SOPARFI)Société en Commandite Spéciale (SCSp)Limited Partnership (CLP/SLP)
CostVaries based on fund structure, but generally known for being costly due to the engagement of local service providers
TimingVaries depending on the fund structure but can be as fast as a couple of days if the entity is not regulated
Fund Marketing Fund Managers are subject to AIFMD and NPPRs of Luxembourg AIFM required to notify regulator via informal letter within 2 weeks of commencing pre-marketing activities
Tax TreatmentVaries based on fund structure
Luxembourg Private Equity and Venture Capital Association

Luxembourg Overview

A leading global domicile for funds, Luxembourg offers strong financial stability, access to the European Union, and a track record of fund excellence. It is the second largest domicile in AUM behind Delaware with more than €4.7 trillion in assets under management. As of 2021, around €9B is invested in venture capital through Luxembourg funds. There are a number of fund structures available in Luxembourg such as the: 

  • Undertaking for Collective Investment (UCI)
  • Specialized Investment Fund (SIF)
  • Société d’Investissement en Capital à Risque (SICAR)
  • Reserved Alternative Investment Fund (RAIF)
  • Société de Participations Financiéres (SOPARFI)

Certain fund structures are more heavily regulated and have more investment restrictions than others. Fund managers can choose unregulated or regulated funds based on their needs. Fund managers should consider the types of investors they are fundraising from and the level of regulatory framework required to determine which Luxembourg structure is most appropriate. The timing of forming these entities varies depending on the entity but can be as little as a few days if the entity is not regulated to an unlimited timeline if the entity is regulated. 

Tax treatment depends on the fund structure chosen and the applicable regulatory regime. EU member status means funds in Luxembourg can benefit from double tax treaties and invest throughout the EU under the same domicile and tax code. In addition, Luxembourg is an attractive jurisdiction for fund managers and investors seeking compliance with the EU’s Alternative Investment Fund Managers Directive (AIFMD). 

Moreover, Luxembourg has several initiatives aimed at expanding the venture capital and startup ecosystem in the country. For example, there are several incubators (Lux Future Lab and Luxembourg House of Financial Technology) and conferences in development. These initiatives give fund managers the opportunity to meet potential investors and be introduced to founders. 

Generally, investors are comfortable with Luxembourg and think of it as a safe domicile, however, there is increasing scrutiny regarding Luxembourg’s reputation as a tax haven in the EU. Costs may also be high depending on the type of fund structure due to the required annual fees (regulatory, audit, reporting, etc.). Note, costs for a non-supervised fund is less costly than supervised funds. In addition, fund managers should be aware that the type of fund structure determines how long it will take to form the fund as some structures are more complex than others. 

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The Domicile Report

Fund Domicile – United Kingdom

UK Summary

Fund Structure English Limited Partnership, specifically a Private Fund Limited Partnership (most common)
Cost£20 to register the limited partnership 
£20 to apply for PFLP designation
£100 for same day registration (currently suspended)
Formation can become costly depending on the law firm or tax advisor engaged
TimingVaries but can pay an expedited fee for same day turnaround
Fund Marketing Subject to the UK AIFMD (equivalent to AIFMD)
Tax TreatmentSeveral Tax Incentive Schemes 
British Private Equity & Venture Capital Association

UK Overview

The United Kingdom is an attractive fund domicile due to the UK’s established and trusted legal system, relatively low corporate tax rates in the EU and tax allowances, specialist VC tax incentives; and highly skilled workforce and flourishing startup ecosystem. Based on the British Venture Capital Association’s 2019 VC Industry Report, key sectors in the UK include ICT (communications, computer, and electronics), consumer good and products, business products and services, financial and insurance services, and biotech and healthcare. 

Venture capital funds are typically formed as an English Limited Partnership, but designated as private fund limited partnership (PFLP). PFLPs are tax transparent,  lightly regulated, and offer investors limited liability protection so long as the investors are not involved in the day-to-day management of the fund. Venture capital funds can also be structured as a Venture Capital Trust (VCT). VCTs are publicly listed companies on the London Stock Exchange run by fund managers. The benefit to structuring a fund as a VCT is the VCT is not taxed on capital gains. However, the compliance requirements for being approved and maintained as a VCT make this structure risky and more burdensome than the limited partnership structure. 

Prior to Brext, the UK was subject to EU law including the Alternative Investment Fund Manager Directive (AIFMD), the law that regulates the managers of investment funds in the EU. The UK has since enacted an equivalent regulation called the UK AIFMD, however, Brexit has led to some uncertainty regarding the UK’s compliance requirements with AIFMD, tax treaty benefits between the UK and EU, and the impact of Brexit on UK-based fund managers marketing their funds in the EU. In addition, the UK no longer has access to the management and marketing passports allowed under AIFMD. As such, there are other jurisdictions that may be more attractive fund domiciles in the EU, like Estonia below. 

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