Delaware Summary
Fund Structure Limited Partnership or Limited Liability CompanyCosts$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 engagedTimingEntity formation can be done quickly and can be expedited on a same day turn-around for an additional feeFund Marketing Investment Advisers Act of 1940Securities Act of 1933Typically no general solicitation and all investors must be US Accredited InvestorsIf 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…
Category: Domicile
Reports on locations to domicile venture capital firms and funds.
Here is everything you need to know about picking a domicile for your VC fund. At VC Lab we’ve helped many ambitious fund managers such as yourself pick and launch their VC funds and we’ve simplified the process so you can focus on what matters most.
Domiciling is a complex and opaque process because of the many factors one has to consider. Each fund manager has a unique set of needs to consider with regards to their funds. You must take into account: your fund size, geography, thesis, LPs, and much more.
Read more in our ‘Best VC Domiciles‘ article.
The 7 key factors:
Fund Vehicles
Taxation / Cost
Speed to market
LP / Investor preferences
Sophistication of the national regulator
Legal system and certainty
Ease of doing business
Sign up to our Decile Launch, to automate your fund structuring.…
Netherlands Summary
Fund Structure CV, NV and CoopCostThe AFM charges €4,400 for a small managers regime registrationFormation can become costly depending on the law firm or tax advisor engagedTimingVaries depending on the regulatory regimeSmall Managers Regime is considerably quicker and better suited for new fund managersFund Marketing Fund Managers are subject to AIFMDAIFM required to gain approval from AFM prior to marketing fund to investors in the EUTax TreatmentDependent on the tax regime – open / closed and many other variablesNetherlands Private Equity & Venture Capital Association https://nvp.nl/en/
Netherlands Overview
The Netherlands is quickly becoming a hot spot for new fund managers due to its relatively cheap costs in the EU and tailor-made “Small Managers Regime” for smaller funds. As a jurisdiction with one of the most double tax treaties and clear-cut cross-border capital deployment regulations, fund managers can partake in many of the investment opportunities across Europe and raise capital with relative ease.…
Over 60% of new venture capital managers are choosing Delaware as the domicile for their firms and funds. As Europe becomes more regulated and expensive, the UK faces Brexit-related isolation, and traditional tax havens like the Caymans grow costly due to new Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations, Delaware shines. Its clear regulatory framework, cost-effectiveness, and stability make it the preferred choice for venture capitalists globally.
Why is Delaware the Top Domicile
Cost-effectiveness:
While some jurisdictions offer various incentives for venture capitalists, Delaware stands out for its cost-effectiveness. The state’s corporate franchise tax structure is favorable for venture funds of all sizes, and the cost of doing setting up and running a fund is three to five times less expensive than most other domiciles.…
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.
Overview
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.…
Cayman Islands Summary
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Fund Structure Exempted Limited PartnershipCostUS$1220 to form the ELPAnnual registration feesAudited financial statements to file with CIMASince 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 receiveFund 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 MaterialTax 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.…
Ontario, Canada Summary
Fund Structure Limited PartnershipCost$210 for the initial registration fee and renewal fee$360 late renewal feeFormation can become costly depending on the law firm or tax advisor engagedTimingImmediate turn-around if filed in person~20 business days if filed by mailFund 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. Individual Accredited Investor RequirementsAccording to NI 45-106, an individual is an accredited investor if the individual satisfies one of the following tests:– Owns at least C$1,000,000 in financial assets (e.g.,…
Hong Kong Summary
Fund Structure Limited Partnership FundCostRegistration with the Companies Registry: approx. US$390Business 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 engagedTimingEntity registration can be completed in one week, but it can take up to two months in unusual circumstances if the application requires additional governmental reviewFund Marketing There is no requirement for a LPF to have a private placement memorandum or an offering documentTax TreatmentThe unified fund tax exemption provides a jurisdictionally neutral tax treatment for private funds in Hong KongNo stamp duty is payable when an interest in a LPF is contributed, transferred, or withdrawnHong Kong Venture Capital and Private Equity Association https://www.hkvca.com.hk/en/index.aspx
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.…
Singapore Summary
Fund Structure Singapore Limited PartnershipCostS$115 for 1-year registrationS$175 for 3-year registrationS$30 for a renewal feeS$60 for amendmentsFormation can become costly depending on the law firm or tax advisor engagedThere is a S$1,000 non-refundable application fee and S$4,000 annual corporate fee for a Venture Capital Fund Manager licenseTimingEntity registration can be completed in 1 day, but it can take up to 2 months in unusual circumstances if the application requires additional governmental reviewFund 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 dividendsNo capital gains tax devised the disposal of capital investmentsGains from the disposal of ordinary share are tax exempt if certain standards are metIndividual Accredited Investor RequirementsAccording to the SFA 2001, an individual will qualify as an Accredited Investor if they meet at least one of the following criteria:– Annual income in the preceding 12 months of S$300,000 or more (or equivalent in foreign currency)– Net personal assets exceeding S$2 million (or equivalent), provided that the net value of their primary place of residence counts up to a maximum of S$1 million– Net financial assets exceeding S$1 million (or equivalent in foreign currency) Singapore Venture Capital & Private Equity Association https://www.svca.org.sg/…
Mauritius Summary
Fund Structure Limited Partnership (most common)CostPayable to FSC:USD$1,000 registration feeUSD$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 engagedTiming~60 business daysFund 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 transparentAn 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 MauritiusThere 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…
Luxembourg Summary
Fund Structure Funds can be structured as:Specialized Investment Fund (SIFSociété 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 providersTimingVaries depending on the fund structure but can be as fast as a couple of days if the entity is not regulatedFund Marketing Fund Managers are subject to AIFMD and NPPRs of LuxembourgAIFM required to notify regulator via informal letter within 2 weeks of commencing pre-marketing activitiesTax TreatmentVaries based on fund structureLuxembourg Private Equity and Venture Capital Association https://lpea.lu/
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.…
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 engagedTimingVaries but can pay an expedited fee for same day turnaroundFund Marketing Subject to the UK AIFMD (equivalent to AIFMD)Tax TreatmentSeveral Tax Incentive Schemes British Private Equity & Venture Capital Association https://www.bvca.co.uk/
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. …
Estonia Summary
Fund Structure Limited Partner FundCostFormation is generally cheaper than the UK and Luxembourg€13 to register the Limited Partner Fund€12.75 for a notary fee and an additional €18.20 if the notary prepares the draft application plus VAT Timing5-10 business days to register the fund manager60-120 days to register with the EFSA Fund Marketing Fund Managers are subject to AIFMD and NPPR of EstoniaAIFM required to notify regulator via informal letter within 2 weeks of commencing pre-marketing activitiesTax TreatmentLimited Partner Fund is tax transparent In most cases, non-resident investors are not taxed in Estonia and will only have to declare investment income earned from the fund if such income is taxed in EstoniaEstonian Private Equity and Venture Capital Associationhttps://www.estvca.ee/
Estonia Overview
In 2016, Estonia implemented legislation for closed-end PE and VC funds similar to investment schemes in the UK and Luxembourg.…