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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The Domicile Report

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.

More Domicile Analysis

For more information on fund domiciles, including details and analysis below: