tax & jurisdiction
As part of an ongoing strategy to boost the island's fund industry, the Isle of Man has brought forward the tax strategy by three years to give VAT relief for fund managers now.
The main focus is on promotion of the Experienced Investor Fund structure (EIF), which, after a slow start, is now accelerating in its take-up. The government is keen to push this advantage and turn the reputation of the island away from a life company specialist into a more broadly diversified financial services centre.
The EIF was launched in January 2000 but by June last year there were only 65 funds. Since then another 45 have been formed. The EIF fund structure is very flexible and tends to be used for illiquid or alternative strategies, especially property funds.
'This change impacts the fund managers' fees chargeable to a fund,' explained Steven Beevers, in charge of business development for the International Services division of the Isle of Man. 'We have managed to get all our funds out of paying the tax.
'The growth area has been and still is the Experienced Investor Fund,' he continued 'It's really starting to turn the corner ' it is almost an exponential graph now.'
The Isle of Man will be coming to London in June to officially launch the changes and explain them, followed by similar visits to Switzerland and the US.
'The next big thing for us is that we are sitting down with our fund management association, who have developed their own view of what the five-year strategy should be and how we should do the marketing roll-out,' he said.
'However, we do know that we have got ourselves into a strong position ' although there are some issues regarding levelling the playing field with our competitors.'
Beevers attributes the initial sluggish uptake of the EIF to the need for the Isle of Man to break into existing relationships managers had with other jurisdictions. This is now being achieved and, in an unexpected twist, the older, less flexible structure - the Professional Investor Fund, has had something of a resurgance in popularity.
The island is looking at a few further regulatory tweaks, including one minor one, involving reducing documentation. At the moment there are certain bits of information which need to be in both the offer document and the constitutional document.
'But if a manager is essentially lifting the fund from somewhere else, he doesn't want to have to change the constitutional documents and the offer documents,' explained Beevers. 'The tweak is minor but it's still material to people doing the business.'
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