When considering how the investment management activities for a hedge fund should be structured, the legal form that is chosen for the hedge fund vehicle itself (and, in particular, the jurisdiction in which it is established) plays an important role.

As more fully discussed in Practice Note: Tax and hedge funds—structuring the hedge fund vehicle, a hedge fund vehicle could, realistically, take one of the following structural forms:

1. •

   a Cayman Islands company

2. •

   a limited partnership

3. •

   an entity established in another low (non-EU) tax jurisdiction (eg the Channel Islands, British Virgin Islands or Bermuda), or

4. •

   an entity or structure established under a special tax exemption regime in an EU or OECD member country (eg a Luxembourg SICAV or an Irish OEIC)

This Practice Note looks at the key tax considerations when considering how to structure the management of the fund’s investments. It is assumed for these purposes that this management will take place from the UK, which continues to serve as the centre of the European hedge fund industry. Specifically, this Practice Note addresses:

1. •

   what