Taxation of international private equity funds—offshore fund structuring
Produced in partnership with Ceinwen Rees of Macfarlanes LLP
Taxation of international private equity funds—offshore fund structuring

The following Tax guidance note Produced in partnership with Ceinwen Rees of Macfarlanes LLP provides comprehensive and up to date legal information covering:

  • Taxation of international private equity funds—offshore fund structuring
  • What are the key UK tax drivers behind an offshore private equity fund structure?
  • Example of a typical offshore fund structure with UK elements
  • Tax transparency at the fund level
  • Permanent establishment risk for the fund and investors
  • Offshore manager with an onshore adviser
  • FATCA
  • Automatic exchange of information—the Common Reporting Standard
  • Offshore funds rules
  • Achieving capital gains treatment on carry
  • more

This Practice Note provides an introduction to the structuring considerations relevant to a typical offshore private equity fund with some UK connection. The note deals with issues arising in both completely offshore structures and those that combine both onshore and offshore elements.

Given the potential scope of this note, it is restricted to the UK tax consequences of such structuring, and focuses on typical arrangements involving European- and US-based funds. This Practice Note does not deal with regulatory matters.

It will be helpful to read this note in conjunction with the Practice Note on onshore fund structuring: Taxation of private equity funds—how is a fund structured? and also: Private equity funds—overview.

For details of how investors in a typical private equity fund are taxed on their share of the fund's profits, see Practice Note: How are investors in a private equity fund taxed on their share of the profits?

For an international guide to fund formation, covering a number of key jurisdictions, see Practice Note: Getting the Deal Through: Private equity fund formation.

What are the key UK tax drivers behind an offshore private equity fund structure?

When establishing an offshore private equity fund structure, many of the same considerations are at play as when a UK-based, onshore fund structure is established.

In particular, this Practice Note looks at:

  1. a typical offshore fund structure

  2. tax