Selecting an off- shore country

P

praetorian2

Hey,

I recently spoke with my accountant and fund lawyer about setting up an off shore fund. This fund would be a feeder fund into a main fund (master feeder setup). They both suggested dozens of prospective countries to choose. Here were their main points that I should consider.

1. Country in or near my time zone.

2. Country without too many tax treaties. My prospective investors will annonimity

3. Country fees for filing the paperwork.

4. Somewhere I would like to visit so I can have vacations that are writeoffs.

5. Country that prospective partners would like to invest in, and feel comfortable investing in.

For those of you on this forum who have off shore funds, how did you choose your country to locate in? Which country did you choose? Which country do you think would be good for me? Which country do you think that prospective partners would feel comfortable investing in.

Thanx in advance, and I appreciate any input.
 
My offshore domicile is the BVI's.

Slightly less cost and regulation than Bermuda or the Caymans. And slight higher in terms of prestige verse the Bahamas.


So far so good.



Regards,
Dr. Zhivodka
 
Quote from praetorian2:

What places are high in terms of prestige?
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Besides the BVI, the Netherland Antilles, Bermuda, Isle of Man, and Jersey come to mind as reputable and common offshore domiciles.
 
im sure you've already seen this book: "The Offshore Money Book" by Cornez, but it has some great, basic info for you to get started on.
 
P2,

could you explain the feeder structure? I've heard it a lot and know that all large hedge funds have it but how does it work exactly and how does it accomplish tax avoidance?

To throw my $0.02 I would have to recommend Turks+Caicos. Based on British law, time=NY, very clean and experienced as well as great beaches and scuba reefs.
 
Thanx everyone. Master feeder just means that I have a us fund and an overseas one. They both feed into the main account and I only trade one account. I let my accountant later on figure all the numbers out. That makes it easy for me.

I would like somewhere that is somewhat built up.
 
Quote from praetorian2:

I was actually thinking of using BVI also. What places are high in terms of prestige?
More...


Well as in everything, prestige is in the eye of the beholder.

Bermuda is probably tops, but as I said before its cost and regulatory structure is a bit higher and tighter than some.

Caymans traditionally has been very well regarded but some recent scandals may have tarnished its reputation a bit. All in all they are still a fine offshore domicile but the cost is a bit higher that the BVI's.

Bahamas has a very low cost structure and it's very lightly regulated. However, it is my perception that it is WAAAYY too closely associated with the U.S.

BVI to me has the best of all worlds; relatively low cost too form and maintain a fund; lightly regulated; perception of great independence; many highly competent service providers; great place to visit

All of the four domiciles listed above are approved for exchange listing if and when you wish to list your fund on a Stock Exchange like the Irish or Luxembourg or the Bermuda Stock Exchange. Some managers wish to do this to appeal to European institutions.



One thing to keep in mind about an offshore fund is that its ongoing annual cost can be prohibitive. Example: you're looking at $25,000 - $35,000 per year just for Administration and Auditing alone. Then you've got the Financial Statement preparation and any ongoing legal work and/or director fees and you could easily be in $50,000+ range per annum. Then you've still going your onshore costs to deal with on top of that.

It ain't cheap and I wouldn't advise it unless you have serious demand from many non-U.S. persons and tax-exempt U.S. persons. As you might imagine it takes a certain amount of critical mass of assets under management just to cover your cost of doing business.


Regards,
Dr. Zhivodka
 
Quote from Dr. Zhivodka:




Well as in everything, prestige is in the eye of the beholder.

Bermuda is probably tops, but as I said before its cost and regulatory structure is a bit higher and tighter than some.

Caymans traditionally has been very well regarded but some recent scandals may have tarnished its reputation a bit. All in all they are still a fine offshore domicile but the cost is a bit higher that the BVI's.

Bahamas has a very low cost structure and it's very lightly regulated. However, it is my perception that it is WAAAYY too closely associated with the U.S.

BVI to me has the best of all worlds; relatively low cost too form and maintain a fund; lightly regulated; perception of great independence; many highly competent service providers; great place to visit

All of the four domiciles listed above are approved for exchange listing if and when you wish to list your fund on a Stock Exchange like the Irish or Luxembourg or the Bermuda Stock Exchange. Some managers wish to do this to appeal to European institutions.



One thing to keep in mind about an offshore fund is that its ongoing annual cost can be prohibitive. Example: you're looking at $25,000 - $35,000 per year just for Administration and Auditing alone. Then you've got the Financial Statement preparation and any ongoing legal work and/or director fees and you could easily be in $50,000+ range per annum. Then you've still going your onshore costs to deal with on top of that.

It ain't cheap and I wouldn't advise it unless you have serious demand from many non-U.S. persons and tax-exempt U.S. persons. As you might imagine it takes a certain amount of critical mass of assets under management just to cover your cost of doing business.


Regards,
Dr. Zhivodka
More...

Thankyou. This really helps. The cost will be prohibitive. So far, I only have one potential overseas investor, but I think that the tax advantages make it sot hat it pays to look in this direction and have the fund there for when the demand comes.

I am using GTT for my work, they gave me a much lower cost quote. I have been pretty happy with them, but it still is a significant expense.

I looked over some fund databases. It seems that a lot of the bigger funds are in the Caymans. What type of scandals were there?

Which fund structure would you suggest. It seems that people are using everything from LLC/LP to corporation to something unique? They told me to choose which I prefer. There are pluses and minuses to everything. I think a corporation is the best, but it may exclude some investors potentially while attracting others. I wish there was more of a one size fits all solution. What structure are you?

Which islands are in the BVI that you really like. It seems like a good place to spend the weekend on the beach, but are any parts really built up and not just vacationish like in burmuda?

Thanx for all your help everyone.
 
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