Budget 2013: Deloitte comments on real estate funds
20 March 2013
David Brown, partner in real estate tax, said: “The Budget announced a consultation on broadening the scope of existing exemptions from UK tax for non-UK funds that are managed by UK-based investment managers.
“This is a nod to the forthcoming Alternative Investment Fund Managers’ Directive which will permit the management of real estate funds across national borders within the EU – the so-called EU passport regime. This regime will commence once the Directive becomes effective in July 2013 and the proposed consultation is aimed at reducing UK tax barriers for an investment management house seeking to provide more services to non-UK funds from a UK base - as has happened for existing UCITS funds. Ultimately, if all the legal and tax issues can be mastered, an investment manager may be better able to consolidate its management of funds into a single manager entity in the UK. Given the number of UK-headquartered managers promoting and operating funds in Luxembourg and other EU jurisdictions, the ability to consolidate is likely to be welcome.
“This specific consultation is accompanied by a broader UK Investment Management Strategy document, highlighting the Government’s desire to increase UK attractiveness as a jurisdiction for the domiciliation and management of funds across all asset classes. This will involve streamlining of taxes on the sector as well as improving responsiveness of the FSA as regulator, for example, evidenced by the work on the new private equity depositary regime which many UK real estate funds will take advantage of as they register under AIFMD.
“The Budget also announced secondary legislation to address certain issues around the offshore funds legislation. This is aimed at addressing mismatches that may occur on fund mergers or reorganisations and is unlikely to affect the majority of real estate funds.”
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