How to Start a Hedge Fund in Switzerland
Updated on Tuesday 13th June 2017
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Switzerland represents an attractive market for hedge fund startup. In the last years, more and more investors preferred to set their investment operations in this country. Also, the country became an attractive jurisdiction for the managers of the hedge funds operating here.
Types of hedge funds in Switzerland
The Swiss legislation prescribes several types of hedge funds which can be registered here. The taxation of the hedge funds incorporated in Switzerland is performed following the regulations of the Federal Act on Collective Investment Schemes.
Businessmen interested in starting a hedge fund in Switzerland may set up one of the following legal entities:
• investment companies with variable capital (SICAV);
• investment companies with fixed capital (SICAF);
• Swiss contractual funds;
• limited partnership for collective investment (LP).
Businessmen should know that most of the hedge funds registered in this jurisdiction are set up as contractual funds. In this particular situation, it is necessary to register the fund under a Swiss corporation, which should be managed by a management company.
Taxation of hedge funds in Switzerland
Depending on the vehicle chosen for incorporation, the taxation of hedge funds can vary. For example, in the case of a hedge fund startup set up as SICAV, LP or as a contractual fund, the income tax or the capital taxes are not imposed under the applicable legislation.
Investors interested in how to start a hedge fund under one of the above mentioned vehicles should know that the taxation will be applied to the fund’s founders.
In a SICAF, the taxation is performed following the corporate tax regulations, which means that the fund will be taxed according to the provisions applicable to commercial companies. In this case, the fund will be liable to paying the corporate tax rate as well as the capital taxes.
In special conditions, hedge funds set up in Switzerland can benefit from the provisions of the double taxation treaties signed here, but this is applicable for specific jurisdictions, such as Japan, Australia, Canada, Germany or France.
Businessmen interested in more details on the registration of a hedge fund in this jurisdiction are invited to contact our affiliates in Switzerland for assistance.