The set up of an investment fund in Germany or another EU member state is the creation of a full-fledged organization. It will be a legal entity with all the necessary permits for financial and investment activities.
Investors planning to open a fund in Germany should be aware that the management of funds in the country is regulated by the Investment Law, which is fully synchronized with the EU Directives for UCITS and regarding the managers of AIFs.
If you are interested in the regulation of investment funds in Germany, then we recommend that you carefully study the information presented in this blog post.
Often, investment businesses choose offshore jurisdictions as the place of registration of the fund, where registration procedures are simplified and there is no taxation. An ordinary offshore company, having received the appropriate license, can turn into an offshore investment fund in just a few months.
Things are quite different in European countries. Popular jurisdictions such as Liechtenstein and Luxembourg, as well as Germany have unusually high demands to ensure full investor protection.
Those wishing to register an investment fund in Germany should pay attention to the following:
- Fund regulation in Germany is mainly done through manager regulation. For this, the manager must either obtain a license to manage assets in Germany, or obtain authorization from BaFin;
- Those who wish to open an investment fund in Germany should be aware that both professional and semi-professional investors can be appointed to manage funds. The key person must be a chartered accountant or hold an MBA in Finance degree. They need to have the experience to service regulated products;
- Those managing an alternative investment fund are to be regarded as an AIF manager;
- Registered manager is the one who either directly or indirectly, manage portfolios of AIFs whose assets under management in total do not exceed a threshold of EUR 500 million;
- A foreign AIF manager based in a country is able to pursue its activities in Germany;
- Fund managers who are not eligible to register or refuse to register must apply for a full German fund management license.
Consultation on registration and licensing of fund managers in Germany from IQ Decision UK experts will help you find out the details.
Those who intend to register a fund in the EU should know that the marketing of investment funds requires a regulatory permit or at least a European marketing passport.
Private placement mode is no longer available in Germany. The exception is small managers with local registration.
Entrepreneurs wishing to obtain permission to manage investment funds in Germany should be aware that:
- Both open-ended and closed-end mutual funds are widespread in the jurisdiction;
- Those wishing to register a fund in Germany should take into account that the choice of the depositary for the respective fund must be coordinated with the regulator;
- Retail funds pay tax on dividends and income from real estate transactions, as well as income tax in Germany.
For those who plan to start a business in this jurisdiction, we recommend signing up for a consultation on the registration of an investment fund in Germany from IQ Decision UK experts. Also, our specialists are ready to advise on funds regulation in Germany and the EU.