In 2009, the combination of the release of the first draft of the Alternative Investment Fund Managers Directive (AIFMD) and the confirmation that the top income tax rate would be increased from 40p to 50p prompted many existing and prospective hedge fund managers to question the attractiveness of London (or any other city in the EU) as the base for their management business. While there was no exodus, it is undeniable that the popularity of non-EU, tax-favourable jurisdictions, like Switzerland, dramatically increased.
The concern is that, in 2013, the final AIFMD will prompt hedge fund managers to ask this question again. The AIFMD's remuneration requirements will be a very significant factor when answering this question, particularly for smaller hedge fund managers.
This white paper discusses the key questions to be considered by hedge funds including how the ESMA guidelines and AIFMD fit together, impact upon remuneration, tax issues and proportionality.