Fund boards: more substance required

Can well qualified, locally resident directors solve the substance problem that alternative funds have as a result of BEPS and related measures coming from the EU?

BEPS’ rules on Permanent Establishment - and now probably the EU’s blacklist threat - mean that directors, especially those resident in the jurisdiction where the fund is domiciled, will almost certainly have to show that they are the key decision makers. Otherwise the fund may well fall foul of the EU blacklist as well as BEPS’ rules on Permanent Establishment. This could be a huge boost for well qualified local fund directors resident in the jurisdiction where the fund is domiciled.

The principle behind Permanent Establishment, BEPS’ Action Plan
7, is to align a company’s economic activity – including, for example, its sales, product development and intellectual input – with where it
pays its taxes. It is intended to stop companies using low tax jurisdictions as a location to book its profits. To read more on this story subscribe to The NED.