Preventing Unnecessary VAT Leakage In A Private Capital Setting

This is an updated version of our previous article that discusses ways to mitigate unnecessary VAT leakage in a private capital setting, focussing on the following areas:

• VAT savings in a typical UK/Luxembourg structure;
• The interaction between UK fund structures, VAT groups and partial exemption methods; and
• VAT recovery in respect of transaction costs.

VAT savings in a typical UK manager/Luxembourg fund structure

What's the position?

Luxembourg is a well-established jurisdiction for establishing alternative investment funds (AIFs) as its legal and regulatory status for investment funds is well-established and familiar to investors. There are also VAT benefits that arise due to a difference between the VAT laws of Luxembourg and those of the UK.