Best jurisdiction for private fund

[kagein]

Four friends are looking for the best jurisdiction to set up a closed ended private fund. The fund will be trading crypto derivatives, all profits will be distributed in crypto so we wont need any banking. Our main aims are no corp tax, no need to have a license and minimal reporting requirements.

We've looked at Panama PIF 20 which seems to fit the bill but we're not sure if this is just a regular IBC or there's more that needs to be done. We have considered just using a seychelles IBC without registering it as a private mutual fund.

Any ideas?

 

[JohnnyDoe]

Four friends are looking for the best jurisdiction to set up a closed ended private fund. The fund will be trading crypto derivatives, all profits will be distributed in crypto so we wont need any banking. Our main aims are no corp tax, no need to have a license and minimal reporting requirements.

We've looked at Panama PIF 20 which seems to fit the bill but we're not sure if this is just a regular IBC or there's more that needs to be done. We have considered just using a seychelles IBC without registering it as a private mutual fund.

Any ideas?

Setup a DAO. Don’t be a dinosaur.

 

[kagein]

I don’t know how a DAO would work for us. We trade crypto derivatives so we need an account with a broker under the name of the company. So if there’s ever an issue, we each have legal claim for the funds sat at the broker. We don’t do any on chain trading.

 

[JohnnyDoe]

I don’t know how a DAO would work for us. We trade crypto derivatives so we need an account with a broker under the name of the company. So if there’s ever an issue, we each have legal claim for the funds sat at the broker. We don’t do any on chain trading.

What about a Wyoming DAO LLC?

 

[kagein]

Brokers wont open crypto derivative accounts for us companies / citizens.

 

[Martin Everson]

Four friends are looking for the best jurisdiction to set up a closed ended private fund.

Why a fund over a normal company. What you think a fund would achieve over a normal company?

Our main aims are no corp tax, no need to have a license and minimal reporting requirements.

How would a fund help with this?

We have considered just using a seychelles IBC without registering it as a private mutual fund.

A Seychelles IBC which would not be tax resident in Seychelles would not help tax wise.

Anyway the first thing you need to work out is your personal tax status. In some countries with CFC rules an offshore company will be transparent for tax purposes making it a waste of time. You need to mention where you are resident for any serious answer to be given.

 

[kagein]

Your right a company would suit our needs, the problem is collective investment companies (closed ended funds) have to obtain a license in many jurisdictions, Seychelles and BVI for example. While we could use an IBC, if authorities find out there are generally hefty fines. With regards to tax we each have our own unique tax statuses, so the transparent nature of the fund would be completely fine, we just want minimal reporting requirements.

 

[CaptK]

Your right a company would suit our needs, the problem is collective investment companies (closed ended funds) have to obtain a license in many jurisdictions, Seychelles and BVI for example. While we could use an IBC, if authorities find out there are generally hefty fines. With regards to tax we each have our own unique tax statuses, so the transparent nature of the fund would be completely fine, we just want minimal reporting requirements.

Not necessarily, if it’s a group of 4 friends getting together and starting a company then that wouldn’t require regulation.
If you intend to bring 3rd parties in then yes you would require a fund license.

From what I have read you don’t require a license but the issue is tax residency and nationality. Unless one of you are in a tax neutral state then the PE can be stated there and profits distributed to the everyone and tax is your individual headache.

 

[Martin Everson]

Not necessarily, if it’s a group of 4 friends getting together and starting a company then that wouldn’t require regulation.

I agree. This is what I was going to suggest as this is what most people should do. Then it only leaves the tax issue open.

With regards to tax we each have our own unique tax statuses, so the transparent nature of the fund would be completely fine, we just want minimal reporting requirements.

A fund won't work either depending on your country. Four friends would be 25% ownership each. Thats not a minor holding in a closed end fund and you need to examine your countries tax code treats such major holdings.

 

[startfleetio]

@kagein

What kind of crypto derivatives are you trading?

With a US LLC, you can easily setup crypto US exchange accounts with fiat on-ramp and off-ramps. Coinbase, Kraken, FTX.US, Binance.US and more. Your pick.

 

[rentolfree]

Will a US LLC require holding a license though? I am reading that you need to own a trading license in order to trade derivatives and that crypto is becoming harder to trade.

I am also looking into starting a small hedge fund with 1 founder / shareholder (max 2 if my friend does not go solo), and I was thinking to go with Seychelles.

I am resident in Bulgaria so I am looking to extract the profits as yearly dividends there.

Any thoughts from Martin?

Why a fund over a normal company. What you think a fund would achieve over a normal company?



How would a fund help with this?



A Seychelles IBC which would not be tax resident in Seychelles would not help tax wise.

Anyway the first thing you need to work out is your personal tax status. In some countries with CFC rules an offshore company will be transparent for tax purposes making it a waste of time. You need to mention where you are resident for any serious answer to be given.

I wonder, what did @kagein eventually decide to do? Can you provide any feedback now that a year passed?

Four friends are looking for the best jurisdiction to set up a closed ended private fund. The fund will be trading crypto derivatives, all profits will be distributed in crypto so we wont need any banking. Our main aims are no corp tax, no need to have a license and minimal reporting requirements.

We've looked at Panama PIF 20 which seems to fit the bill but we're not sure if this is just a regular IBC or there's more that needs to be done. We have considered just using a seychelles IBC without registering it as a private mutual fund.

Any ideas?

 

[TheCryptoAnt]

We have considered just using a seychelles IBC without registering it as a private mutual fund.

Go with this one, save the headache.

Any 'classic offshore' jurisdiction works for crypto only companies. Bonus points if theres no reporting requirement.

 

[rentolfree]

Thanks a lot cryptoant! Greatly appreciated! Any recommendation when it comes to offshore set up company that can assist? If anyone has a referral in the usual prices I am happy to use it!

Thanks