HSBC Unveils System To Demystify Tax Reporting Requirements For German Hedge Funds

HSBC has come up with a German tax compliant version of its hedge fund accounting system, which could be a step toward manuevering the ambiguous tax reporting burden
By None

HSBC has come up with a German tax compliant version of its hedge fund accounting system, which could be a step toward manuevering the ambiguous tax reporting burden stalling the take off of German-based hedge fund since the Bundesanstalt fur Finanzdienstleistungsaufsicht(BaFin)opened the domestic market for the products in 2004.

“The recent changes in the regulatory environment paved the way for hedge funds in Germany,” said Claude Noesen, client relationship manager, HSBC Luxembourg. “We expect to see significant growth in the on and offshore hedge fund sector as both domestic and international fund managers and investors look to leverage the new regulatory environment and diversify into other countries in Europe.”

When the German legislator created the tax structure for hedge funds, it treated them no differently from other funds that fall under the German Investment Tax Act. The stringent standards dissuaded fund managers from launching hedge funds to be sold in Germany because it meant an overhaul of their accounting and reporting systems.

HSBC’s solution attempts to make the switch-over less difficult, offering an integrated tax transparency capability for hedge funds and funds of hedge funds distributed by domestic or international fund promoters to German domiciled investors.

“With hedge funds and funds of hedge funds around the world predicted to take advantage of the new opportunities, we believe that Luxembourg -through its long history of servicing Continental Europe generally and its alignment to the German market in particular – will be at the forefront of developments through its additional ability to service Luxembourg regulated vehicles.” notes Germain Birgen, head of HSBC Securities Services, Luxembourg.

HSBC has been working with its German Bank, HSBC Trinkaus & Burkhardt and their KAG, INKA (Internationale Kapitalanlagegesellschaft) to come up with a solution that allows the group to act as KAG and service German domestic hedge fund and fund of hedge fund structures from a custody and administration point of view. This has now been approved by the German regulator BaFin.

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