The draw of hedge funds to sunnier climes and more favorable tax rates has continued today as Tyrus Capital Management has moved most of its staff and resources to Monaco. The company retains its headquarters in London but most of its operatives live in the Mediterranean principality where they can avail of much lower tax rates.
Several high profile funds have left London, and American cities, in favor of low tax European and Caribbean countries in recent years in order to avail of the benefits offered in those nations.
European Union regulations that are soon to come into effect have certainly influenced the withdrawal of companies from London. There has been clear protest against the European measures seeing companies move to nations in the same locale that do not accede to the Union’s laws. Switzerland has been one of the most popular options for firms though smaller countries with very low personal tax rates seem to be benefiting as well.
Tyrus’ officers seem to be deciding their fate based on that variable. The firm’s heads have all moved to Monaco and their residences are now listed there. They have all also resigned as directors of Tyrus Capital LLC based in London. The directors still manage the company’s funds but now from Monaco.
Tyrus Capital has over $8 billion in assets is just the latest in a series of funds that have sought to leave London in order to avoid taxes in Great Britain. In the recent past several funds have chosen Switzerland as their home. The leading causes of the exodus are the high personal tax rates in Britain and the level of regulation in that country.
The United Kingdom’s government recently raised the country’s top tax rate to 50% and since the financial crisis regulations on investment firms have been increasing. Because of the shift London may be missing out as one of the world’s financial capitals.
London may be facing a losing battle as funds become more mobile. Moving company Headquarters and operations has become easier and more fluid as internet based trading has become more popular with traders.
Tyrus is just the latest example of a firm that can operate hundreds or thousands of miles away from the most important markets and face no information deficit. Monaco and Switzerland’s gain may be indicative of the future of hedge funds.