Hedge Funds' Swiss Shift Costs U.K. £500M

Oct 4 2010 | 1:45pm ET

Hedge fund managers leaving the U.K. will cost the country's Treasury some £500 million in lost tax revenue, even though the feared "exodus" has yet to materialize.

About one in four hedge fund employees have moved from London to Switzerland, according to Kinetic Partners. The Financial Times conservatively estimates that those roughly 1,000 people pay nearly £500 million in taxes every year—assuming that they were paying the 28% corporate tax rate on their average earnings of between £1.5 million and £2 million per year.

The exit of just two people alone is responsible for £200 million of the loss: Brevan Howard Asset Management's Alan Howard and BlueCrest Capital Management's Michael Platt. Leaders of Europe's largest and third-largest hedge fund firms, respectively, the two decamped to Geneva this year, taking with them several group of top traders, whose tax-generating potential is not included in the lost £200 million.

Britain's decision to raise taxes on its highest earners to 50% from 40%, along with growing fears of strict new European Union regulation, are behind most of the decisions to leave London, the world's second-largest hedge fund center, for the regulation- and tax-friendly Alpine climes of Switzerland.


In Depth

Q&A: Pantheon’s McCrary Says Private Equity Market ‘Robust’

Dec 17 2014 | 8:32am ET

Dennis McCrary is a partner at Pantheon, a private equity firm with $32.2 billion...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.