Where Are Real Asset Funds Moving in 2025 — and What’s Behind the Tax Arbitrage Rush?

In 2025, the battle for investment alpha is no longer limited to outperforming indexes or beating inflation. The smarter game being played is in jurisdictional strategy - specifically, where a fund is structured and how it is taxed. With the OECD’s global minimum tax coming into effect, fund managers are racing to restructure their vehicles across more strategically advantageous domiciles.

Gone are the days when the Cayman Islands or British Virgin Islands were the default option for alternative asset funds. A new, more sophisticated map is emerging - spanning Singapore, Abu Dhabi, Luxembourg, and Wyoming - each offering a different cocktail of tax efficiency, regulatory credibility, and global access. Welcome to the new era of global tax arbitrage - where fund redomiciling isn't just legal housekeeping, but a serious source of structural alpha.

Preparing for tax season with a cup of coffee, a pen, and essential tax forms ready for review.

🧾 Why Funds Are Moving: The Tax & Policy Drivers

1. OECD BEPS Pillar 2: The 15% Global Minimum Tax

The biggest shift came with the OECD's Base Erosion and Profit Shifting (BEPS) Pillar 2 initiative, which mandates a 15% minimum corporate tax rate across participating nations.

• Effective across 135+ countries representing 90% of global GDP

• Targets multinational corporations and investment structures that shift profits to zero-tax jurisdictions

• Includes "Income Inclusion Rules" (IIR) and "Undertaxed Payment Rules" (UTPR) that force parent companies to top up taxes if subsidiaries are domiciled in low-tax havens

  
  

This directly impacts private equity, real estate, and infrastructure funds that traditionally route capital through Cayman, BVI, or Mauritius structures. Now, jurisdictions that lack substance, don't meet OECD transparency standards, or offer zero or negligible taxes without local activity are losing favor.

2. Reputation & Transparency Matter More Than Ever

Post–Panama Papers and Pandora Papers, investor scrutiny has intensified. Institutional LPs, sovereign funds, and endowments are increasingly reluctant to allocate to vehicles domiciled in "gray list" jurisdictions flagged for secrecy or tax evasion.

• EU maintains a blacklist of non-cooperative jurisdictions, including BVI and Panama

• U.S. IRS flags certain offshore vehicles for reporting under FATCA

• Global AML (Anti-Money Laundering) and KYC standards have tightened

In short: optics now impact capital raising.

3. Mobility = Alpha

Cross-border fund managers need flexibility to:

• Target investors from multiple regions

• Manage FX, tax, and regulatory risk efficiently

• Optimize legal protections in volatile markets

Redomiciling a fund — or setting up parallel vehicles in more reputable hubs — allows managers to access broader LP bases, tap new investor treaties, and structure for tax deferral, treaty benefits, and lower friction in distributions.

🏝️ Where the Capital Is Going: Emerging Fund Hubs

Singapore: Asia’s Private Market Powerhouse

Singapore has rapidly evolved from a banking hub to a structuring center for funds, particularly in private credit, venture, and real assets.

• Variable Capital Company (VCC) framework launched in 2020

• Allows umbrella fund structures, sub-fund segregation, and tax efficiency

• Benefits from 17 signed tax treaties, including with China, India, Australia, and Indonesia

• No capital gains tax or dividend withholding tax

Over 1,200 VCCs were launched by Q1 2025, according to MAS (Monetary Authority of Singapore)

Singapore is especially attractive for family offices, Asia-focused GPs, and decentralized investment platforms seeking both credibility and low friction.

Luxembourg: The RAIF and SIF Stronghold

For EU-domiciled strategies — especially those targeting European LPs — Luxembourg remains dominant.

• RAIF (Reserved Alternative Investment Fund): Lightly regulated, tax-optimized

• SIF (Specialized Investment Fund): Suitable for real estate and infrastructure

• Exempt from corporate tax in many configurations

• Access to EU passporting for AIFMD compliance

Luxembourg manages over €5.7 trillion in assets across regulated and semi-regulated fund structures (CSSF 2024)

RAIFs are increasingly being used for co-investment funds, club deals, and multi-strategy real asset platforms.

Abu Dhabi (ADGM): The Fastest-Rising Star

The Abu Dhabi Global Market (ADGM) is rapidly positioning itself as a zero-tax, substance-strong, well-regulated alternative to traditional offshore centers.

• 0% corporate tax on investment funds

• Recognized under OECD standards

• Access to over 100 double tax treaties via UAE federal agreements

• Streamlined fund licensing for private credit, VC, and infra GPs

• Proximity to Gulf-based LPs and sovereigns

As of 2025, ADGM hosts over 85 fund managers and 450 SPVs, including names like Apollo, Blackstone, and Mubadala-backed ventures.

ADGM is now seen as the MENA equivalent of Singapore — especially for asset managers targeting LPs in the Middle East, India, and Africa.

Ireland: ESG and Regulated Fund Magnet

Ireland continues to lead in regulated fund vehicles, particularly for:

• ESG mandates

• UCITS and AIFs

• Green bond and Article 8/9 funds

It offers:

• 12.5% corporate tax, but no capital gains tax on funds

• Robust legal and financial infrastructure

• Favorable tax treaties with over 70 countries

• Access to EU distribution and EU central bank proximity

Dublin-based funds now manage €4.2 trillion in net assets, with significant AUM in climate, infrastructure, and private equity vehicles (Irish Funds 2024)

Wyoming & Delaware: U.S.-Focused Structures Remain Strong

While international flows are shifting, for funds investing in or raising from U.S. LPs, Wyoming and Delaware remain vital:

• Simple LLC or LP structures

• Favorable tax pass-through treatment

• Strong legal protection for GP liability

• Popular for crypto-native, VC, and U.S. real asset strategies

Over 70% of U.S. VC funds are still domiciled in Delaware (NVCA 2024)

📉 Where Funds Are Leaving

Historically popular domiciles like Bermuda, BVI, and Cayman are seeing declines in fund launches due to:

• BEPS-driven tax inefficiency

• Blacklisting risks (EU & OECD scrutiny)

• Perception issues with institutional LPs

• Lack of updated fund structures or regulatory modernization

According to the Financial Times, new fund launches in Cayman fell 35% YoY in 2024, with many funds either winding down or redomiciling to more substance-based hubs.

💡 Implications for Fund Managers & Investors

Redomiciling a fund is no longer a bureaucratic task — it’s a strategic investment decision. Done well, it can:

• Reduce withholding tax on distributions

• Expand eligible LP base (especially institutional and ESG-sensitive)

• Improve access to international deal flows and investment treaties

• Enhance legal and regulatory confidence among co-investors

If your fund is not already thinking about jurisdictional optimization in 2025, you're likely behind the curve.

📌 Final Thought

Capital flows are increasingly shaped not just by returns, but by rules — and the most valuable alpha may come from rethinking your fund’s legal and tax structure.

Whether you manage private credit, infrastructure, real estate, or digital assets, the future belongs to those who understand that where your fund is domiciled matters just as much as what it owns.

The next frontier of competitive advantage isn’t on the asset side — it’s in the passport of the fund.

Play global. Stay agile. Structure for alpha.