Cayman Islands funds to invest in Italian securities if added to Italy's whitelist: Cayman Finance


Jude Scott, chief executive officer of Cayman Finance, has supported the inclusion of the Cayman Islands on Italy’s “whitelist”.

Scott said the addition of the island on the whitelist will, among other things, allow Cayman Islands funds to invest in Italian securities such as bonds and securitisation instruments and receive interest payments gross of withholding tax. Additionally, Cayman funds may benefit from full exemption from Italian tax on profits attributable to them where they own more than five percent of an Italian real estate investment fund.

Cayman Finance said that while statistics show managers in the US manage approximately 74 percent of net assets from Cayman domiciled regulated funds, Europe remains an important player in the alternative investment industry.

Scott said this decision was a positive step forward for Cayman’s financial services industry in Europe, particularly on the heels of the European Securities and Markets Authority’s (ESMA) recent deferral of its recommendation on the Cayman Islands’ application for the Alternative Investment Fund Managers Directive (AIFMD) passport.

“We are optimistic that the pending legislation for the Cayman Islands AIFMD regime will be in place late 2016/early 2017,” Scott said. “Once the remaining legislation is enacted, we see no impediments hindering Cayman’s AIFMD passport application. The creation of this regime will offer wider opportunities for Cayman domiciled funds and managers in Europe.”

The Cayman Islands continue to make positive strides as a reputable international financial centre as it co-operatively develops legislation for the AIFMD compliant regime to market into Europe beyond the national private placement regimes.

Scott said Cayman’s financial services industry is encouraged by Italy’s recognition of the Cayman Islands for its good tax governance and inclusion of the jurisdiction on its whitelist.

“The inclusion of the Cayman Islands on Italy’s whitelist echoes to the global financial services industry its recognition of our robust framework to combat corruption, money-laundering and tax evasion but as importantly, Cayman’s commitment to comply with international standards of transparency and exchange of information,” Scott said.

“It is encouraging to be recognised by many European countries and more recently Italy, on tax information exchange. We look forward to building a stronger partnership with Italy and other EU countries in an effort to combat financial crimes.”

This development will enable Cayman funds, particularly credit and real estate funds, to provide much needed inward investment into Italy. The granting of the right to receive interest income gross of withholding tax is very positive for Cayman funds investing in Italian securities, Cayman Finance said in its press release.

Scott said Cayman’s funds industry could play an increasingly important role in providing liquidity and credit to Italian businesses, to help offset the challenges faced by Italian banks as a result of the recent global credit crises.

“Cayman funds have played this role with other major economies,” he said. “As a premier global financial hub and allocator of global capital and financing, Cayman provides a cost effective, neutral platform to allow international investment to be made into economies that need that investment, while at the same time giving pension funds and other international institutional investors an opportunity to invest in a diversified portfolio of securities.

“The Cayman Islands enables parties from around the world who are domiciled in countries that may have differing laws, regulations, tax structures and customs to benefit from doing business with each other using Cayman as an efficient and effective global financial hub.

“This inward investment from Cayman will ultimately help stimulate economic activity, create much needed jobs and generate taxable revenue in Italy.”

Scott said if Cayman is granted the AIFMD passport, Italian resident investors and pension funds would be able to invest in Cayman domiciled structures including many of the world’s best alternative investment structures.

“As Cayman funds continue to market into Europe, all stakeholders can take confidence that the Cayman Islands Government, the Cayman Islands Monetary Authority and the financial services industry remain committed to building a vibrant alternative investment funds industry that safeguards its investors but facilitates growth and good business,” he said.

The Cayman Islands signed a Tax Information Exchange Agreement with Italy on 3 December 2012 which came into force on August 13, 2015.

To date, the Cayman Islands have signed 36 tax information exchange agreements, two inter-governmental agreements, namely with the United States and the United Kingdom and more recently a multilateral competent authority agreement to implement the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard to improve international tax compliance and the exchange of information.

Cayman Finance, Cayman Islands, Funds, Europe, Italy, Legislation, US, ESMA, AIFMD passport, Jude Scott

Cayman Funds