How Fund Formation Works in Jersey, Guernsey and Luxembourg for Private Equity and Venture Capital Funds

Jersey, Guernsey and Luxembourg are among the most established domiciles for private equity and venture capital funds globally. Each jurisdiction has developed a mature ecosystem of legal frameworks, regulators and professional service providers designed to support alternative investment funds.

However, the similarities end there.

Jersey, Guernsey and Luxembourg are best understood not as interchangeable “offshore” (aside from Luxembourg) options, but as purpose-built fund platforms. Each jurisdiction has spent decades refining its legal frameworks, regulatory approach and service-provider ecosystems to support cross-border private capital. These centres function as operational hubs for global managers which enable capital to be raised internationally and deployed expertly across markets.

Jersey and Guernsey are international finance centres located outside the European Union, while Luxembourg is an EU member state and the leading onshore fund domicile in Europe. Emerging fund managers and investors often gravitate towards Jersey or Guernsey for their speed, flexibility and cost efficiency, while Luxembourg is favoured for its onshore status and access to the AIFMD marketing passport.

Understanding how fund formation works in each jurisdiction is crucial. Selecting the wrong domicile can introduce unnecessary complexity, delay fundraising or even deter target investors. Let’s look at Jersey, Guernsey, and Luxembourg across the key dimensions of fund formation: legal structures, regulatory oversight, launch timelines, costs, and ongoing compliance. What is the experience of setting up and administering funds across all three jurisdictions and where should you domicile a fund?

Jersey Fund Formation: Key Features and Process

Regulatory Authority and Fund Regimes

Jersey funds are regulated by the Jersey Financial Services Commission (JFSC). Over the past decade, Jersey has positioned itself as a leading jurisdiction for private funds by developing regimes specifically designed for professional and institutional investors.

For private equity and venture capital strategies, the most commonly used regime is the Jersey Private Fund (JPF). Jersey’s Private Fund (JPF) regime, introduced in 2017 as a streamlined, flexible private investment fund structure for professional and eligible investors, has become a widely used choice for private equity and venture capital strategies due to its light regulation and rapid authorisation; while it historically had a 50‑investor cap, this limit was removed in August 2025, and Jersey also offers other vehicles such as expert and listed funds for different institutional or public‑facing strategies.

Legal Structures

The typical Jersey fund structure is a Jersey Limited Partnership, with a Jersey-incorporated company acting as the General Partner. This structure is familiar to international investors and closely aligned with Delaware-style limited partnerships. While Jersey companies and unit trusts are also available, limited partnerships dominate the private equity and venture capital landscape.

Formation of a Jersey LP involves registration with the Jersey Registry and the appointment of a Jersey-regulated service provider (specifically for funds under the Jersey Private Fund (JPF) regime), usually a fund administrator, who acts as the Designated Service Provider under the JPF regime.

Why Limited Partnerships Are the Preferred Structure for PE and VC Funds

Across Jersey, Guernsey, and Luxembourg, limited partnerships have become the dominant legal structure for private equity and venture capital funds. This reflects deliberate legislative reforms aimed at aligning partnership law with the commercial and governance requirements of alternative investment strategies.

Following the introduction of AIFMD, many jurisdictions modernised their limited partnership regimes to offer greater contractual flexibility, clearer governance arrangements and closer alignment with Anglo-Saxon fund models. As a result, limited partnerships in these jurisdictions are now well suited to complex capital structures, carried interest arrangements and multi-jurisdictional investor bases.

Formation Process and Timeline

Jersey is widely recognised for its speed to market. A Jersey Private Fund does not require pre-approval of an offering memorandum by the regulator. Instead, a registered Designated Service Provider (DSP) submits a JPF application form (notification) to the Jersey Financial Services Commission (JFSC) confirming that the proposed fund meets the eligibility criteria set out in the JPF Guide. Provided the application is complete and the eligibility criteria are satisfied, the JFSC’s streamlined process generally results in authorisation within about 24 hours, reinforcing Jersey’s reputation for rapid time to market.

This allows managers to align fund launch closely with fundraising momentum, which is why a lot of emerging managers or spin-outs working to tight timelines choose Jersey. More regulated Jersey fund regimes take longer, but still compare favourably with onshore alternatives.

Regulatory and Compliance Requirements

Jersey operates under a model of proportionate regulation. JPFs are not subject to prescriptive investment or leverage limits, nor are they required to comply fully with the Alternative Investment Fund Managers Directive (AIFMD), as Jersey is outside the EU.

However, Jersey funds marketed into the EU via national private placement regimes must comply with Jersey’s AIF Code of Practice, which incorporates key AIFMD-equivalent standards. Jersey has been recognised by European authorities as a cooperative jurisdiction, enabling continued access to EU professional investors under NPPR.

AML and investor due diligence requirements are scrutinous. Jersey maintains a confidential beneficial ownership registry, accessible to regulators and tax authorities, but not publicly available, thereby balancing transparency with investor privacy.

Cost Profile and Example Structure

Jersey funds are generally cost-effective to launch and operate. There is no fund-level taxation on income or gains, regulatory fees are modest, and the overall cost base is typically lower than in Luxembourg.

A common structure would be a Jersey Limited Partnership operating as a JPF, administered by a Jersey-based firm. The General Partner and manager meet local substance requirements, while the fund raises capital from UK, Middle Eastern, and international institutional investors.

Guernsey Fund Formation: Key Features and Process

Guernsey is one of the world’s leading international finance centres, with a long-established and highly active funds industry. It offers proportionate and competitive regulation, political and legal stability, and a deep pool of experienced fund service providers. A broad range of authorised and registered fund regimes makes Guernsey well suited to private equity and venture capital strategies.

Regulatory Authority and Fund Regimes

Guernsey funds are regulated by the Guernsey Financial Services Commission (GFSC). Like Jersey, Guernsey has developed fund regimes specifically aimed at private capital strategies.

The Private Investment Fund (PIF) regime is widely used for private equity and venture capital vehicles targeting professional or eligible investors and operates with a streamlined authorisation process without prescriptive investor limits under the updated rules; other available regimes include Expert Funds, Listed Funds, Eligible Investor Funds, and Unregulated Eligible Investor Funds, each suited to different strategies and investor bases.

Legal Structures

Guernsey private funds are most often structured as Guernsey Limited Partnerships, although companies and unit trusts are also available. Guernsey LPs are broadly comparable to Jersey and Delaware partnerships and are well understood by international LPs.

LP formation requires registration with Guernsey’s Companies Registry and, where applicable, notification or approval from the GFSC depending on the chosen fund regime.

Formation Process and Timeline

Speed is a key attraction of Guernsey. Certain PIF variants can be launched within one to three business days once documentation and declarations are finalised. Registered Funds and Qualifying Investor Funds (QIFs) are also approved rapidly, often within days rather than weeks. This efficiency makes Guernsey particularly attractive to anyone prioritising rapid deployment or those coordinating launches around anchor investor commitments.

Regulatory and Compliance Requirements

Guernsey, like Jersey, is outside the EU and therefore not subject to full AIFMD. Instead, it applies AIFMD-equivalent requirements for funds marketed into Europe via NPPR. Guernsey has also been assessed as a cooperative jurisdiction for AIFMD purposes.

Closed-ended Guernsey funds are not required to appoint an AIFMD-style depositary, provided certain conditions are met. Oversight responsibilities are typically discharged through licensed local fund administrators and custodians. AML and KYC standards are aligned closely with UK and EU requirements and are enforced through Guernsey-regulated service providers.

Cost Profile and Example Structure

Guernsey’s cost profile is comparable to Jersey’s and generally lower than Luxembourg’s. There is no fund-level taxation on income or gains, and Guernsey does not impose VAT on most fund services.

A typical Guernsey structure might involve a Guernsey Limited Partnership operating as a PIF, with a Guernsey-based General Partner and administrator. The fund may market to UK and select European LPs using NPPR, often targeting only a small number of EU jurisdictions.

Luxembourg Fund Formation: Key Features and Process

Luxembourg is Europe’s dominant onshore fund domicile, developed through decades of regulatory coordination, government support and specialist fund infrastructure. It is widely used by global asset managers as a European structuring hub, with funds established in Luxembourg and capital deployed across international markets. Rather than serving as a generic onshore option, Luxembourg operates as a purpose-built platform for cross-border private equity and venture capital funds.

Regulatory Authority and Market Position

Luxembourg funds are regulated by the Commission de Surveillance du Secteur Financier (CSSF). Luxembourg is the dominant onshore fund centre in Europe and operates fully within the EU regulatory framework.

Luxembourg’s position has been shaped by early and pragmatic implementation of European fund regulation, including UCITS and later AIFMD. This approach allowed Luxembourg to scale its fund industry rapidly while maintaining regulatory credibility across the EU. As a result, many non-European asset managers use Luxembourg as their primary European fund domicile, combining EU regulatory alignment with a deep pool of specialist service providers.

Luxembourg has implemented AIFMD in full and offers a wide range of fund vehicles for alternative strategies. For private equity and venture capital, the most common structures are the SCSp (special limited partnership), often used with the Reserved Alternative Investment Fund (RAIF) regime.

Legal Structures

The SCSp is Luxembourg’s equivalent to an Anglo-Saxon limited partnership. It has no legal personality, offers contractual flexibility and does not require public filing of the partnership agreement. The General Partner is typically a Luxembourg SARL, which must be incorporated by notarial deed and funded with minimum share capital.

While the SCSp itself can be established quickly, incorporation of the GP and opening of bank accounts can introduce additional time and complexity.

In practice, establishing an SCSp involves a series of interdependent structuring decisions. These typically include the design of the capital structure, the use of equity and debt instruments, governance arrangements at both GP and fund level, distribution waterfalls, and exit mechanics. These elements are embedded into the constitutional and contractual documentation at formation, and errors or oversights can be costly and difficult to unwind once the fund is operational.

Formation Process and Timeline

Luxembourg fund formation is more involved than in Jersey or Guernsey. Most private equity and venture capital funds follow one of two routes:

• RAIF with authorised AIFM: The fund itself is not directly approved by the CSSF, but it must appoint an authorised AIFM. This allows for faster launch than fully regulated products but still requires AIFM onboarding, depositary appointment and compliance setup.
• Fully regulated funds (SIF or Part II): These require direct CSSF approval and are less commonly used for first-time PE or VC funds due to longer timelines.

In practice, setting up an SCSp RAIF with a third-party AIFM typically takes two to three months from initiation to readiness.

Operational Infrastructure and Fund Administration

Luxembourg’s success as a fund domicile is closely tied to its operational infrastructure. The jurisdiction has developed a dense ecosystem of specialist fund administrators, depositaries, AIFMs and service providers that support domiciliation, accounting, NAV calculation, regulatory reporting and distributions.

This operational “plumbing” enables complex, cross-border fund structures to function within the EU regulatory framework. For private equity and venture capital funds, effective administration is central to maintaining compliance, managing capital flows and supporting the fund throughout its lifecycle.

Regulatory and Compliance Requirements

Luxembourg operates under the full AIFMD framework. This means an authorised AIFM must be in place (either in-house or third-party), and a depositary must be appointed. The AIFM is responsible for risk management, regulatory reporting (including Annex IV filings), valuation policies and compliance oversight.

Funds are also subject to EU AML directives and, where applicable, additional regimes such as SFDR. These requirements provide a high degree of regulatory oversight but introduce additional operational complexity.

Cost Profile and Investor Perception

Luxembourg is generally more expensive to operate than Jersey or Guernsey. Additional mandatory service providers, higher professional fees and VAT on many services contribute to a higher cost base, including cross-border governance.

However, Luxembourg offers the key advantage of the AIFMD marketing passport, allowing funds to market across the EU without separate NPPR filings. For certain institutional investors, particularly continental European pension funds or insurers, an onshore Luxembourg structure may be a requirement rather than a preference.

Luxembourg also plays a structural role in global investment flows, acting as a central holding and routing jurisdiction for international capital. Its treaty network, regulatory alignment and concentration of fund services make it well suited to coordinating investment structures across multiple markets, provided appropriate substance, governance and compliance are maintained.

Comparative Overview: Jersey, Guernsey and Luxembourg

Choosing the Optimal Jurisdiction

There is no universally “best” jurisdiction for fund formation. Jersey, Guernsey, and Luxembourg each serve different strategic objectives. Managers prioritising speed, flexibility, and cost efficiency often favour the Channel Islands, while those requiring broad EU market access or meeting specific LP mandates might gravitate towards Luxembourg.

From an operational perspective, the key is not simply the jurisdiction itself, but the quality of local execution. Fund managers who understand these distinctions are better positioned to select a domicile that supports both their immediate launch objectives and their longer-term fundraising ambitions.

Talk to Belasko for expert fund administration across all three.