UK tax drives hedge fund staff away to Switzerland
GLG Partners has become the latest large hedge fund to see some staff leave its UK offices for Switzerland, due to higher personal tax rates.
Pierre Lagrange, co-founder of the Mayfair-based group, said a handful of employees have moved to Pfaffikon, where parent group Man has a large office and where about 500 of its 1,500 permanent employees are based.
“We have offices in quite a few jurisidictions so we have quite some flexibility, if staff want to go absolutely they can, but few have gone,” Lagrange said.
Switzerland’s tax rates are somewhat flexible, whereas higher rate taxpayers earning more than £150,000 incur 50% income tax in the UK.
GLG’s hedge fund rivals Brevan Howard and Amplitude Capital have relocated staff, or whole offices, to Switzerland, while BlueCrest Capital Management has moved its corporate headquarters and staff to Guernsey.
But Lagrange said: “You have to recreate a new fabric, and it is a question of how you do your job in a different location.”
“There are still things (colleagues) need to be together for at some stages, which is massively important.”
He said the lure of Latin America, the Middle East and Asia posed a “much bigger risk in the longer term” to established centres such as London and New York, than does Switzerland.
Lagrange said the numbers of financiers moving to Geneva would grow, “but I am more concerned about Asia”.
He added the European Union’s plans to regulate its alternative fund managers, as manifested in the Alternative Investment Fund Managers directive, was an “interesting discovery process for the authorities” rather than a cause of concern for the industry.
It was also not, as some had feared, a major impetus for managers to leave Europe, where its greatest effects would be felt.
“London is still one of the best places on the planet to operate. But (London) has to be cognisant of the risks, and not from New York, but from Dubai, Hong Kong and Rio De Janeiro,” Lagrange said.