An interesting piece of news in the context of the financial upheavals and relocations we have been seeing over the last few months – the latest to be impacted is Germany. It seems that venture capital firms are actually migrating away from Germany because the German tax environment is not very conducive for investing in early-stage businesses.
Two of the latest funds which are in the news are TVM and Earlybird who are actively looking at relocating prior to their next fund-raising. The positive news is that TVM is also looking at UK as a relocation possibility, in addition to Luxembourg and Guernsey.
Will that impact their investments in Germany? – hard to say.
Wellington moved their funds to Switzerland in 2003 but they continue to have a strong German focus in their investment portfolio. However having some of the senior investing team outside Germany will certainly make them even more open to non-German investments.
According to Dow Jones – ‘the VC firms' response came after uncertainty in German law had threatened the guarantee of tax transparency for funds. This uncertainty has made investors outside Germany reluctant to invest in funds based in the country......another change in the law in 2008 made the funds liable for value added tax on their fees’.
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