August 13, 2006

Hedge Funds Liberalization in Germany

How many times have you heard about the liberalization in Germany? When hedge fund business gained importance in the US and Europe, Germany liberalized its rules governing hedge funds and taxation of their income at the beginning of 2004. The initiative was haled in many quarters as a new dawn for the growing hedge fund sector. Here is an interesting point that arises before the world. If a conservative country like Germany could embrace hedge funds, why the rest of Europe and other markets are still lagging behind?

The German Investment Act and the Investment Tax Act help the authorities in encouraging the growth of a domestic hedge fund industry. At the same time, these legislations made it easier for funds to attract customers and retail investors. This is definitely a good sign for the emerging hedge fund industry in Germany. Now, we should wait to watch the real impact of these legislations on the hedge fund industry in Germany. Who knows, they might set a precedent for others.

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