Offshore fund

However, the term is also frequently used to include other corporate domiciles popular for cross border investment structuring, such as Delaware and Luxembourg.

[2] Although the term is often used as a simply descriptive one, many onshore countries have specific definitions in their legislation or their tax codes for when an investment is treated as an offshore fund.

However, different sources may vary in relation to market share according to (i) which jurisdictions are considered to be "offshore" and which types of collective investment schemes are included.

Figures for private equity funds, an investment product with similar liquidity constraints, are markedly different, with Delaware enjoying over half the market on either measure.

Most developed offshore jurisdictions provide a broadly similar regulatory regime in relation to funds formed in their country.

Similarly, if a person domiciled in the United Kingdom invests in a Guernsey fund, they will still be liable to taxation of income and capital gains received under British tax laws (subject to the rules on remittance of foreign earned income), notwithstanding the absence of any taxation imposed in Guernsey.

The most recent (and ongoing) example is the Convention on Mutual Administrative Assistance in Tax Matters which almost every major offshore fund domicile has agreed to be bound by.

Critics, such as ATTAC (an NGO), alleged that they are a main player of the underground economy, allowing legalized tax evasion, in particular through the usage of shell corporations practicing transfer pricing.