An offshore fund is a collective investment scheme

Collective investment scheme

A collective investment scheme is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group...

 domicile

Domicile

*In architecture, a general term for a place of residence or "permanent residence" in legal terms*Domicile , the zodiac sign over which a planet has rulership...

d in an Offshore Financial Centre

Offshore financial centre

An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....

 such as the British Virgin Islands

British Virgin Islands

The Virgin Islands, often called the British Virgin Islands , is a British overseas territory and overseas territory of the European Union, located in the Caribbean to the east of Puerto Rico. The islands make up part of the Virgin Islands archipelago, the remaining islands constituting the U.S...

, Luxembourg

Luxembourg

Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...

, or the Cayman Islands

Cayman Islands

The Cayman Islands is a British Overseas Territory and overseas territory of the European Union located in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica...

; it is typically sold exclusively to 'foreign' investors (those not of the domestic fund sponsor's country of origin). Thus, a common example could involve an offshore fund managed or sponsored by a U.S.-based money manager, organized under the laws of the Cayman Islands and sold exclusively to non-U.S. investors. For the purposes of the Income and Corporation Taxes Act 1988

Income and Corporation Taxes Act 1988

The Income and Corporation Taxes Act 1988, also known as ICTA, was the foremost United Kingdom Act of Parliament concerned with taxation until the Income Tax Act 2007 and the Corporation Tax Act 2010. ICTA was enacted in order to consolidate a number of earlier legislative provisions covering...

 of the UK, an offshore fund is one which is governed by the Offshore Fund Rules set out in that Act.