Cross-Border Fund Structuring UK/EU: The Practical Guide for UK Managers in 2026

Brexit did not just change the political relationship between the UK and the EU. It fundamentally changed the regulatory infrastructure that UK fund managers rely on to access European institutional capital.

Before January 2020, a UK-based AIFM could use the AIFMD marketing passport to distribute funds across all 30 EEA states through a single notification process. That infrastructure is gone. In its place is a fragmented, country-by-country system that requires separate registrations, separate documentation, and separate regulatory relationships in each market you want to enter.

This guide explains what that means in practice for UK managers in 2026, what the options are, and what the fastest compliant route to EU capital actually looks like.

What Brexit Actually Changed for UK Fund Managers

The core change is simple: the UK is now a third country under AIFMD. UK AIFMs may no longer avail themselves of the pan-European marketing passport in order to market AIFs to professional investors in the EU. UK AIFMs may only conduct their marketing activities in EU Member States on the basis of a notification and/or approval under the relevant EU Member State's NPPR regime implementing Article 42 of AIFMD, where provided for.

This places UK managers in exactly the same position as US, UAE, or Singapore-based managers. There is no special treatment, no transitional arrangement, and no equivalence framework that gives UK managers preferential access to EU markets. The Trade and Cooperation Agreement between the UK and EU contains, in the words of Linklaters, "very limited provisions in relation to financial services, including in connection with investment funds."

The practical consequence: a UK manager who wants to raise from German pension funds, French insurers, Dutch family offices, and Swedish sovereign wealth funds must register separately in each of those markets, comply with each country's individual NPPR requirements, and maintain ongoing reporting obligations across each jurisdiction.

The NPPR Route: What It Is and What It Is Not

The National Private Placement Regime under Article 42 of AIFMD is the primary mechanism available to UK managers today. It allows marketing to professional investors in EU Member States, but it is not a passport and it is not harmonised.

Each EU Member State was entitled to decide whether or not to implement the National Private Placement Regimes. Some EU Member States have implemented marketing regimes as envisaged under Articles 36 and 42, others have implemented a modified version imposing stricter requirements, and others have elected not to implement these provisions at all. Akin Gump Strauss Hauer & Feld LLP

This matters practically. Some EU member states such as Latvia, Greece and Italy have not implemented Article 42 and therefore NPPR under Article 42 is not possible in these jurisdictions. Linklaters

For UK managers, the most accessible NPPR markets are Luxembourg, Ireland, the Netherlands, Germany, and France, each with its own notification process, timelines, and documentation requirements. Entering all five requires five separate registration processes, five sets of filings, and five ongoing compliance relationships.

What AIFMD II Changed for UK Managers Using NPPR

Because the UK is no longer a member of the EU, AIFMD II will not apply to UK AIFMs directly. AIFMD II will still be relevant, however, for UK and other non-EU AIFMs, whether marketing in the EU under Article 42 national private placement regimes or acting as delegates of EU AIFMs. cms

The specific AIFMD II changes that affect UK managers using NPPR are:

Marketing under NPPRs is now prohibited where either the AIF or the AIFM is established in a jurisdiction on the EU's AML or tax non-cooperation lists. AIFMD II does not provide for any clear transitional or grace period for marketing pursuant to NPPRs, meaning that loss of market access could occur immediately if a relevant jurisdiction is listed. Walkersglobal

The UK is currently on neither list, but this represents a structural risk that did not exist before. Additionally, AIFMD II has extended Article 23 disclosure requirements and reinforced periodic reporting obligations for non-EU AIFMs marketing under NPPR. These apply to UK managers immediately.

The Third-Country Passport: Still Not Available

The AIFMD framework includes provisions under Articles 35 and 37 for a third-country passport that would allow non-EU managers to market across the entire EEA through a single notification, equivalent to the passport that EU managers use. This has been anticipated since 2011.

It remains unavailable. ESMA has never activated it, and there is no current indication of when or whether activation will occur. UK managers should not plan on this route becoming available within any meaningful investment or fundraising horizon.

The Fastest Route to Full EU Marketing Access

For UK managers who need to raise from institutional investors across multiple EU Member States, the NPPR route has a structural ceiling: it requires country-by-country registration, creates multiple ongoing compliance obligations, and cannot scale efficiently beyond three or four target markets.

The cleanest and most scalable solution is to establish an EU-domiciled fund managed by an authorised EU AIFM. In practice this means:

Setting up a Luxembourg SCSp managed by an authorised AIFM or management company. The SCSp provides a tax-transparent, Anglo-Saxon-style partnership structure that UK institutional LPs immediately recognise. The EU AIFM handles regulatory obligations such as risk management, compliance oversight, CSSF interface, while the UK manager retains portfolio management and investment decision-making.

This structure enables the fund to obtain the full AIFMD marketing passport, allowing distribution to professional investors across all 30 EEA states through a single notification. One structure. One compliance framework. Scalable to any number of EU markets.

The typical timeline for a UK manager to set up a Luxembourg SCSp with an authorised AIFM is six to nine months end-to-end from first instruction to first close readiness. Setup costs for the AIFM relationship typically start at €50,000 to €100,000 per annum depending on AUM and complexity.

The Most Common Mistake UK Managers Make

The most frequent error is assuming that NPPR in two or three markets is sufficient for a serious EU fundraise. It is not.

Institutional allocators (pension funds, insurance companies, sovereign wealth funds) conduct rigorous due diligence on fund structures before committing capital. A fund that can only be marketed via NPPR in select markets signals to European LPs that the manager has not committed to building a proper European platform. It raises questions about governance, substance, and long-term intent.

The managers who access EU institutional capital consistently are the ones who build correctly from the start: EU-domiciled vehicle, authorised AIFM, AIFMD-compliant governance, CSSF-registered marketing passport. That infrastructure is what institutional allocators expect before the first pitch meeting.

UK Managers Raising UK Capital: The OFR

A note on the reverse direction. The UK introduced the Overseas Funds Regime under the Financial Services and Markets Act 2023 to allow non-UK funds to be marketed in the UK. This is relevant for EU managers wanting to access UK investors, but it does not provide a mechanism for UK managers marketing into the EU. These are two separate regimes governing two separate directions of travel.

What This Means for Your Fundraising Strategy

If you are a UK-based fund manager and European institutional capital is part of your fundraising strategy, the structural question is straightforward: NPPR for one or two markets as a short-term solution, or a Luxembourg SCSp with an EU AIFM as a scalable long-term platform.

The managers who move in 2026 will access institutional capital before those who wait. The AIFMD II tightening of NPPR conditions means the window for informal market access is narrowing, not widening.

If you are unsure which route is right for your specific investor base and strategy, Dorhyan Navigator will give you a structured, jurisdiction-specific assessment. For a direct conversation about your European market access pathway, book a call with the Dorhyan team.