Relief for double taxation of carried interest now needs to be found on the other side of the Atlantic. The new accruals regime helps to make this possible, write Eli Hillman and Linus Ostberg (KPMG).
Firstly a quick recap on carried interest of a high-level nature. Private equity and certain other private capital fund structures have traditionally provided a special financial return to team members/carryholders in the form of an entitlement to the super-profits of the fund.
Under typical carried interest terms once invested capital has been distributed back and commonly a fixed or ‘preferred’ return usually 8% cumulative per annum has been paid to the external investors then (generally after a ‘catch-up’ to the carryholders) additional profits of the fund are distributed 20% to the carryholders and the remainder is distributed to the external investors.
There are many variations of carried...
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Relief for double taxation of carried interest now needs to be found on the other side of the Atlantic. The new accruals regime helps to make this possible, write Eli Hillman and Linus Ostberg (KPMG).
Firstly a quick recap on carried interest of a high-level nature. Private equity and certain other private capital fund structures have traditionally provided a special financial return to team members/carryholders in the form of an entitlement to the super-profits of the fund.
Under typical carried interest terms once invested capital has been distributed back and commonly a fixed or ‘preferred’ return usually 8% cumulative per annum has been paid to the external investors then (generally after a ‘catch-up’ to the carryholders) additional profits of the fund are distributed 20% to the carryholders and the remainder is distributed to the external investors.
There are many variations of carried...
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