Ceinwen Rees (Macfarlanes) focuses on the tax benefits that funds can gain from using Luxembourg holding companies.
Why do funds use holding companies?
A fundamental tenet of investment structuring is ensuring that proceeds can flow through a structure in as tax neutral a way as possible. The ideal result is that the ultimate investor is taxed at the same overall rate and on the same basis as if they had invested directly in the underlying investments although this goal is not always achieved. Partnerships are commonly used as the fund vehicle because they don’t add an additional layer of tax or change the nature of the return. Put simply if a partnership generates 100% growth the investor’s gain also increases by 100%.
However it is not often desirable for a partnership to hold investments directly. Where an investment is in a jurisdiction that imposes withholding...
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Ceinwen Rees (Macfarlanes) focuses on the tax benefits that funds can gain from using Luxembourg holding companies.
Why do funds use holding companies?
A fundamental tenet of investment structuring is ensuring that proceeds can flow through a structure in as tax neutral a way as possible. The ideal result is that the ultimate investor is taxed at the same overall rate and on the same basis as if they had invested directly in the underlying investments although this goal is not always achieved. Partnerships are commonly used as the fund vehicle because they don’t add an additional layer of tax or change the nature of the return. Put simply if a partnership generates 100% growth the investor’s gain also increases by 100%.
However it is not often desirable for a partnership to hold investments directly. Where an investment is in a jurisdiction that imposes withholding...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
