Mitigating tax leakage

Bastien Voisin and Laura Charkin consider the latest tax considerations in structuring Luxembourg private equity funds for investors from the UK, the US and the EU

Private equity investments have traditionally been associated with a high degree of flexibility in terms of structuring and tax optimisation of the investment platform. The investor base of such funds is made up to a large extent of tax exempt investors. It is critical for these investors that their commitment to investing with a fund manager does not expose them to additional tax costs that they would not suffer if they invested directly into companies. In the past, the EU has recognised the specific needs and difficulties faced by these investors in investing across Europe, looking at ways of removing barriers to cross-border investment.