Tax changes and developments in the fund and investment platform structuring within the European private equity sector: the anti-avoidance Directive and ECJ’s case law

Tax changes and developments in the fund and investment platform structuring within the European private equity sector: the anti-avoidance Directive and ECJ’s case law

Abstract:

All EU member States are implementing into their legal orders the rules within the Directive against anti-avoidance practices. These rules are completely or partially new for some EU member States attractive for the private equity sector, like Luxembourg, Ireland and the Netherlands. These three countries now officially have a rule limiting the deduction for tax purposes of net interest expenses, a rule on controlled foreign companies and a rule against hybrid instruments. In addition to this tax reform at EU level, the European Court of Justice has issued some judgements directly affecting private equity funds and investment structures with regard to withholding tax exemptions on interest and dividend payments. Private equity players, including fund managers and investors, should consider the impact of these new rules and judgements in their investment structures within the EU, to keep them efficient and effective from a tax perspective.

Keywords: Directive, anti-avoidance, private equity, alternative investments, Danish cases, ECJ