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Carried interest, a form of performance-related compensation for private equity (PE) managers, has been a contentious point of discussion in tax policy across various jurisdictions. Changing political landscapes and worsening economic climates have put carried interest regimes and PE under significant pressure. Some governments are seeking to cut back on favorable regimes for carried interest and PE funds. As such, governments are increasingly scrutinizing these types of regimes, viewing them as overly favorable compared to regular employment income. In response to these pressures, several jurisdictions are considering measures to reduce the preferential tax treatment of carried interests. These changes could significantly impact fund managers and PE executives, potentially reducing their net compensation and altering the attractiveness of PE as a career.
This article delves into specific developments in the United States of America, the United Kingdom, The Netherlands, Spain, Belgium, Germany, France, Switzerland, and Luxembourg, providing a comparative analysis of how each jurisdiction is addressing the issue. By examining these aspects, the article aims to provide a comprehensive overview of the current state and future direction of carried interest taxation in these key regions.
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