Pressure rises on private equity bosses’ tax

Pressure rises on private equity bosses’ tax

Government's worldwide argue taxes on private equity chiefs need to rise

PRESSURE IS rising across the globe to raise taxes for private equity bosses, with German and Swedish authorities pushing for legislative changes and a leading US pension fund investor calling the 15% rate in America “indefensible”.

Both the German and Swedish governments are considering proposals to lift tax rates for on the industry’s profit-sharing schemes, in what private equity executives say is likely going to trigger similarly sweeping changes across Europe, the Financial Times reported.

In the US, the comments about the industry’s taxes by Joe Dear, investment chief of Californian pension fund Calpers, come as US President Barack Obama is demanding the wealthy pay more.

“General partners [in private equity companies] should recognise that tax treatment of their income has become indefensible,” told the FT on Monday.

Calpers is among the world’s largest investors in private equity funds and it has investments with Blackstone, Carlyle and KKR. In Europe, buy-out managers enjoy preferential tax treatment on profit sharing schemes that are their main source of income in most countries, FT research shows.

But in Germany, four regional governments are studying a plan to remove an exemption clause which allows only 60% of a private equity manager’s profits to be taxed.

In Sweden, tax authorities are pushing key executives from Nordic Capital, IK and Altor to retrospectively pay a 56 per cent rate of income tax – plus a 40% penalty tax on past profits instead of the 30% capital gains rate that they have already paid.

 

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

4m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

5m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

6m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

6m

Related Articles

ICAEW calls for more flexible Apprenticeship Levy

Training & CPD ICAEW calls for more flexible Apprenticeship Levy

52m Chris Jewers
Insolvency: Recognising the warning signs

Insolvency Insolvency: Recognising the warning signs

20h Stephen Wainwright
SFO corporate cooperation guidance – How far should you go to cooperate?

Regulation SFO corporate cooperation guidance – How far should you go to cooperate?

22h Johnny Shearman and Elliott Fellowes
How to use artificial intelligence today

Technology How to use artificial intelligence today

1d Nash Riggins
VAT and the upside of Brexit

VAT VAT and the upside of Brexit

2d Sponsored | Bloomsmith
Value of Fraud Cases reaching UK Courts decreased in H1 2019

Security Value of Fraud Cases reaching UK Courts decreased in H1 2019

2d Chris Jewers
Tilney and Smith & Williamson confirm merger talks

Mergers And Acquisitions Tilney and Smith & Williamson confirm merger talks

3d Chris Jewers
How to cook a frog, or how to tax a non-dom

HMRC How to cook a frog, or how to tax a non-dom

3d Mark Davies