January 22, 2026

Luxembourg’s New Carried Interest Tax Regime

January 22, 2026/ Ruchelman P.L.L.C.

Carried interest tax regimes are under review across several countries in which major fund hubs are based. Policy trends diverge, with some jurisdictions tightening tax privileges in response to fairness and anti-avoidance debates, while others recalibrate to attract or retain fund talent and decision making substance within an investment fund context. Seeking to foster and strengthen its position as a major investment fund hub, the Luxembourg government proposed legislation to reform the existing carried interest regime. In his article, Adnand Sulejmani, a senior associate in the Luxembourg tax practice of Ashurst, explains that the existing law fostered inconsistent interpretations among practitioners regarding the taxation of carried interests and contained a sunset provision for the benefit. In comparison, the proposed legislation emphasizes tax certainty for participating investment management professionals and a permanent favorable tax regime. The proposed legislation is expected to be enacted before the end of January 2026, with an effective date as of January 1, 2026.

May 27, 2021

Clarity on Recharacterization of Carried Interests

May 27, 2021/ Ruchelman P.L.L.C.

· Earlier this year, the I.R.S. issued final regulations providing guidance on Code §1061, which recharacterizes certain long-term capital gains as short-term gains for holders of partnership interests entitled to carried interests. The provision impacts fund managers of alternative investments, such as private equity and hedge funds, who receive carried interests. When gains are derived through a carried interest, they are treated as long-term capital gains only when the carried interest is held for 36 months and one day, significantly longer than the 12 months and one day ordinarily required. In her article written while an extern at Ruchelman P.L.L.C., Susan F. Robinson explains how the final regulations address two workarounds that were widely proposed to circumvent the lengthened holding period and cautions that the policy debate on carried interests may not be over.

January 26, 2018

Circular Letter No. 25/E Clarifies Italy’s New Carried Interest Regime

January 26, 2018/ Ruchelman P.L.L.C.

Early last year, the Italian government announced new rules regarding favorable taxation of carried interests. Graduated tax rates and social charges would be replaced by a flat 26% tax on investment income. Towards the end of the year, guidelines were published by the Italian tax authorities providing significant clarifications on the scope, requirements, and conditions under the new tax regime. Andrea Tavecchio and Riccardo Barone of Tavecchio Caldara & Associati, Milan, examine how the new regime will work in practice.

August 15, 2015

U.S. Taxation of Carried Interest

August 15, 2015/ Web Admin

Favorable long-term capital gains tax treatment for managers of hedge funds has been under attack by the Obama Administration. While the industry defended itself from outright changes to favorable tax treatment, the I.R.S. recently proposed to disallow favorable treatment where a manager’s right to payments bears no entrepreneurial risk. Nina Krauthamer, Philip R. Hirschfeld, and Kenneth Lobo explain.