{"id":44064,"date":"2017-08-01T10:17:03","date_gmt":"2017-08-01T08:17:03","guid":{"rendered":"https:\/\/newserver.fyb.de\/produkt\/inheritance-tax-aspects-in-the-valuation-of-private-equity-funds\/"},"modified":"2017-08-01T10:17:03","modified_gmt":"2017-08-01T08:17:03","slug":"inheritance-tax-aspects-of-valuation-of-private-equity-funds","status":"publish","type":"product","link":"https:\/\/www.fyb.de\/en\/produkt\/inheritance-tax-aspects-of-valuation-of-private-equity-funds\/","title":{"rendered":"Inheritance tax aspects in the valuation of private equity funds"},"content":{"rendered":"

Dr. Chris\u00adtoph Ludwig<\/strong> \u2014 Tax Consul\u00adtant and Part\u00adner BLL Braun Leber\u00adfin\u00adger Ludwig, Munich<\/p>\n

Thomas Unger<\/strong> \u2014 Tax Advi\u00adsor, Certi\u00adfied Public Accoun\u00adtant and Part\u00adner BLL Braun Leber\u00adfin\u00adger Ludwig, Munich Mana\u00adging Direc\u00adtor of Private Equity Verwahr\u00adstelle GmbH<\/p>\n","protected":false},"excerpt":{"rendered":"

The provi\u00adsi\u00adons of the German Inhe\u00adri\u00adtance Tax Act have been a matter of concern to the fiscal courts for many years, and recently also with incre\u00adasing inten\u00adsity to the Fede\u00adral Consti\u00adtu\u00adtio\u00adnal Court. Howe\u00adver, the legis\u00adla\u00adtor has not yet succee\u00added in crea\u00adting a consen\u00adsual inhe\u00adri\u00adtance tax concept.<\/strong><\/p>\n

On Septem\u00adber 22, 2016, the Media\u00adtion Commit\u00adtee of the Bundes\u00adtag and Bundes\u00adrat agreed on a compro\u00admise propo\u00adsal on inhe\u00adri\u00adtance tax. The Bundes\u00adtag confirmed the sett\u00adle\u00adment propo\u00adsal on Septem\u00adber 29, 2016. The Fede\u00adral Coun\u00adcil will deal with the amen\u00added law on Octo\u00adber 14, 2016. <\/strong><\/p>\n

Although the valua\u00adtion of invest\u00adments in private equity funds is not affec\u00adted by this discus\u00adsion, it is beco\u00adming incre\u00adasingly important in day-to-day taxa\u00adtion prac\u00adtice. Shares in private equity funds are trans\u00adfer\u00adred by gift inter vivos or by inhe\u00adri\u00adtance. In the absence of expli\u00adcit legal regu\u00adla\u00adti\u00adons on the valua\u00adtion of (shares in) private equity funds, the consul\u00adting commu\u00adnity is faced with a number of chal\u00adlenges, parti\u00adcu\u00adlarly in the case of a large number of private equity funds to be valued, although at least some of these also offer scope for design.<\/strong><\/p>\n

I. Essen\u00adtial prin\u00adci\u00adples of private equity<\/strong>
\n 1. basic struc\u00adture of a private equity fund<\/strong><\/p>\n

In a typi\u00adcal private equity fund, there are basi\u00adcally diffe\u00adrent groups of people invol\u00adved. The inves\u00adtors provide the invest\u00adment capi\u00adtal, the spon\u00adsors estab\u00adlish the private equity fund, and the company mana\u00adges the indi\u00advi\u00addual private equity invest\u00adments. The spon\u00adsors usually have only a small share in the capi\u00adtal of the private equity fund, but their share in the results is dispro\u00adpor\u00adtio\u00adna\u00adtely large (so-called \u201ccarried inte\u00adrest\u201d). In Germany, venture capi\u00adtal and private equity funds are regu\u00adlarly estab\u00adlished in the form of a part\u00adner\u00adship (GmbH & Co. KG). Howe\u00adver, the follo\u00adwing prin\u00adci\u00adples apply analog\u00adously to foreign partnerships.<\/p>\n

2. carried interest<\/strong><\/p>\n

The carried inte\u00adrest is a special compo\u00adnent of the spon\u00adsors\u2019 profit parti\u00adci\u00adpa\u00adtion and is regu\u00adlarly struc\u00adtu\u00adred in the part\u00adner\u00adship agree\u00adments as a dispro\u00adpor\u00adtio\u00adnate profit share.<\/p>\n","protected":false},"featured_media":18969,"comment_status":"open","ping_status":"closed","template":"","meta":{"wp_typography_post_enhancements_disabled":false},"product_brand":[],"product_cat":[2452,2454,2464,2553],"product_tag":[1398,1892,1899,1903,1910,2322,2325,2329,2333],"class_list":{"0":"post-44064","1":"product","2":"type-product","3":"status-publish","4":"has-post-thumbnail","6":"product_cat-ebook-en","7":"product_cat-dr-christoph-ludwig","8":"product_cat-thomas-unger-en","9":"product_cat-fyb-2017","10":"product_tag-private-equity-funds","11":"product_tag-ludwig-en","12":"product_tag-christoph-en","13":"product_tag-unger-en","14":"product_tag-thomas-en","15":"product_tag-inheritance-tax-act","16":"product_tag-taxation-practice","17":"product_tag-carried-interest-en","18":"product_tag-profit-sharing","19":"pa_sprache-english-3","20":"pa_sprache-german","22":"first","23":"outofstock","24":"taxable","25":"shipping-taxable","26":"purchasable","27":"product-type-variable"},"yoast_head":"\nInheritance tax aspects in the valuation of private equity funds - FYB Financial Yearbook<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fyb.de\/en\/produkt\/inheritance-tax-aspects-of-valuation-of-private-equity-funds\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Inheritance tax aspects in the valuation of private equity funds - FYB Financial Yearbook\" \/>\n<meta property=\"og:description\" content=\"The provisions of the German Inheritance Tax Act have been a matter of concern to the fiscal courts for many years, and recently also with increasing intensity to the Federal Constitutional Court. However, the legislator has not yet succeeded in creating a consensual inheritance tax concept. On September 22, 2016, the Mediation Committee of the Bundestag and Bundesrat agreed on a compromise proposal on inheritance tax. The Bundestag confirmed the settlement proposal on September 29, 2016. The Federal Council will deal with the amended law on October 14, 2016. Although the valuation of investments in private equity funds is not affected by this discussion, it is becoming increasingly important in day-to-day taxation practice. Shares in private equity funds are transferred by gift inter vivos or by inheritance. In the absence of explicit legal regulations on the valuation of (shares in) private equity funds, the consulting community is faced with a number of challenges, particularly in the case of a large number of private equity funds to be valued, although at least some of these also offer scope for design. I. Essential principles of private equity 1. basic structure of a private equity fund In a typical private equity fund, there are basically different groups of people involved. The investors provide the investment capital, the sponsors establish the private equity fund, and the company manages the individual private equity investments. The sponsors usually have only a small share in the capital of the private equity fund, but their share in the results is disproportionately large (so-called "carried interest"). In Germany, venture capital and private equity funds are regularly established in the form of a partnership (GmbH & Co. KG). 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