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France Welcomes Foreign Asset Managers With Softened Tax Treatment of Carried Interest

In light of the ongoing changes in Europe resulting from, inter alia, Brexit, the French government has shown a strong commitment to removing certain French tax pitfalls for foreign asset managers looking for an alternative entrance into the European market. A parliamentary amendment to the French 2019 Draft Finance Act, initially adopted by the National Assembly (the Holroyd Amendment), was recently voted on by the Senate. The Holroyd Amendment is expected to enable foreign private fund managers relocating to France to benefit from a 30-percent tax rate on carried interest they already hold in foreign funds. In a guest article, Sabina Comis and Pierre-Emmanuel Floc’h, partner and associate at Dechert, respectively, discuss the actions taken by the French government – namely, the lowering of the tax rate on incentive compensation – to lure foreign fund managers to France in the wake of Brexit, as well as which fund managers will be eligible to benefit from this new tax regime. For more on French law affecting private fund managers, see “Advise Technologies Program Provides Guidance for Non-E.U. Hedge Fund Managers Registering Under E.U. Private Placement Regimes (Part One of Two)” (Dec. 3, 2015); and “What the Evolving European Marketing Environment Means for Hedge Fund GCs and CCOs” (Nov. 12, 2015). For additional commentary from Dechert partners, see “How Cross-Border European Fund Managers Can Prepare for Brexit’s Momentous Regulatory Effect” (Apr. 6, 2017).

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