The carried interest as a profit distribution agreement to be recognized for tax purposes in the case of asset-managing private equity funds

The tax treatment of the carried interest of the initiators of private equity and venture capital funds is the subject of some controversy. In its decision of November 17, 2020, the Munich Fiscal Court agreed with POELLATH and confirmed that the carried interest is part of the profit distribution agreed in the partnership agreement and does not constitute a hidden remuneration of the investors to the initiators. The Federal Fiscal Court allowed the appeal against the decision. In his article, Raphael Baumgartner summarizes the principles of the case law and puts the decision into context.