Carried interest from US funds – No ‘commercial profit’ within the meaning of Art. 7 DTT-USA

The Schleswig-Holstein tax court has ruled that carried interest of US asset management funds does not constitute ‘commercial profits’ within the meaning of Art. 7 DTT-USA. Carried interest can therefore only be taxed in Germany if it is paid to a person resident in Germany. This affects all those carry beneficiaries who are also taxed abroad on their carried interest and is particularly relevant in light of the possible change in the taxation of carried interest in the United Kingdom.