On the scope of application, effect, and reach of Section 18(1)(4) of the German Income Tax Act (EStG) – Current case law and open questions

The tax treatment of carried interest as a form of disproportionate profit distribution is a perennial issue in tax consulting for private equity and venture capital funds. Despite, or perhaps because of, legislation enacted more than 20 years ago and only a few court cases, there is still considerable legal uncertainty surrounding carried interest today. Increasing internationalization and regulatory changes are fueling tax controversies. In their article, Peter Peschke, Raphael Baumgartner, and Florian Meixner address fundamental questions regarding the taxation of carried interest and current developments.