Amid UK tax hikes, where should you take your carried interest?

As part of a package of reforms to the taxation of carried interest, the UK’s Labour government announced that a unified capital gains tax of 32% will apply to carried interest from April 2025. From April 2026, it is intended that carried interest will be subject to a revised tax regime within the Income Tax framework.
 

Given that many fund managers have previously also benefitted from the UK resident non-domiciled regime, this “double whammy” has led many fund managers to consider relocating.
 

Switzerland: an attractive alternative

With a generally beneficial tax landscape for ultra-high net worth (UHNW) individuals, Switzerland is an attractive option for fund managers considering relocation. The country boasts competitive income tax and corporate tax rates. There is no capital gains tax on moveable property, and Switzerland does not levy inheritance tax at the federal level.
 

Since there is no distinct set of rules with regard to the taxation of carried interest in Switzerland, taxation will be by analogy with the structures they most closely resemble in nature and qualification. The Swiss tax authorities will carefully consider the nature and structure of the interest on a case-by-case basis before considering the most appropriate method of taxation. Key elements include:

• Position of the contracting parties
• Manner in which the interest is structured
• Intervals of the payout

Pre-domiciliation planning for relocation success

Fund managers wishing to relocate themselves or their investment to Switzerland should seek support from a knowledgeable provider to assist with pre-domiciliation planning that takes all the federal, cantonal and municipal considerations into account.
 

Learn more about carried interest taxation in Switzerland as well as tax rules for fund managers in our brochure: