Finance
London Private Equity Executives Spooked by Labour’s Tax Plan Eye Milan Moves
- Italian city gaining interest from managers wanting to move
- UK’s Labour is planning to raise tax on PE’s carried interest
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Marco Cerrato, a partner at Maisto e Associati, has seen his Italian tax-law firm field more phone calls than ever in recent weeks from London’s wealthy private equity fund managers nervously plotting an escape to Milan.
The trigger for their growing anxiety is the prospect of paying a higher tax on their main source of compensation — the so-called carried interest, or the portion of investment returns shared between PE fund managers. Considered capital gains, those earnings are taxed at 28% under the current regime. Britain’s Labour Party — poised to win Thursday’s election — has pledged to take a tougher approach, which could mean treating them as income at a tax rate as high as 45%.