Revenue Note for Guidance
This section ensures the share of profits of an investment that a venture fund manager receives for managing an investment in a venture capital fund is deemed to be an amount of chargeable gains to which section 28(1) applies. These profits are known as “carried interest” and are separate from the profits made by the investors in a venture capital fund. A rate of 15 per cent applies to “carried interest” received by individuals or partnerships and a rate of 12.5 per cent applies to “carried interest” received by companies.
In order to qualify for the reduced rates of tax, investments must be made on or after 1 January 2009 for a period of at least 3 years from the date of the initial investment in private trading companies which are engaged in carrying on a business of research, development and innovation activities. “Innovation activities” mean new technological, telecommunications, scientific or business processes.
Relief will be given in respect of the total investments of the qualifying venture capital fund. However, relief will only apply to relevant investments in an EEA State.
Relevant Date: Finance Act 2019