PLF 2026: Planned Revision of the Tax Treatment of Income Distributed by Private Equity Funds

Currently, collective investment vehicles (CIVs) benefit from tax neutrality as transparent financing vehicles. As a result, the income received by these entities is taxable in the hands of shareholders and unit holders as dividends. According to lawmakers, this treatment does not ensure tax equity, as income received in the form of non-taxable capital gains within the CIVs, for example, is redistributed to shareholders as exempt dividends. This contradicts the principle of tax transparency, which should allow for the taxation of income received by collective investment vehicles based on its original nature, in line with international practices. To clarify the tax treatment of various products distributed by CIVs and to uphold the principle of tax neutrality for these entities, it is proposed in the 2026 finance law that taxation for shareholders or unit holders should consider the nature of the received products (dividends, interest, capital gains). This ensures that taxation for investors is equitable, as if they had directly invested in the underlying assets without using financing vehicles.