Taxation of Funds
Tax analysis of investment vehicles, classes and unitholders, considering portfolio, events and legal requirements.
The tax treatment of funds depends on their category, portfolio composition, and the qualification and characteristics of their unitholders. Law 14,754 changed the rules on taxation of investments in funds and sets out regimes and requirements that call for individualized examination. Classifying a vehicle as open-ended or closed-ended is not enough on its own to determine its entire tax treatment. The existence of periodic taxation, withholdings or specific scenarios must be assessed together with the other applicable provisions.
The advisory work covers formation, reorganization and events in the life of the fund, such as amortizations, redemptions and distribution of income. The effects of changes in the portfolio, in classification and in unit ownership are examined. The class structure must also be taken into account in the tax analysis and in compliance with obligations. The work is coordinated with the fund administrator and other parties responsible for data and withholdings, so that the treatment adopted is supported by documentation and ongoing monitoring of legal requirements.
Our work
- Analysis of the fund's and unitholders' tax regime
- Assessment of amortization, redemption and reorganization events
- Review of classification and withholding requirements
Are closed-ended funds always exempt from periodic taxation?
No. The legislation sets out rules that may apply to closed-ended funds and to specific regimes subject to requirements. Category, portfolio and other characteristics must be verified.
Editorial review: