Use of investment fund for planned investments

An investment fund – in addition to its standard function of investing the money collected – can act as a “holding company” for carrying out specific investments.

One of the advantages of such an arrangement is that it is more likely to obtain the needed financing (e.g., a bank loan) than in the case of an “ordinary” commercial company. In turn, in the case of further lending to subsidiaries, the interest received by the fund will, in principle, be exempt from CIT.

Similarly, if the assets of an investment fund consist of shares in companies, distributions of profits of these entities to the fund will also be exempt from tax.

Income of an investment fund does not include the value received from payments made in the form of cash or securities or shares in limited liability companies, accepted in exchange for the allocation or disposal to fund participants of participation units or investment certificates. Contributions received by the fund can therefore be used in full (without deduction of tax) for investment.

The use of the fund makes it possible to quickly and efficiently “exit” a given investment. In this case, the fund will also, in principle, benefit from the exemption from taxation of income from the sale of shares in companies.