Is the carry the same all over Europe?
Hi guys,
I wonder if carry in UMM/MF PE fund (like EQT) is the same (or similar) across all European offices - regardless of whether you work in London, Luxembourg, Madrid or Warsaw. Thanks in advance.
Based on previous WSO threads, carry can vary significantly across different European cities and funds. Here are some key points to consider:
Fund-Specific Variations:
Geographical Differences:
Role and Seniority:
Performance and Realization:
In summary, while there might be some similarities in carry structures within the same fund across different European cities, there are numerous factors that can lead to variations.
Sources: Q&A: European PE professional at a Large-cap Megafund, Q&A: European PE professional at a Large-cap Megafund, Confused about carry at PE Fund, PE Ranking - Europe, Private Equity in London - US MFs vs European Funds
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No, carry arrangements are highly bespoke from firm to firm and impossible to sus out from the outside (and even once on the inside). The only thing that is certain is that it will take way longer for you to see a dime of carry than you think it should take.
Yes that is correct! Across all 44 countries in Europe and many thousands of firms the carry is literally identical. Thanks!
Well, what I meant was whether carry in the same company in the same position is similar in all major european financial centers, and if not, are the differences large?
Come to the U.S. While carry is bespoke based on firm not country in the EU, I can tell you European firms pay less across the board than the U.S. There may be a couple outliers (e.g. U.S. firm that opens EU office) but generally this is the case
The right question is whether the carry has the same tax treatment across country lol. If you were getting the same level of carry at EQT in London you would pay on it anything between 28% and 45% (likely in the 30-35% region). If you were getting that amount (gross) in Italy, you would likely get away with it paying a €100k flat tax. Which goes without saying it is like you were getting 30-40% more carry.
Not really. There's some good tax avoidance schemes and some favourable laws for expats working in Italy but you need to fit within specific criteria. I.e. in that sense to benefit for the 100k flat tax you should have not been living in Italy over the past 5/10 years (don't remember rn) and those carry profits need to come from a foreign income. Meaning that carry needs to be generated by a company outside of Italy etc. It's effectively similar to what a non-dom tax is in the UK or Spain for the first 5/10 years of your residency. And again, unless you move to Italy as a senior with already some good skin in the carry, if this incentive is only lasting for 5/10 years you'll benefit from it only partially as carry might take longer to materialize
Of course there are limitations, but we were discussing about large cap buy-out. How many PortCo do they have in Italy? Not that many, so maybe the carry from 1-2 PortCo is not tax free (pretty much) but this is still pretty much relevant. At the same time, there are that many Italians in large cap PE funds in Milan who come from a banking / consulting career in Italy. Tax treatment is definitely a very relevant question when asking in which country to work... especially with what's going on in politics between France and the UK
Do you know if the pre-tax carry is similar across all European offices of the same firm?
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