Tax Governance in Relation to Investment Funds

This article examines how tax governance is becoming a core component of investment fund governance frameworks, moving far beyond a narrow compliance exercise. Using Luxembourg as a reference point given its leading role in cross-border fund distribution, the article explains the complexities of tax governance in an investment fund context, notably due to multi-stakeholder operating models and the need to manage tax obligations across multiple layers – investor, fund and portfolio levels. The article further explores the drivers behind rising investor expectations and increased scrutiny from tax authorities and financial regulators regarding tax governance. Against this backdrop, the article proposes practical action points for the fund industry, highlights opportunities resulting from the use of new technologies and emphasizes the importance of sound human judgment and deep tax knowledge for implementing strong tax governance frameworks.