We have considered the final reports from the perspective of a typical private investment fund that focuses on illiquid assets such as private equity, infrastructure or real estate. Some of the reports contain proposals that, if they are adopted by jurisdictions in which the funds operate and invest, could require a restructuring of the fund. This is because there is a risk that some widely-used structures will cease to be efficient from a tax perspective, or that the rules will impose a heavy additional compliance and monitoring burden on the operators of the fund.

The publication of the final reports represents a very important staging post in the process. However, there is still significant uncertainty about the full impact. In particular, much will depend on the manner in which certain governments adopt the BEPS recommendations (if at all) and the reports recognise that further work needs to be done in relation to agreeing how some of the recommended actions should apply to investment funds. As most of the OECD’s recommendations are not minimum standards to be fulfilled by all participating jurisdictions, but instead are best-practice and non-binding recommendations, there are likely to be many differences as to how and when jurisdictions will implement the BEPS recommendations. As a result, it will be extremely important for fund managers to monitor the implementation of the BEPS recommendations in the domestic laws and the tax treaties of any jurisdictions in which their fund structures operate.