April 28th, 2021

Private Equity, M&A and Tax

Korean Capital Gains Tax Risks for PE Funds: How Tax Liability Insurance Can Help

By: Martijn de Lange

In Korean M&A transactions involving foreign PE funds, uncertainty often arises regarding the identification of the beneficial owners under the capital gains tax (CGT) rules and which deal parties bear the risk. This is where TLI steps in. A TLI policy offers deal parties a quick and capital-efficient solution to take the risk off the negotiation table by covering a potential financial loss arising from a successful challenge of the agreed CGT position. This way, no party bears the risk and indemnities and holdbacks can be avoided.

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