Private Equity and Venture Capital in Europe

6.1. Fundamental Role of Taxation in Private Equity and Venture Capital

Policymakers play a fundamental role in private equity and venture capital development. They must address regulatory and administrative barriers and ensure coherent policies. This enables investors to provide a continuous financing cycle for start up, spin off, company development, transition, and buyout investments to create taxable value or returns (see Figure 6.1). Investors should be considered in the valuation framework of investment strategies used to allocate financial sources, taxation, and the entire country taxation system.

Figure 6.1. Financing cycle of private equity and venture capital.

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