My observations and those of the team point to the conclusion that the tax preferences offered by an alternative investment fund (AIF) often encourage investors to use it in order to manage their own investment portfolio, for the purposes of, one could say, private nature. The statutory purpose of AIF, in turn, is “to collect assets from a number of investors in order to invest them in the interests of said investors in accordance with a specific investment policy”. So how should we understand it? Is the design of an AIF as a private financial vehicle correct? Or, in other words, is it safe? What can the lack of external investors entail? These and other questions will be answered in this article. 


An alternative investment fund remains a very popular financial instrument. There are about 300 active AIFs in the register of AIF-managing entities maintained by the Polish Financial Supervision Authority (as of the end of Q3 2022). The tax preferences which determine the popularity of AIF represent primarily the possibility of:

  • tax exemption upon the disposal of shares, 
  • dividend exemption, 
  • no restrictions on thin capitalization or 
  • investor tax incentives. 

These and other advantages are what makes AIF so attractive as a financial vehicle. In general, AIF is used to conduct investment operations and manage the capital contributed by investors in accordance with the established investment policy and strategy. It is therefore, in principle, a vehicle for the management of the capital of others since that is essentially the task of “collecting assets from a number of investors in order to invest them in the interests of said investors in accordance with a specific investment policy”. 


Among the various aims for which customers use AIFs, we see a tendency to build an AIF as a private financial vehicle, and sometimes as an instrument for securing succession. These are therefore strictly the needs pertaining to the management of one’s private property. In this case, external investors are not considered, as their capital is simply not required. 

Let us look at the numbers:

  • as I mentioned, we have about 300 active AIFs in Poland 
  • nearly half (i.e., 147) is an internally managed AIF
  • it is estimated that within this half, about 45 entities (about 30%) are private investment funds.


How should we interpret the statutory requirement whereby AIF must manage assets of “multiple investors” in this case? The European Securities and Markets Authority (ESMA) points out that from a regulatory perspective the possession of only one investor by an alternative investment fund will not always be considered as a failure to meet the requirement of multiple investors. It can be deemed to be satisfied, for example, if internal regulations (company agreement, investment policy, etc.) or other acts or arrangements binding on a given AIF remain open to investors and do not prevent/prohibit the raising of capital from more than one investor. Thanks to this, the number of investors in a given financial vehicle may be increased. 

In conclusion, in the opinion of the European supervisory authority, whose guidelines are also used by the Polish Financial Supervision Authority, the mere fact of having one investor does not exclude the qualification of a given entity as an AIF. However, it is necessary to permanently open this entity to external investors. So much for the regulatory approach, such as ESMA or the PFSA.


This means that the appropriate structuring of even a private AIF does not have to be a problem from a regulatory perspective. However, this does not mean that the potential problem is completely eliminated. It must be borne in mind that the use of AIF for trading in private property means, quite obviously, that one can benefit from the tax preferences applicable to AIF. For example, it is possible to imagine a multi-million investment portfolio giving tax preferences on the sale of assets worth many million zlotys. And that is an entirely different thing. In such a situation, will the tax authority fail to scrutiny the transaction and examine whether there were actual grounds for taking advantage of the exemption?

And here comes the heart of the problem. In such a case, can the tax authority begin to question the failure to meet the statutory criteria for conducting investment activities and directing the offer to “multiple investors”? In such a situation, could the use of tax exemption resulting in the non-taxation of a transaction be met with such charge and the application of a general anti-tax avoidance clause? I leave the answer to the readers of the article.

How are we to defend against this in the case of private AIFs? It would be particularly desirable to try and suitably substantiate carrying out investment activities in the full sense of the word. What does this mean? First of all, it should be demonstrated that the fund has realistic capabilities to implement an investment policy, e.g., by: 

  • having a team capable of making investment decisions;
  • holding and actively using bank/brokerage accounts;
  • having a real office;
  • incurring real costs related to employing a team.

These are very important factors that should be taken into careful consideration when planning active investment operations. As a result, even if an AIF is used to manage private assets, it will be possible to demonstrate that investors can join it at any time, and therefore that our alternative investment fund is a real investment vehicle. 


It is therefore necessary to build the capabilities of viable assets management and investment management capabilities on the part of an AIF. Just stopping at ESMA/PFSA guidelines and leaving AIF open to external investors on paper alone may not be enough to fend off the increasingly aggressive approach of official authorities.