AQS Patrimonio Merchant Bankers

Fund vs Individual Tax & Compounding Model

Master Dashboard →Valuation Uplift →Lux Structures →CFC/PFIC Tax Map →

Scenario A Net Worth

$659M

After 15 years (Individual)

Scenario B Net Worth

$844M

After 15 years (Lux+Blocker)

Delta / Advantage

$186M

Fund+Blocker better

Cumulative Tax Saved

$110M

Individual: $131M vs. Fund: $21M

General & Operating Assumptions

Years to Model

Contributed Asset Base (Operating) $

Initial value of operating/real estate asset

Operating Yield % (annual)

Cash yield on contributed asset base

Operating Growth % (annual)

Annual appreciation of base value

Portfolio Starting Balance $

Liquid portfolio sleeve (stocks/bonds)

Portfolio Return % (annual)

Annual return on portfolio

Reinvest portfolio after-tax returns

Distribute operating after-tax cash (vs. retain)

Reinvest retained operating cash into portfolio

Tax Rates & Fund Structure

Individual Ordinary Income Tax %

Rate on operating income (Scenario A)

Individual Portfolio Tax % (LTCG / div proxy)

Rate on portfolio returns (Scenario A)

Blocker Tax Rate % (C-Corp)

Combined fed+state on operating income (Scenario B)

Fund Portfolio Tax Rate % (Lux level)

Often 0 in simplified Lux model

Enable Intercompany Loan (Lux → Blocker)

Loan Percentage % (of Fund Value)

Amount borrowed from Lux fund to blocker

Loan Interest Rate % (annual)

Interest reduces blocker taxable income

Current Loan Details

Loan Amount: $338M

Annual Interest: $17M

Interest expense is tax-deductible at the blocker, reducing taxable income and overall tax burden.

Conservative mode (US anti-deferral proxy)

Net Worth Trajectory

Individual vs. Fund+Blocker over time

Final Comparison (Year 15)

Net worth & cumulative tax paid

Cumulative Tax Paid

Total taxes over time

Net Worth Delta (Fund – Individual)

Advantage of Fund+Blocker structure

Assumptions & Notes

Scenario A taxes operating yield at the individual ordinary rate and portfolio returns annually at the portfolio tax rate.
Scenario B taxes operating yield at the blocker rate. Portfolio returns are taxed at the fund portfolio tax rate (often set to 0 in a simplified Lux model).
Intercompany Loan: When enabled, the Luxembourg fund loans a percentage of the total fund value to the US blocker. Interest payments are tax-deductible at the blocker (reducing US taxes) and flow back to the Lux fund where they can be received tax-efficiently, creating a tax arbitrage opportunity.
If you're a U.S. taxpayer owner, toggle Conservative mode to approximate PFIC/CFC-style current taxation on portfolio returns.
This model ignores source-country withholding on bond interest/dividends, transaction costs, fees, and 163(j) interest deduction limits. It also does not model debt:equity ratios or thin capitalization rules.

Important Disclaimer

This tool is provided for educational and illustrative purposes only. The models, calculations, and tax scenarios presented are simplified and do not constitute tax, legal, or financial advice. Tax laws are complex, jurisdiction-specific, and subject to change. Actual tax consequences depend on numerous factors not captured in this model.

Before making any investment, structuring, or tax-planning decisions, you must consult with qualified tax advisors, legal counsel, and financial professionals who can evaluate your specific circumstances. AQS Patrimonio Merchant Bankers and the creators of this tool assume no liability for decisions made based on the information provided herein.