What is carried interest?
Carried interest (or simply carry) is the share of investment profits paid to the General Partner of a private investment fund — venture capital, private equity, hedge fund — as performance compensation, in addition to a management fee. The market-standard carry is 20% of profits above a return threshold (the hurdle rate).
Carried interest is taxed favourably in many jurisdictions (long-term capital gains in the U.S. if held for the required period). Recent U.S. tax reforms have extended the holding-period requirement to three years for carry to qualify as long-term gain. Türkiye taxes carry under personal income tax rules.