* France to simplify taxes on carried interest
* Part of battle to win business from Britain
* Local firms may lose out on talent
LONDON/PARIS, Nov 2 (Reuters) - France has stepped up efforts to lure UK-based private equity executives into relocating to Paris after Brexit by pledging to slash the tax rate on the cut of profits managers share with their investors, to the chagrin of some local rivals.
Paris is competing with Luxembourg and Dublin to attract investment funds looking to ensure continued access to European Union clients after Britain leaves the bloc next March, but has found its tax rules are a barrier for some.
To help make relocation more attractive, France plans to cut the tax rate on 'carried interest', or their share of whatever profits private equity fund managers generate, to 30 percent from 75 percent.
Until now, a manager needed to hold at least 1 percent of their fund's assets or meet other complex rules to secure the 30 percent tax rate. Under the new rule, newcomers will be taxed at the low rate no matter how much they hold in their fund.
Companies already in France will miss out on the change, which is expected to take effect by the end of December.
"The special tax rate will be applicable only to foreign funds relocating in France," the finance ministry's special adviser on the matter said. "Any new fund created in France will have to stick to the pre-existing rules."
The 30 percent rate compares with lows of around 28 percent in Germany and Britain, although it is still some way above the roughly 11 percent payable in Luxembourg and 15 percent in Ireland.
Ever since the Brexit vote, French authorities have sought to attract UK-based financiers to help secure business and jobs, boost funding to local companies and better manage risks by ensuring supervision by French regulators.
The planned tax change is the latest in a series of moves backed by President Emmanuel Macron which lawyers and fund managers say have made France more attractive.
"We are currently advising a number of clients that are thinking about relocating part of their teams to France... this is a very strong incentive at the individual level for managers," said Sabina Comis, partner at law firm Dechert.
The degree of pressure felt by private equity funds to move ahead of Britain's EU exit would depend in large part on when the fund next planned to raise money, a second lawyer said.
Among those to feel the pull from the changing political environment in France is Johannes Huth, the head of private equity giant KKR's European operations, who has moved to Paris from London.
The world's biggest asset manager, BlackRock, meanwhile, has announced plans to hire more staff in Paris to invest in alternative asset classes.
ON THE MAP
One French private equity investor based in London said that France was now "on the map" because of the tax change, especially since British tax changes over recent years have seen bills rise sharply for some long-term private equity residents.
"A few guys I know are actually waiting for this (the French tax change)... as soon as this has passed they will pick France over other countries," he said.
Among other tax perks given exclusively to those relocating is a special 8-year income tax deduction of up to 30 percent of an individual's annual salary, as well as tax breaks for companies and a state-pension payment waiver.
The largesse offered to those making the switch to Paris has not gone down well with some local firms. Jean-Sebastien Beslay, partner at Trusteam Finance, which manages around 1.2 billion euros ($1.37 billion), said it was unfair.
"This is a distortion of competition," he said. "To get growth, the government neglects asset managers that have been here for years, with no guarantee the newcomers will settle here for good and will really hire more people."
"Over the years, many have decided to move to London for tax reasons, now those who decided to stay are penalised."
Years of punitive regulation - culminating in the former French leader Francois Hollande's now-withdrawn 75 percent tax on high wage earners - had prompted many fund managers to set up in Britain, Europe's leading fund hub.
Data from industry tracker Preqin showed UK-based private equity managers oversaw $318 billion in assets at the end of March, against $75 billion in France. Real estate and infrastructure funds were overwhelmingly run from Britain. ($1 = 0.8736 euros) (Reporting by Inti Landauro and Simon Jessop; editing by Louise Heavens)