The participation of the leading management (Top-line-and Second-Line Managers) in the business development of a parent company or a group company is a popular way to incentivise the managers. In private equity transactions, managers fairly regularly get the opportunity to purchase shares in order to (indirectly) participate in the future business developments of the target company. These co-investment programmes, in which managers participate, are currently challenged by the tax authorities. In co-investment structures, there is a tussle between the tax authorities and the participating managers—often in times of disposal of the co-investment—over whether reimbursements out of the co-investment programme to the managers represent wage or capital income/capital gain. The type of income is a crucial factor for all managers resident in Germany and especially abroad. The tax risks of these co-investment models have to be borne by the managers. A careful implementation of the management participation programme is necessary in order to structure these co-investments as a capital investment for the managers. That leads to low taxation for German residents or possibly even no taxation for non-German residents. The article wants to highlight the current developments in this context and to carve out solutions for management participation programmes for international managers in Germany.