The tax neutrality of investment funds is a principle that strongly influences the tax treatment of such vehicles in many jurisdictions. Accordingly, direct investments are to be treated for tax purposes in the same way as indirect investments through the intermediary of an investment fund. In order to preserve this principle, the OECD has provided for an exclusion from the scope of application for investment funds as the ultimate parent entity of a group of entities within the framework of Pillar II. In addition, Pillar II provides for special rules concerning investment entities, which stipulate a separate computation of the effective tax rate and the top-up tax. This article will therefore examine the effects on investment funds under Pillar II, which are related in particular to their vertical classification within the group.