Fund Taxation Alert 2017-08 | KPMG | LU
Share with your friends

Fund Taxation Alert 2017-08

Fund Taxation Alert 2017-08

Draft of the BMF letter related to the outstanding questions on the Investment Tax Act released


Related content

Draft of the BMF letter related to the outstanding questions on the Investment Tax Act released

We would like to announce that the draft of the BMF letter related to the outstanding questions on the Investment Tax Act has been released!

Please note that we will shortly provide you with more detailed information. But in the meantime, we would like to draw your attention on the following hot topics that are discussed within the draft:

  • The draft further specifies the scope and what is understood as an investment fund, especially regarding funds in the legal form of a partnership.
  • It also gives further insights on the definition of an equity fund and how the equity ratio is determined for both domestic and foreign funds:
    o Requirements for qualifying as an equity/mixed fund have been clarified in terms of falling below the 51%/25% limit. A fund will not lose its status as an equity fund if its ratio falls below 51%/25%, although only if it is a short-term fall (due to certain events such as changes in the value of an asset, misclassification of an asset as equity investment or passively falling below the minimum requirement).
    o For foreign investment funds, a predominant investment statement (more than 50%) within their investment condition is sufficient to qualify for the classification as equity fund.
    o In terms of the partial tax exemption at the investor level, the investor gains the possibility to submit corresponding verifications for an individual examination in cases where the prospectus of the fund does not provide the necessary information. However, the draft confirms that the semi-annual and annual reports of an investment fund are not sufficient for the verification.
  • The draft gives confirmation regarding the competent tax authority for foreign investment funds in Germany (in general the Federal Central Tax Office [BZSt]).
  • A transition period exists until 31 March 2018 to apply for the status certificate; however, prior to that, a so called NV certificate is necessary to be in compliance and to benefit from a beneficial tax treatment at the fund level.
  • The draft confirms that the investment fund does not have to submit a tax declaration for German taxable income if the tax has already been withheld at source. Otherwise, the investment fund is obliged to submit a tax declaration in Germany. 
  • The new law will affect all distributions made as of 1 January 2018. This means that if a fund wants to take advantage of distributing according to the old law the distribution must be made by 31 December 2017.
  • The extended publication period of 12 months is also applicable for funds with a year-end of 31 December. 
  • Furthermore, the draft includes a complex rule regarding how income from target funds is considered if no publication of these target funds is available by the end of July 2018.
  • A new equity gain for the period beginning as of 1 January 2018 has to be implemented (starting with zero).

Please note that this BMF draft letter is not available in English. However, we will also provide you with an excerpt of the essential points within the next few days.

Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (I) avoiding penalties that may be imposed on any taxpayer or (II) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Connect with us


Request for proposal