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15.03.2019

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Brexit: Grandfathering for German regulated investors

With the expiry of March 29, 2019 the United Kingdom of Great Britain and Northern Ireland's membership of the EU will expire unless the EU and the United Kingdom agree on an extension of this deadline. After leaving the EU, or, if applicable, after expiry of a transitional period, the United Kingdom shall be treated as a third country also for the purposes of financial markets law. This affects, among other things, the eligibility of British investment funds for German regulated investors. By the Act on Tax Implications of the Brexit (Brexit-Steuer­begleit­gesetz), there is now grand­fathering for such invest­ments in British funds which were made prior to the key date.

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12.03.2019

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Will the reduction of the Luxembourg corporate income tax rate result in a German controlled foreign company taxation?
On 5 March 2019 the Luxembourg government filed the new finance bill n° 7450 with the Luxembourg parliament. One of the most important corporate tax measures concern the reduction of the maximum corporate income tax rate from the current 26.01 percent to 24.94 percent as of 2019. Thus, Luxembourg corporate holding companies qualify as low-taxed entities within the meaning of the German controlled foreign company rules as of 2019 with a potential filing obligation for German investors.
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Tax privileged dividends from a Luxembourg SICAV despite Bondstripping under DBA Lux applicable until 2013
Last week, the Düsseldorf Fiscal Court published a decision in which it again classifies distributions from a Luxembourg SICAV organised as a corporation as qualifying intercompany dividends to be exempted in Germany under the old DBA Luxembourg applicable until 2013 (2 K 3874/15 F). For the first time, however, the Fiscal Court had the opportunity in these proceedings to determine that this also applies if the distributions consist of income generated by way of bondstripping. The tax authorities have lodged an appeal with the Federal Fiscal Court (I R 8/19).
Note: This newsletter is only available in German language.
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