On December 22, 2021, the European Commission presented a draft directive to prevent the use of shell entities for tax purposes. Once the draft is adopted, Member States are required to finalize their national implementation by June 30, 2023, and apply it as of January 1, 2024.

Especially in the case of fund structures, EU shell entities held below their alternative investment fund (AIF) are affected, provided that these EU shell entities have sources of income outside of their country of residence. These cross-border operating EU shell entities are to be denied advantages under double taxation treaties and EU directives. Another novelty – at least from the German point of view – is the possible attribution of the income of the EU shell entities directly to their shareholders.

The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, “BaFin”) published a draft of the revised Marketing FAQs for consultation on August 12, 2021. These amendments serve to adapt the Marketing FAQs to the changed legal framework following the entry into force of the Act to Promote Germany as a Fund Jurisdiction (Gesetz zur Stärkung des Fondsstandorts Deutschland, “Fund Jurisdiction Act”). In our following newsletter, we would like to present to you the draft of the amended Marketing FAQs.

Since the end of 2017, the Council of the European Union has been drawing up a so-called blacklist of non-cooperative tax states. It started as a so-called "name and shame" list, but otherwise had no impact.

This changed: the Council of the EU wants Member States to use tax measures to damage business relations with such states. The aim is to avoid business relations with these states altogether. After Luxembourg (legislative process here has already been completed since 2020), Germany also has adopted its Combating Tax Avoidance and Unfair Tax Competition Act (Gesetz zur Abwehr von Steuervermeidung und unfairem Steuerwettbewerb) this year. The law is applicable from 1 January 2022.