The German Investment Tax Reform will enter into force on 1 January 2018. Meanwhile, the German Fiscal Authorities are working on a comprehensive circular to address and clarify important questions arising in connection with the interpretation of the new law before the end of the year. In advance of this circular, the German Federal Ministry of Finance issued a letter to the relevant fund industry associations in which the Ministry explains its view of the determination of the partial tax exemption regime applicable to real estate funds, equity funds and mixed funds.
In our beinformed dated 19 January 2017, we addressed the multilateral instrument (MLI) of the Organisation for Economic Co-operation and Development (OECD). As a part of the BEPS (Base Erosion and Profit Shifting) project of the OECD, the MLI is meant to adopt and synchronize existing double tax treaties which are – according to the OECD – one of the major drivers of inappropriate tax avoidance strategies by abusing different tax treaties jurisdiction (“treaty shopping”). With the help of the MLI, adjustment processes of double tax treaties will be reduced significantly. After the first draft of the MLI was confirmed on 24 November 2016, ministers and other high-level representatives of over 60 states signed the international treaty on 7 June 2017 in Paris. Our beinformed illustrates the implementation of the MLI in Germany and Luxembourg.
The German Parliament passed the German Act to Combat Tax Avoidance (Steuerumgehungsbekämpfungsgesetz) at the end of April. The focus of this Act is the fight against the concealment of commercial activities through companies domiciled abroad (see also our beinformed Newsletter dated 15 February 2017). Moreover, Article 10 is the first law to amend the German Investment Tax Reform effective as of 2018 (see also our beinformed Newsletter dated 12 July 2016, German Investment Tax Reform – Changes for German and Foreign Funds as of 2018). In the following Newsletter, we would like to introduce and analyze the amendments of the Investment Tax Reform effective as of 1 January 2018.
