On December 16, 2015, the German Ministry of Finance published the draft law on the reform of the German Investment Tax Act (the "Draft"). This commencement of the legislative process follows a six-month discussion with the German investment industry about an initial draft version already published in June 2015. The Draft reflects, inter alia, comments and remarks of various associations of the German financial industry as well as those raised from certain European investment management organizations. The legislative process is expected to be almost finalized by mid of this year.
You can find the draft law on the reform of the German Investment Tax Act (Investmentsteuergesetz) in our web-based version of the German Investment Tax Act. It is now available online. It highlights the changes and allows you to navigate through the legislative history.
Following a six month long discussion with the German associations of banks and the investment management industry, the German Ministry of Finance issued an ordinance on the application of the rules under the Foreign Account Tax Compliance Act (FATCA) agreed between Germany and the United States and set forth in the intergovernmental agreement on FATCA (IGA) (the “Ordinance”) on November 3, 2015. The discussion with the industry results in various amendments to the draft of the Ordinance previously published in June 2015. This Newsletter will specifically address the deviations to the draft Ordinance and addresses certain issues that have yet to be clarified by the German financial authorities.
On 9 December 2015, the European Court of Justice (ECJ) published its judgment in the Fiscale Eenheid case (C-595/13). According to this judgment, the VAT exemption for the management of investment funds may also apply to risk diversified (closed ended) funds investing in real estate, provided these funds are subject to specific state supervision. However, the actual management of the immovable property is not VAT-exempt as that activity is not specific to the business of undertakings for collective investments.
