According to a judgement of the European Court of Justice (ECJ) the German lump-sum taxation of non-transparent foreign investment funds according to Sec. 6 GITA violates the free movement of capital (ECJ, decision dated 9 October 2014, “Van Caster” – C-326/12). This is because it is not possible for the investor itself to provide information to avoid such lump-sum taxation.

In a recent circular, the German Federal Ministry of Finance clarified the procedure that allows the investor to provide sufficient information in order to avoid lump-sum taxation. The requirements are very tough.  

The Luxembourg Tax Administration has published the final circular regarding clarification on the tax treatment of limited partnerships. The Tax Administration provides interpretation and clarification regarding both types of limited partnerships, "Société en Commandite Simple“ (SCS) and "Société en Commandite Spéciale“ (SCSp).

The European Court of Justice (ECJ) now has to deal with the question whether Sec. 18 para. 3 of the German Foreign Investment Act (GFIA) infringes the principle of the free movement of capital, ECJ C-560/13 (Wagner-Raith). Sec. 18 para. 3 GFIA, effective until the end of 2003, is the predecessor of Sec. 6 GITA and provides for the application of the German lump-sum taxation to income received from third-country funds. On December 18th, 2014, the Advocate General referred his opinion on the preliminary question of the German Federal Court of Finance (Bundesfinanzhof) in the Wagner-Raith Case to the ECJ.