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.