Newsletters

Lump-sum taxation of German investors in non-EU funds violates free movement of capital

In a recent decision, the German Federal Fiscal Court clarified that the procedure to avoid lump-sum taxation according to sec. 6 of the German Investment Tax Act (GITA) is appli­cable not only to EU and EEA funds, but also to funds from non-EU countries. In order to avoid lump-sum taxation, the investor is required to provide sufficient information and proof of the tax data according to sec. 5 para 1 GITA. Contrary to the opinion of the fiscal authorities, the court decided that the so-called 'stand-still' clause of Art. 64 TFEU is not applicable and thus sec. 6 GITA may violate the principle of the free movement of capital in the case of a non-EU fund (in this case: a US fund).

Note: This newsletter is only available in German language.