GERMANY – The German investment fund association Bundesverband Investment und Asset Management (BVI) has criticised the government’s decision to introduce a 15% capital gains tax on investors.

In November 2002, German finance minister Hans Eichel proposed a “double taxation”, which enraged the fund industry. Previously, capital gains at the fund and investor level were exempt from tax, but the new proposals called for taxation at both levels. Last week, however, the Bundestag lower house amended the proposals so that capital gains tax of 15% will only be applicable at the investor level.

Commented Stefan Seip, head of the BVI: “We are very happy that we can give our members and investors the ‘all-clear’ regarding double taxation, and that the month-long period of uncertainty is over, but the 15% tax at investor level will damage Germany’s financial position.”

The argument, explains Frank Bock of the BVI, is that the tax will act as a disincentive to those wanting to save for retirement. It is hoped that the CDU-dominated Bundesrat upper house will not pass the law on March 14.

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