The latest draft of Germany’s new investment tax law, approved by the government earlier this week, sees improvements for Spezialfonds but also further limitations for institutional investors.
The new law (InvStRefG) is to replace the old investment tax legislation, which had to be amended following the implementation of the AIFM Directive in Germany via the so-called Kapitalanlagegesetzbuch (KAGB).
Last year, two different drafts of the law called for the introduction of taxation on certain derivatives gains in Spezialfonds.
The government has now removed that proposal from the draft it will present to Parliament in the coming weeks.
Germany’s investment association (BVI) said the tax-law amendments were going “in the right direction”.
BVI chief executive Thomas Richter said the fact taxation laws for Spezialfonds would, in principle, remain the same now meant they would “remain attractive from a tax viewpoint”.
He added, however, that “the administrative burden has to be lowered, and it needs some corrections to some details”.
Another potential burden for institutional investors is the narrowing of the definition of “securities” under the tax legislation.
If the draft goes through in its current form, alternative investments such as infrastructure might become less attractive for institutional investors.
Investment associations and industry groups, however, are still negotiating further changes.
The BVI also welcomed that the government appeared to have followed its advice to include German retirement funds for certain professions such as lawyers or doctors – known as Versorgungswerke – among ‘preferential’ investors.
‘Preferential investors’ – which also include Pensionskassen and so-called Unterstützungskassen, another retirement provision vehicle – can get a refund on the 15% tax now being introduced on certain domestic profits made in fund investments such as dividends, rental income or the sale of real estate.
For more on Germany’s amended tax reform law, look out for the April issue of IPE magazine