GERMANY – Capital gains tax on long-term savings will discourage citizens that are preparing for an independent old-age pension, says Stefan Seip, head of the German investment fund association Bundesverband Investment und Asset Management (BVI).

He made the remarks ahead of a meeting with government ministers on Wednesday.

The BVI is demanding that, for long-term pension savings, the status quo should be retained and capital gains tax waived, and is proposing to the Bundestag finance committee that savings plans with regular deposits beyond a five-year period should not be subject to capital gains tax at the end of a twelve-year period.

Speaking at a press conference on Friday, Seip put forward the BVI’s view on the proposed capital gains tax by the German government. Wednesday will see Germany’s financial representatives meet ministers to discuss the proposals.

German finance minister Hans Eichel proposed a flat rate 15% capital gains tax on domestic equity and real estate investments during coalition talks between the Social Democrats and the Green Party in November.

Fund management companies are concerned that a capital gains tax will destroy the equity culture that has been gradually building up in Germany, as well as preventing the private pensions market from growing.