GERMANY - Long-term investors in funds must be exempt from the new CGT to be introduced in Germany from next year, the federal association of investment and asset management BVI warned.
Plans to treat gains made via an investment fund in the same way the same as gains made for example via direct share trading could lead to people choosing life insurance policies over investment funds for their private long-term savings, the association said in a statement.
The BVI calculated people in the low to medium-income tier will have to pay €250 in tax for every €1,000 they make in an investment fund while the same capital gain realised via a life insurance product would only cost them €125.
At a government hearing on the new tax, the so-called "Abgeltungssteuer" in mid-October, the BVI will demand an exemption for people who are saving long-term in investment funds.
An capital gains exemption should be granted on savings kept in the fund for at least 12 years and only being paid out once the saver has reached the age of 60 - similar to conditions under which certain life insurance companies agree to start payments - the BVI has argued.
"The new tax penalising people with low or medium income is unacceptable," BVI-president Wolfgang Mansfeld said.
The BVI added people with high incomes would benefit less from the suggested exemption as they are in a higher tax bracket and will therefore have to pay higher tax in any case.
According to the association, there are 14 million investment fund saving contracts, many of which are used for personal retirement provision.
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