Taxation of Investment Funds in Germany
Taxation of Investment Funds in Germany
Updated on Tuesday 21st June 2016 Rate this article
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Taxation system applicable to German funds
At the moment, the taxation regulations applicable to German funds are going through important changes, which will enter into force starting with 1st of January 2018. The Investment Taxation Reform Act is a proposed governmental act, which will improve the current tax legislation applicable to funds in Germany.
One of the most important provisions of the Act refers to the participation exemption to shareholding, which will be applicable at the rate of 10%.
The new Act can be comprised in two main parts, which refer to a transparent taxation system, applicable to UCITS and alternative investment funds, and a semi-transparent taxation system, available for special investment funds; our team of German attorneys can provide more details on the types of funds available here.
Taxes applicable to German funds
One of the proposed regulations refers to the abolition of the tax reporting requirements applicable to investment funds. Information which has to be presented in the Federal Gazette, such as the deemed distributed income, will no longer be necessary, due to the costs involved.
Both German and foreign investment funds with activities in Germany will be imposed with a 15% tax on income. The same rate will be applicable to German dividends.
Under the new Act, the local authorities have also changed the meaning of the investment funds, which will also take into consideration single investment funds, as well as non-commercial bodies which are not subjected to taxation.
Businessmen who need to receive further information on the taxation applicable to investment funds can address to our German law firm for more details.