Exemption Certificate
The income of an investment fund is exempt from tax if tax-privileged investors participate at the time the income is received. The investment fund must prove the participation of tax-privileged investors by presenting a certificate pursuant to Section 44a (7) second sentence EStG or an Exemption Certificate.
Tax-privileged foreign investors of investment funds
The income of an investment fund is exempt from tax if tax-privileged investors participate at the time the income is received. Tax-privileged investors are persons which meet the prerequisites of Section 44a (7) first sentence German Income Tax Act (EStG), or comparable foreign investors with registered office and management in a foreign country assisting in administrative and recovery matters.
The investment fund must prove the participation of tax-privileged investors pursuant to Section 9 (1) InvStG 2018 by presenting a certificate pursuant to Section 44a (7) second sentence EStG or a certificate about the comparability of the foreign investor with such investors pursuant to Section 9 (1) no. 2 InvStG 2018 (Exemption Certificate). An investment balance sheet must be provided in addition.
An Exemption Certificate for comparable foreign tax-privileged investors is issued by the BZSt upon application by the investors. The application for the issuance of an Exemption Certificate must be filed using the official form.
Prerequisite for the issuance of an Exemption Certificate is that the foreign investors are based in a country assisting in administrative and recovery matters and that they are comparable with German tax-privileged investors (Sections 51 to 68 German Fiscal Code (AO)). The comparability requires that the foreign investor
- is a corporation, association of persons or conglomeration of assets,
- which pursuant to its statute, act of foundation or other articles of association and its actual management exclusively and directly serves public-benefit (Section 52 AO), charitable (Section 53 AO) or religious purposes (Section 54 AO) and
- that the tax-privileged purposes serve the advancement of natural persons inland or contribute to the reputation of the Federal Republic of Germany abroad.
The Exemption Certificate is only for the purpose of tax exemption at investment fund level. The certificate is not intended for special expenses deduction of donations and consequently does not entitle to the issuance of donation receipts.
Questions and Answers
What is the purpose of an Exemption Certificate in terms of Section 9 (2) German Investment Tax Act (InvStG 2018)?
Using an Exemption Certificate enables an investment fund to verify the fiscal status of its tax-privileged foreign investors. This is necessary for the eligibility to apply for the full or partial exemption from tax of their income (Section 8 InvStG 2018). The original of the issued Exemption Certificate must be transmitted to the investment fund for this purpose.
The income of the investment fund will not be exempt from tax and will be deemed taxable income if an Exemption Certificate has not been requested or presented to the investment fund.
Who is entitled to apply for an Exemption Certificate with the Federal Central Tax Office?
An application for an Exemption Certificate can be made by a corporation with registered office and management in the following States assisting in administrative and recovery matters:
Belgium, Bulgaria, Denmark, Estonia, Finland, France, Greece, Ireland, Italy, Croatia, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Austria, Poland, Portugal, Romania, Sweden, Slovakia, Slovenia, Spain, Czech Republic, Hungary, United Kingdom, Cyprus, Australia, Liechtenstein, Canada.
Domestic tax-privileged investors should contact their competent tax office.
Who should apply for an Exemption Certificate?
An application is useful for investors in investment funds which achieve taxable domestic income in terms of Section 6 InvStG 2018. Investors in investment funds which only generate interest do usually not require an Exemption Certificate.
Is it possible to file an informal application for an Exemption Certificate?
No, the application must be filed by using an official form. For the application form, please click here.
What is the address to which the formal application should be sent to?
Foreign investors should send the completed and signed application to the following address:
Bundeszentralamt für Steuern
Referat St II 5 – Investmentsteuer
53221 Bonn
Is it possible to transmit the application electronically?
The application for the issuance of an Exemption Certificate must be signed. Transmitting the application in simple electronic form (e.g. by email) is therefore not sufficient.
Can the issued Exemption Certificate be sent to addresses abroad?
The Exemption Certificate will only be sent to an address abroad if permitted under international law. Under international law, the BZSt is not permitted to send Status Certificates by post to the following States: Egypt, Argentina, Brazil, China, Costa Rica, Gibraltar, Isles of Man, Jersey, Guernsey, Republic of Korea, Kuwait, Mexico, San Marino, Switzerland, Singapore, Sri Lanka and Venezuela. In such cases, it is absolutely necessary to specify a domestic (German) authorised recipient.
When does the period of validity of an Exemption Certificate commence?
The date of validity is specified in the Exemption Certificate. The certificate can be issued with retroactive validity for a period of up to six months prior to the application date (date the application was received by post) upon request.
For how long is the Exemption Certificate valid?
The issued Exemption Certificate is valid for a maximum of three years. The Federal Central Tax Office (BZSt) has the right to verify whether the prerequisites, which led to the issuance of the Exemption Certificate, still exist at any time during the validity period of the Exemption Certificate.
Does an issued Exemption Certificate have to be returned to the Federal Central Tax Office and must be replaced by a new Exemption Certificate due to change of the applicant’s name?
In terms of tax, a change of name is irrelevant as the legal and taxable entity does not change. Thus, a change of name does not affect the validity of the Exemption Certificate.
Which prerequisites must be met for the issuance of an Exemption Certificate?
The prerequisite is that foreign investors are comparable to German tax-exempt investors. The comparability requires that the foreign investor
- is a corporation, association of persons or conglomeration of assets,
- which pursuant to its statute, act of foundation or other articles of association and in its actual management exclusively and directly serves public-benefit (Section 52 German Fiscal Code (AO)), charitable (Section 53 AO) or religious purposes (Section 54 AO) and
- that the tax-privileged purposes serve the advancement of natural persons inland or contribute to the reputation of the Federal Republic of Germany abroad.
What proof must be provided when making the application?
The following documents must be provided together with the application as proof of eligibility:
- Excerpt from the commercial register or equivalent proof of registration in the country of origin
- Proof of recognition of public-benefit, charitable or religious purposes in the country of origin
- Statute, act of foundation or other articles of association
- Activity report
- Itemisation of revenue and expenditure
- Cash report
- Statement of assets and liabilities with proof of the creation and development of reserves
- Records about the receipt and appropriate use of donations
- Minutes of board meetings
If possible, these documents should be submitted electronically.
What should be done if the prerequisites for the Exemption Certificate cease to exist?
In this case, the certificate must be returned to the BZSt. This also applies if the certificate is reclaimed by the BZSt.
Contact
Bundeszentralamt für Steuern
- Investment tax -
An der Küppe 1
53225 Bonn
Phone:
+49 228 406-3550
Fax: +49 228 406-2661
Befreiung-Anleger.Ausl.Fonds@bzst.bund.de Mo - Fr von 09:00 - 12:00
Jurisdiction:
Investment tax
