Competent authority

Federal Central Tax Office (BZSt) is the competent authority for all investment funds where the management of the legal representative (usually the capital management company) is based abroad. An exception here are foreign investment funds which achieve domestic real estate income. The competent authority in these cases is the tax office of the district where the most valuable part of the asset is located.

Taxation of investment funds

Since 1 January 2018, the domestic income from shareholdings, domestic real estate income as well as other domestic income of investment funds will be subject to corporation tax (Section 6 InvStG 2018).

Corporation tax and solidarity surcharge shall be deemed as settled by withholding tax where income is subject to tax deduction. The amount of withholding tax is 15% of the capital gains. Prerequisite for a reduction in withholding tax on capital gains is, pursuant to Section 7 (1) InvStG 2018, that the person liable for deduction of capital gains tax (party obliged to pay the tax) has a Status Certificate.

The income of an investment fund is not subject to taxation if the investors meet the requirements of Section 44a (7) first sentence German Income Tax Act (EStG) or if comparable foreign investors participate at the time the income is received. The comparability of the foreign investor with investors pursuant to Section 44a (7) first sentence EStG must be proven with a certificate issued by the BZSt (Exemption Certificate).

If an investment fund buys taxable domestic investment income i. P. D. § 6 (3) sentence 2 no. 2 InvStG 2018 (fees, receipts and payments from securities loans or securities repurchase agreements) which, however, have not actually been deducted, the tax will be taxed by subsequent recovery of the withholding tax tax deduction amounts from the creditor of the capital gains. For this purpose, the creditor of the capital gains is required to notify the tax authority responsible for its taxation (Securities lending).

In addition, tax bases for special investment funds and their investors must be assessed uniformly and separately. The domestic investor or the management company of a foreign specialized investment fund must file a return for the separate and uniform assessment after the end of the financial year. This must be submitted to the tax authority responsible for the taxation of the special investment fund.

Laws

BMF-Write

Forms and explanatory leaflets