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German Investment Tax Act – Amended reporting duties - 04/03/2013


On February 26 the mediation committee (comprising members of German Bundestag and Bundesrat) agreed on a proposal that would amend several German laws, in order to meet obligations resulting from the ECJ decision dated October 20 2011. In this decision, the ECJ ruled the participation exemption regime in Germany as being contradictory to EU laws, as far as there is an unequal treatment of foreign corporate investors compared to local ones.

The German participation exemption regime in its current form (effective exemption of 95 %) only applies to foreign corporate investors holding more than 10 % of the equity of a corporation in Germany, whereas this restriction does not apply for local German corporate investors. 

According to the proposal of the committee, a full taxation of these so called “portfolio dividends” distributed to German corporate shareholders might be implemented and the recent threshold of 10 % shall be extended to all investors. The cancellation of this tax exemption has impacts on several German laws, including the reporting duties for investment funds of the German Investment Tax Act.

Therefore, Art. 5, paragraph 2, sent. 1 of the German Investment Tax Act (GITA) might be amended and a separate “Aktiengewinn” -calculation for individual persons on the one hand and corporations, associations of individuals or pools of assets on the other hand might be required.

This law was resolved by the German Bundesrat on February 28 and might come into effect within the following weeks as only the decision by the German Bundestag is outstanding. 

If this law will be accepted by German Bundestag, legislation could be completed as early as March, which would also be the effective date for the new law to come into effect. As a result, affected investments funds might be required to publish those new tax figures as from March 1 ongoing.

We will follow up on the legislative process and continue to keep you updated in case of any new developments.

If you have any queries regarding the above, please do not hesitate to contact us.

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