A decades-long disadvantage for Germany as a fund location was fortunately ended as part of the Future Financing Act of 11 December 2023 (Federal Law Gazette 2023 I No. 354 of 14 December 2023).
The VAT liability of the ongoing management fee for alternative investment funds (private equity, venture capital, etc.) set up in Germany has long been one of the most important and most controversial issues. frequently criticised Disadvantages of Germany as a fund location. Funds were often set up in Luxembourg, for example, for this reason alone. Regrettably, the German legislator had actually VAT exemption under European law of the management fee in Section 4 No. 8 Bs. h UStG only with regard to the management of securities funds (so-called UCITS) that comply with the Directive, comparable Alternative Investment Funds (AIFs) and certain so-called venture capital funds. In practice, this meant that typical private equity funds or other alternative investment funds (AIFs), which are used as bundling vehicles for institutional investors, for example, did not benefit from a tax-free management fee in Germany under the old legal situation.
According to the new regulation, all AIFs within the meaning of sec. § Section 1 (3) KAGB are now covered by the tax exemption. This is a very welcome elimination of the previous discrimination against German investment funds, which will certainly lead to fund initiators increasingly considering launching funds in Germany in the future.
Your TAXGATE team will be happy to assist you at any time with the structuring and launch of funds and with planned investments in alternative investment funds.
