In its judgement of 17 November 2015 (VIII R 27/12), the Federal Fiscal Court (BFH) ruled that the provisions of Section 6 InvStG do not fall under the standstill clause of Article 64(1) TFEU. Accordingly, Section 6 InvStG must also be measured against the free movement of capital in third country cases. The BFH thus contradicts the Federal Ministry of Finance (BMF), which in its letter dated 28 July 2015 (BStBl. I 2015, p. 610) restricted the "van Caster van Caster" decision of the ECJ (judgement dated 9 October 2014, Case C-326/12) to EU/EEA investment funds. Shortly after the ECJ's decision in the "Wagner-Raith" case (judgement of 21 May 2015, case C-560/13), the BMF revised the existing letter dated 4 February 2015.
But first things first:
In the "van Caster and van Caster" judgement, the ECJ ruled that the flat-rate taxation of Section 6 InvStG is contrary to the free movement of capital. Accordingly, income from a (foreign) investment fund is not to be taxed at a flat rate solely because the fund does not fulfil certain requirements in accordance with section 5 (1) InvStG. § Section 6 InvStG must enable the taxpayer to provide documents or information to prove the actual amount of their income. The Federal Ministry of Finance reacted to this and created correction options for income from investment funds subject to flat-rate taxation in its letter dated 4 February 2015 (see Elser/Thiede, NWB-EV 2015, p. 104).
Following the ECJ's "Wagner-Raith" ruling on the predecessor regulation of section 6 InvStG, section 18(3) AuslInvestmG, which also found a violation of the free movement of capital, but which did not apply to investment funds from third countries due to the standstill clause in Article 64(1) AEAU, the BMF replaced the letter dated 4 February 2015 with a letter dated 28 July 2015. According to this letter, the correction options were only available to EU/EEA investment funds and their investors.
The BFH did not follow this view in the decision that has now been published and considers section 6 InvStG to be a regulation based on a new fundamental idea compared to section 18 (3) AusInvestmG. § Section 6 InvStG ties in with the reorganised disclosure and publication obligations of section 5 InvStG as an expression of a new legislative concept of fund taxation. § Section 6 InvStG determines the legal consequences of the flat-rate calculation of capital gains for investors if the domestic or foreign fund does not fulfil the disclosure and publication obligations of section 5 InvStG. In the Senate's view, the regulations applicable from 2004 are therefore a self-contained new system that has replaced the previously existing system of the Foreign Investment Act. § Section 6 InvStG is therefore also regarded in the literature as the core element of a newly created procedure.
We therefore recommend that investors and third-country funds make use of this case law and present their actual income on the basis of the above-mentioned BMF letters.
