On 21 December 2017, the Federal Ministry of Finance published a fourth BMF circular on urgent application issues raised by the BVI and the German banking industry regarding the InvStG 2018 (IV C 1 - S 1980-1/16/10010:016). Some important statements (in particular non-objection regulations) can be summarised as follows:

  • In 2018, the tax authorities will not object if an umbrella investment fund falls below the equity participation ratio specified in its investment conditions.
  • For the purposes of the equity participation ratio, only equity participations in which the fund is not only the legal owner but also the beneficial owner within the meaning of Section 39 AO are to be taken into account. If an investment fund has transferred ownership of equity interests under civil law (e.g. as part of a securities loan), these equity interests are not to be taken into account, even if a re-transfer claim exists.
  • Until 2020, the tax authorities will not object if a simplified electronic procedure is used as a basis for the purpose of waiving the deduction of capital gains tax. In 2018, a still valid non-assessment certificate pursuant to section 11 (2) sentence 4 InvStG 2004 may be used instead of the status certificate.
  • The tax authorities will not object if a special investment fund holds assets that it is permitted to hold on 31 December 2017 in accordance with section 1 (1b) sentence 2 no. 5 InvStG 2004, but which are no longer permitted in accordance with section 26 no. 4 InvStG 2018 (e.g. certain unlisted securities), until 30 June 2018.
  • For the qualification of a special investment fund that invests in real estate companies and has to comply with the requirements of section 26 no. 5 InvStG 2018, there will be no objections until 31 December 2019 if the previous regulation in section 1 para. 1b sentence 2 no. 6 sentence 2 InvStG 2014 continues to be used as a basis for the question of the permissibility of investments in real estate companies.
  • The tax authorities will not raise any objections if an exercise carried out in 2018 Transparency option (Section 30 InvStG) prior to the inflow of the first domestic investment income in 2019 with effect from 2019. Furthermore, an unexercised transparency option can be exercised at any later date with effect for the future. The so-called real estate transparency option, which avoids taxation of real estate income at fund level through a tax deduction on the fund exit side, is also not intended as an option that can be exercised on an annual basis.

Further information at TAXGATE, in the altii blog and in the enclosed Webinar.

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