BMF starts consultation of tax circular on investment tax act with associations

The BMF (Federal Ministry of Finance) sent an updated draft tax circular on 15 June 2018 to industry associations. The updated draft includes, inter alia, statements on securities lending, on umbrella mutual funds and self-declarations, and on the tax requirements of an (tax transparent) investment fund.

BMF presents draft bill for annual tax act 2018

The BMF has sent to industry associations the draft law of the Annual Tax Act 2018. The amendments proposed in the draft bill include with regard to the Investment Tax Act the following changes: 

• Adjusting the definitions of equity funds, mixed funds and real estate funds 

• Changes to the deemed disposal arrangement as of 31 December 2017 and deemed acquisition as of 1 January 2018 for accounting investors 

• Restriction of deemed capital gains as of 31 December 2017 on shares held as business assets

In addition, changes in the Income Tax Act are envisaged, which could have an effect on investment funds. For example, non-assessment certificates from non-profit entities are to be limited to 20,000 euro per year. In addition, profits from the sale of shares in real estate companies are to be attributed to the income subject to limited taxation.

New German court judgement reg. the compensation for defective issuer rating

The Higher Regional Court of Düsseldorf had in its decision of 8 February 2018 (Az. I-6 U 50/17), dealt with the question of whether an investor, who was motivated to purchase a specific financial instrument also through the misleading rating of the respective issuer of that financial instrument, may demand damage compensation from the credit rating agency according to section 35a para. 1 p. 2 of the EU Regulation No. 462/2013 (Regulation on credit rating agencies, in the following “Rating Regulation”). The Higher Regional Court of Düsseldorf ruled that the investor could demand compensation based on section 35a para. 1 p. 2 of the Rating Regulation only from the rating agency if the rating was based on the financial instrument itself. If the rating only relates to the Issuer of the financial instrument, then the scope of section 35a para. 1 p. 2 of the Rating Regulation would not be applicable.

Investment statistics as of 31 May 2018

The German Investment Fund Association BVI has issued its latest investment statistics report as of 31 May 2018, giving an overview of the net assets and net sales within the German investment fund and asset management markets. The statistics are broken down by asset class and provider. They provide information on net assets and net inflows of investment funds and assets outside investment funds.

The latest statistic report is highlighting that in May, open-ended retail funds have registered outflows in the amount of EUR 1 billion net, whereas open-ended special funds raised shares of about EUR 2.4 billion. As at the end of May 2018, open-ended funds raised in total shares of about EUR 4 billion fewer than in April.

Read: The statistics