BaFin Publishes Guidance on the Authorization of Credit Institutions  

BaFin issued a guidance notice on 20 July 2017 on the requirements for the application for a banking license in accordance with Sections 32 and 33 of the German Banking Act. The guidance includes a check list for the application and lists the documents that must be submitted to BaFin.

Read the guidance notice.

BaFin Publishes Guidance on the "Prudent Person Principle" for Solvency II Investors

BaFin published a guidance notice on 17 July 2017 on the requirements of the “Prudent Person Principle” which is set out in Section 124 of the Insurance Supervisory Law (Versicherungsaufsichtsgesetz – VAG) in the context of the use of derivative financial instruments by insurance undertakings who are subject to the Solvency II regulations. The guidance further defines the requirements of “efficient portfolio management” and “effective transfer of risk” and also clarifies the prerequisites for the risk management of insurance undertakings if investments in derivatives are envisaged.

Read the guidance notice (in German).

German Federal Ministry of Finance Publishes Letter on Cum/Cum Transactions 

The German Federal Ministry of Finance (Bundesfinanzministerium – BMF) published a letter on 17 July 2017 on the tax treatment of so-called cum/cum transactions. The BMF generally states in its letter that it must be examined whether cum/cum transactions qualify as abuse of the procedure (Gestaltungsmissbrauch) in accordance with Section 42 of the German Regulation of Taxation (Abgabenordnung – AO) which should be the case if there was no economic reason for the transaction. The application of Section 42 AO will lead to the duty to refund any unduly reimbursed amounts of withholding tax. The BMF has listed several examples for relevant cum/cum transactions and furthermore contains statements regarding cum-cum transactions with investment funds.

In this context, BaFin has sent a questionnaire to all German banks in order to be able to assess the consequences of possible tax charges or penalties. In particular, BaFin intends to examine the consequences for the solvency of the banks and whether further bank supervision measures will be necessary.

Read the letter (in German).

Read the press release (in German).

Latest Investment Fund Statistics for Germany 

The German Investment Fund Association BVI issued its latest investment statistics report dated May 2017, providing 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.

Access the latest statistics.