ARTICLE · 17 FEBRUARY 2016

Fund Taxation E-Alert - Issue 2016-02

KPMG Luxembourg

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In December 2015, the German Federal Ministry of Finance submitted a draft bill for the reform of the German investment fund taxation system (German Investment Tax Reform Act – InvStRefG).

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In December 2015, the German Federal Ministry of Finance submitted a draft bill for the reform of the German investment fund taxation system (German Investment Tax Reform Act – InvStRefG). The industry and the relevant associations had the opportunity to provide the Ministry with their comments until 15 January 2016.

According to the Ministry of Finance, the purpose of the reform was to reduce complexity, eliminate potential EU-level legal risks, and to prevent tax avoidance models. The changes, which shall take effect from 1 January 2018, will comprehensively reorganise fund taxation in Germany.

Domestic and international (foreign/non-resident) investment funds are subject to corporation tax (at the source of the investment) on domestic dividends and income from securities lending, as well as on domestic real estate and other domestic income. Any corporation tax levied in the form of withholding tax (WHT) is considered paid; both the corporation tax and the WHT

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