Pursuant to the new German Investment Tax Act (InvTA), effective 1 January 2018, Germany introduced a new investment fund tax regime which impacts the way investments in funds are taxed.
According to the new regulations, for German taxable investors, distributions, realized capital gains on redemptions and annual lump sum amounts are subject to tax. The tax due on the annual lump sum amounts is a prepayment which will be deducted from the taxable realized capital gains at the time of redemption. As a consequence of the new regime, the daily and annual tax figures calculated under the old regime stop as at 31 December 2017.
Investors can generally benefit from a partial tax exemption based on the category of investor they are and the assets held by the fund in which they invest.
The funds will therefore be categorized according to different classifications as defined by the new regulations:
The tax exemption rates which are applicable upon distribution, redemption and the lump sum annual amounts vary as follows:
Preliminary Lump Sum
Pursuant to the new German Investment Tax Act (InvTA), an annual preliminary lump sum taxation (known as “Vorabpauschale”) is due commencing January 2019. The preliminary lump sum has to be determined in Euro.
The preliminary lump sum is calculated by multiplying the Net Asset Value (NAV) per share at the beginning of the calendar year by 70% of the interest rate for risk-free investments which is published annually by the German Federal Ministry of Finance. The lump sum is limited to the increase in NAV per share in the calendar year. No lump sum is applied in the case of a decrease in the NAV per share. Distributions are always taxable.
Share classes in currencies other than Euro must be converted to Euro based on the reference exchange rates of the European Central Bank on the corresponding date.
Investors can generally benefit from a partial tax exemption based on the type of investor they are and the type of assets held by the fund in which they invest.
The tax figures may be found by clicking on the relevant link below:
In case shares were acquired during the calendar year, the preliminary lump sum should be reduced by one twelfth for every full month, which precedes the month of acquisition.
For investors who hold shares with a German depository bank, the bank will calculate and withhold the tax due from the preliminary lump sum. For investors who hold shares by other means, the preliminary lump sum should be included in their tax return.
Each fund classification may be found by clicking on the relevant link below:
In order to further assist clients with their investment, certain funds will calculate and report a daily equity ratio to WM Daten.
The information contained on this page does not constitute investment or tax advice and does not purport to deal with all of the tax consequences applicable to the funds or to all categories of investors, some of whom may be subject to special rules. Shareholders and potential investors are advised to consult their professional advisors concerning possible taxation or other consequences of purchasing, holding, selling, converting or otherwise disposing of the Shares under the laws of their country of incorporation, establishment, residence, or domicile, and in the light of their particular circumstances.