The German Act on the Adaption of Investment Fund Taxation in
Connection with the AIFM Directive (the "AIFM Tax
Act") that did not pass the legislative process prior
to the Federal Election in September now passed both chambers of
the German Parliament (resolution of the German Bundestag on
28 November 2013 and approval of the German Federal Council on
29 November 2013). The new AIFM Tax Act is substantially
similar to the resolution of the former German Bundestag of
16 May 2013. Only provisions regarding the later entry into
force and the controversial pension asset pooling (not dealt with
herein) have been modified.
The new AIFM Tax Act shall enter into force at the date
following the date of publication of the act in the German Federal
Law Gazette. It is uncertain when the act will be published in the
German Federal Law Gazette. Typically this happens within the next
few weeks after the approval of the German Federal Council. Other
than suspected the new act will not enter into force retroactively
(cf. our client info dated 4 September 2013).
2. Cut-Off Date
The date of entry into force is an important
cut-off date in the following cases:
a. No Participation Exemption for Corporate-Type Non-Qualifying
The special tax regime applicable to corporate-type
non-qualifying investment funds will enter into force as of this
date. This is particularly important for Luxembourg SICAVs (S.A.,
S.C.A.). The German participation exemption for dividends and
capital gains is no longer applicable (irrespective of any minimum
ownership percentage and for all types of taxable investors) if the
dividend payment or the disposition (as applicable) occurs on or
after that date.
b. FCP, FCPR, Fondo Chiuso
Certain asset pools of a contractual type such as Luxembourg
FCPs, French FCPRs or an Italian Fondo Chiuso will be deemed to be
treated as corporate-type non-qualifying investment funds as of
such date. The tax consequences in case an FCP that was treated as
tax transparent so far are uncertain. It is possible that this
issue will be addressed in a circular of the German Federal
Ministry of finance.
c. Pre-Existing Investment Funds
Pre-existing investment funds that were established pursuant the
abolished German Investment Funds Act are subject to a
grandfathering provision, i.e. such investment funds will be
treated as qualifying investment funds under the new law even if
they do not comply with the newly introduced set of criteria for
qualifying investment funds. However, the grandfathering is still
limited until the end of the first business year that ends after
22 July 2016. This is identical to the provisions of the
former AIFM Tax Act that did not pass the legislative process prior
to the Federal Election in September. In case of a business year
that matches the calendar year the grandfathering ends on
31 December 2016. After that date pre-existing investment
funds have to comply with the newly introduced set of criteria for
qualifying investment funds.
3. Special Cut-Off Date for Business Participations
There is a special cut-off date for business participations, in
particular interests in closed-end funds organized as partnerships.
Investment funds that acquired such business participations prior
to 28 November 2013 may keep holding such business
participation without interfering with their tax status even if the
acquisition of such business participation were not eligible under
the newly introduced criteria for qualifying investment funds.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Cyprus Tax Department recently issued Forms T.D 38, T.D 38Qa and T.D 38Qb applicable to individuals being Cyprus tax residents but non-Cyprus domiciled.
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