In our Client Information dated
30 April 2014 we provided information on a Circular dated
23 April 2014 released by the German Federal Ministry of
Finance regarding certain open issues in connection with the AIFM
Tax Act. On 4 June 2014 the German Federal Ministry of Finance
released an update to this Circular.
The Circular has been amended with respect to the following
1. Shares of Corporations as Eligible Assets
In the original Circular dated 23 April 2014 the German
Federal Ministry of Finance held the view that shares of a
corporation only qualify as eligible assets for a qualifying
investment fund if the respective corporation operates an
"active business". There was reasonable doubt whether
this is in line with the statutory requirements (cf.
section III. 2 of our Client Information dated
30 April 2014). In the updated Circular the respective wording
has been deleted. Accordingly, shares of corporations qualify as
eligible assets irrespective of whether the respective corporation
is "active" or "passive".
2. Scope of 10% Threshold
Under the new German Investment Tax Act a qualifying investment
fund may only hold shares that represent less than 10% of the share
capital of the corporation. It was not entirely clear whether this
requirement is also applicable to shares that are quoted on a
recognized stock exchange. Such shares typically qualify as
"securities" which qualify as eligible assets without any
additional restrictions. However, under the updated Circular the
10% threshold is applicable for both public and private
3. Open Issues
There are no further amendments to the Circular. In particular,
the updated Circular does not deal with open issues in connection
with non-qualifying investment funds which are important for
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 Irish Commercial Court (Costello J) has recently clarified a number of issues regarding an Irish investment company authorised as a UCITS fund which will also have relevance for investment companies generally
Any copies of records provided by the firm must be provided in an unencrypted form so that they can be easily analysed when requested by the client, competent authority, or other competent third party.
There has been dramatic growth in recent years both in terms of the size of the ETF market and the number of products available in the market.
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