The German Federal Government has given an important insight to
its plans and future measures regarding taxation of the start-up-
and VC-ecosystem in Germany by official answer to a parliamentary
request by several members of parliament. These plans are not only
important for young companies and their investors, but also for
Germany's attractiveness as a start-up destination itself. This
is especially true considering that Berlin is becoming Europe's
top start-up destination and the call for governmental support for
the German start-up scene increased recently.
One encouraging trend set out in the Government's recent
statements is the announced tax exemption of the so-called
INVEST-Subsidy for Venture Capital (INVEST – Zuschuss
für Wagniskapital). Under this program, business angels get 20
percent of their investment reimbursed from a special governmental
fund if certain conditions are met. Whereas currently such subsidy
triggers German income tax, in the future its incentive effect as a
tax-exempt gain will be much higher. Another positive highlight is
that the government announced to adhere to the concept of a lower
taxation of "carried interest" received by VC-fund
initiators (40% exemption from income tax).
Unfortunately, the government refuses to introduce a tax
exemption for capital gains received by the disposition of shares
in qualified startup businesses, which would be somehow comparable
with certain tax incentives in the UK and USA (tax roll-over). The
group of parliamentarians also asked the government about other
important issues, such as the call for VAT exemption for VC fund
management fees, the idea to privilege a start-up by extending the
offsetting of profit against tax loss carry-forwards and
suggestions for a definite fiscal transparency of VC funds.
Unfortunately the answers to these queries remained evasive.
Overall, as far as the INVEST-Subsidy is concerned, an
encouraging step into the right direction has been announced. In
addition that gives rise to hope for the ongoing effort of the
German government to support the start-up and VC scene in Germany
and especially Berlin.
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