During calender week 24, the German Federal Ministry of Finance (BMF) commented on the determination of the applicable partial exemptions with respect to investment funds (Investmentfonds) from 2018 on in a letter to certain associations (GZ: IV C 1 - S 1980-1/16/10010 :001).
The statements in the circular are relevant for the taxation of German taxable investors, which invest via corporations or funds of the contractual type (Sondervermögen). The entities practically affected by the statements are, inter alia, funds-of-funds as well as comparable investment platforms (e.g. managed accounts) which invest in target funds in the areas of private equity/debt and infrastructure.
The partial exemptions system of the new investment tax law provides for percentaged reductions in the tax base for income from investment funds that invest to a certain extent in participations in corporations.
In contrast to the former statements of the BMF and the (partial) draft of a comprehensive circular dated 31 March 2017 the current circular provides that participations in corporations held indirectly through partnerships cannot taken into consideration with respect to a...