At the end of 2019, the German Ministry of Finance drafted an updated version of its circular commenting on the Investment Tax Act. In the area of special funds, the draft was heavily criticized as it stipulated that a participation in a real estate SPV or a security which at the same time qualifies as investment fund unit should only be eligible if it fulfilled all and any provisions for target fund units. This new interpretation would have negatively affected a large number of special funds, probably making them loose their tax status. The Ministry reacted to the industry’s concerns and recently presented a new draft stating that real estate SPVs and securities may be acquired and held as such, irrespective of their additional status as a fund or fund unit.
Read the full article in German here.
