Komfie Manalo, Opalesque Asia: The European Court of Justice (ECJ) has called on the German government
to amend its Investment Tax Act whose lump sum taxation was found to be
disadvantageous to non-German investment funds. The Court added that
investors have a right to fair taxation.
In a report, the PwC said
that upon the request of the Finance Court Duesseldorf the ECJ has ruled
that the lump sum taxation of investors in so-called non-transparent
investment funds limits the free movement of capital.
According to PwC, the ECJ sees a veiled limitation of the principle of
free movement of capital. Even though the lump sum taxation regulation
applies to German as well as non-German investment funds, the
transparency requirements set out in national law are only regularly
fulfilled by German investment funds according to the ECJ, while in most
cases the lump sum tax regime is applied to non-German investment funds.
As a consequence, German investors in non-German investment funds should
be able to independently transmit their tax-relevant information to the
financial authorities in those cases where transparency reporting has
not been performed. The exact content, format as well as the level of
precision required of this information has been left to be decided by
the financial authorities.
Consequences of ruling not yet predictable
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