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Alternative Market Briefing

German Finance Ministry is tougher on alternative funds than the EU

Tuesday, January 08, 2013

amb
Robert Welzel
Benedicte Gravrand, Opalesque Geneva:

Germanys Ministry of Finance (BMF) presented a draft revision of German fund tax law on 4th December 2012, which is connected to the draft bill for the implementation of the EUs AIFMD (Alternative Investment Fund Manager Directive) it issued in July.

Robert Welzel and Steffen Gnutzmann, both partners with WTS, a tax and legal consulting firm based in Frankfurt, talked to Opalesque about a possible snag they found in the fund tax law proposal.

They claim that based on the two draft bills, the competitive landscape for alternative funds may be significantly transformed. The German AIFMD implementation not only brings about a manager regulation, they say, it also contains significant product regulation, first via regulatory law and second via tax law.

"Basically the regulation is that we have good funds and bad funds, especially from a tax law perspective," Steffen Gnutzmann told Opalesque. "The good funds will generate a better after-tax return for the investors than the bad funds."

German investors usually invest in tax-optimised products, Robert Welzel explained, and funds that authorities do not welcome will be put in a tax regime that investors may want to avoid. So the German implementation of the AIFMD and the related tax law may end up being unfair tax-wise on certain funds.

The future fund tax law would provide for three p......................

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