Services

Fund Topics / Investment Tax Law

Those who understand funds understand how money really works.

A professional investment strategy also involves mastering the German tax law aspects of various investment forms and investments. International fund sponsors and investors therefore rely on our expertise and our many years of experience in investment tax law, foreign tax law, and international tax law. For regulatory issues, we regularly collaborate with the lawyers providing structural advice. We view direct and transparent communication with fund investors as an integral part of our advisory services.

Our advisory services are aimed at the financial services sector, particularly domestic and foreign asset management companies with real estate, private equity, and securities funds. We have many years of specialized experience in ongoing tax compliance for funds with domestic investors. Our focus is on tax advisory services under the Investment Tax Act (InvStG), general tax law, and the German Foreign Tax Act (AStG) regarding the following topics:

Chapter 2-Investment Funds (InvStG)

Chapter 3-Investment Funds (InvStG)

Tax Consulting for Partnerships

CFC Analyses and Tax Returns

Our consulting services in the area of Fund Topics / Investment Tax Law

01 Chapter 2-Investment Funds (InvStG)

For Chapter 2-Investment funds, the Investment Tax Act establishes the so-called separation principle, which provides for the separate taxation of funds and investors. At the fund level, only certain domestic income is taxed, including, in particular, income from equity investments, real estate income, and other domestic income.

Our services in this area include, in particular:

Investment tax classifications of investment funds (e.g., into Chapter 2- or Chapter 3- Investment funds, as well as into (foreign) real estate funds, mixed funds, and equity funds)
Determination of investment income (advance lump-sum, distributions, capital gains) taking into account the investor-related partial exemption and its application at the investor level
Calculation of quotas for (foreign) real estate funds
Tax analyses and determination of domestic income (Section 6 InvStG)
Tax registration in Germany and preparation of corporate income tax returns, taking into account double taxation treaties (DTA)
Application for status certificates
Assistance with inquiries from investors or tax authorities
Reports to WM Datenservice

02 Chapter 3-Investment Funds (InvStG)

Special investment funds under Chapter 3 of the Investment Tax Act are subject to a separate, semi-transparent taxation system. Due to the detailed legal requirements, many years of experience and precise tax guidance are essential. Ongoing compliance with Sections 25 et seq. of the Investment Tax Act (InvStG) and the extensive Federal Ministry of Finance (BMF) administrative instructions requires in-depth and long-standing expertise as well as close coordination between fund management, the custodian, and the tax advisor.

We provide comprehensive support to special investment funds regarding ongoing tax compliance as well as all matters related to reporting and the required declarations:

Tax registration in Germany and preparation of tax reconciliation statements as well as tax assessment declarations pursuant to Section 51 of the Investment Tax Act
Calculation of investor-related tax bases (e.g., distributed and distribution-equivalent income)
Determination of income exempt under double taxation agreements
Continuous evaluation of tax metrics pursuant to Section 48 of the Investment Tax Act (InvStG) (gains from shares, treaty gains, and partially exempt gains) and their notification to investors
Preparation of corporate income tax returns and capital gains tax returns
Assistance with audits by the tax authorities
Assistance with investor inquiries
Advice regarding the requirements (investment regulations) pursuant to Section 26 of the Investment Tax Act
WM Datenservice

03 Tax Consulting for Partnerships

We handle income determination for domestic and foreign asset-managing and commercial (fund) partnerships with an international focus. This includes, among other things, complex structures such as private equity and real estate funds, as well as partnerships with carry interests. Drawing on our experience and understanding of fund products, we assess the structure, its sources of income, and assets both domestically and abroad from a German tax perspective. We identify potential tax and legal risks early on and consistently incorporate the findings into the proper and legally compliant preparation of tax returns.

Our services in this area include, in particular:

Comparison of tax regimes for foreign companies
Classification of income (asset management/commercial)
Separate and unified profit determination for domestic and foreign (fund) partnerships pursuant to Sections 179, 180 of the German Fiscal Code (AO), including tax registration in Germany
Determination of the tax bases for taxable investors
Tax reconciliations in multi-tiered transparent fund-of-funds structures
Reconciliation of foreign financial statements to German tax law
Point of contact for institutional investors, family offices, and private investors
Coordination with investors, fund administrators, and tax authorities
Preparation for and support during tax field audits
Review of fund establishment costs pursuant to Section 6e of the German Income Tax Act (EStG)

04 CFC Analyses and Tax Returns

CFC taxation under the Foreign Tax Act has gained significant importance in recent years and is regularly the focus of tax field audits. A thorough foreign tax analysis of international investment and corporate structures is therefore essential.

We assist our clients in identifying tax risks at an early stage, analyze the applicability of the foreign tax law, and document the tax assessment of the entire investment structure in a transparent and audit ready manner.

In this context, we offer the following services in particular:

Analyses regarding the (non-)application of the CFC tax
Determination of additional tax amounts
Foreign tax returns pursuant to Section 18(3) AStG
Maintaining substance documentation pursuant to Section 8(2) AStG (where applicable, in conjunction with Section 13(4) AStG).
Ensuring audit-proof documentation
Preparation for and assistance during tax field audits
Point of contact for investors