Income documentation exemption for non-transparent investment funds only applies to EEA funds

The finance ministry has clarified that its decree of February 4, 2015 on the documentation requirements to be met by resident investors in non-transparent foreign investment funds applies to funds located in other EEA countries only.

Under the Investment Funds Tax Act, 6% of the value of the units at year-end is deemed to be the minimum taxable income accruing to resident unit-holders in “non-transparent” investment funds, i.e. funds that do not publish audited information on the taxable income falling to shareholders under the German rules of income determination. Since this provision is, in practice, only applicable to foreign funds, the ECJ (van Caster) held it to be an unwarranted restriction on the free movement of capital, as it leaves unit-holders no possibility of demonstrating their actual income on the basis of information obtained from the fund. The finance ministry reacted with a decree of February 4, 2015 setting forth the detailed information and documentation which tax offices may demand from unit-holders as a condition for exempting them from the 6% rule. The finance ministry has now revised its decree to limit its application to units held in funds from other EEA countries.