Germany is a high-tax country. This applies not only to income and corporate taxation but also to financial investments. The German government is now taking a step forward in this area: the new Future Financing Act brings deregulation and expanded opportunities for investments in energy infrastructure. There are also tax reliefs. „This eliminates a significant competitive disadvantage, especially compared to Luxembourg,“ says Daniel Knoblach, Managing Director of Super Global GmbH. „Germany will become significantly more attractive for investors.“
The German federal government has passed the Future Financing Act, with the new regulations set to come into effect on 1 January 2024. With this law, the federal government aims to mobilise more private capital for climate protection and digitalisation, and to make the German capital market more international and less bureaucratic. „This is likely to have been successful,“ comments Knoblach.
This is because the law brings a variety of regulatory and supervisory improvements for the German fund industry. For example, the hurdles for investments in renewable energies are being lowered. However, it is particularly important that in future the administration of all investment funds will be exempt from VAT. This exemption previously only applied to the administration of undertakings for collective investment in transferable securities (UCITS) and comparable alternative investment funds (AIFs) as well as venture capital funds. „This meant that investment funds, in particular those investing in infrastructure and renewable energies, were set up abroad,“ explains Knoblach. „Luxembourg was ahead in this regard.“
Free and non-binding
With the Future Financing Act, the VAT exemption is now extended to the management of all AIFs – regardless of the asset classes and the regulation thereof AIF Managements as well as the qualifications of the investors. This aligns the tax situation with that of other EU member states. „The step means a strengthening of Germany as a financial and investment location,“ commented Oliver Decker, a member of the supervisory board of Super Globalsince March. „In the future, a significant reason for founding funds in Luxembourg instead of Germany will be eliminated.“ The tax-motivated emigration to the neighbouring country is likely to be stopped as a result.
The indirect effects of the new law on the Investment Ordinance, which applies to pension funds and occupational pension schemes among others, should also be welcomed. For example, changes arise here with the allocation of investments to the real estate quota, and thus broader investment opportunities.
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