The Investment Tax Reform Act


The information presented below is for informational purposes only and should not replace individual tax advice from a professional tax advisor.

The new investment tax law came into force on 1 January 2018. This resulted, among others, in the following changes for mutual funds and German private investors.

At a glance:

  • The new taxation system for mutual funds has applied since 1 January 2018. Some types of domestic income are now taxable. Dividends of German companies and German real estate income are charged at the same level as investment funds at 15% fund proceeds tax.
  • The concept of "partial exemption" has been introduced to offset the tax burden. Income from equity and mixed funds is therefore not subject to full taxation under certain conditions. The level of tax exemption depends, among other things, on the minimum share quotas set for a mutual fund.
  • The grandfathering of fund units acquired by investors prior to 2009 was discontinued on 1 January 2018. Capital gains accrued before this date remain tax-free. The consequences of this discontinuation are mitigated by a future allowance of EUR 100,000.00 for these "old units".
  • Overall, this reform is largely tax-neutral from the perspective of investors.

Adjustments to Flossbach von Storch funds

Many fund companies have changed their investment conditions as a result of these reforms by setting minimum equity quotas. This ensures that investors receive a discount during the subsequent taxation of their income.

 

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