German Tax Documents

In accordance with section 5 German Investment Tax Act and does not constitute a distribution of the fund (section 293(1) sent. 2 no. 2 and 4 German Capital Investment Code).

A new German Investment Tax Act (GITA) has become effective on January 1, 2018. Under the new law, investment funds are no longer “transparent” but generally taxed on a lump sum basis. The taxable amount for the German investors resulting from a fund investment is called “preliminary lump-sum” (Sec. 18 GITA). This preliminary lump-sum is calculated as follows: NAV of the fund as of January 1, 2018 multiplied with 70% of an official published interest rate. For the year 2018 this interest rate is 0,87%. That means that for 2018 maximum 0,609% of the NAV as of January 1, 2018 is taxable income for the German investor. The preliminary lump-sum is limited by the increase in the NAV between January 1, 2018 and December 31, 2018 (e.g. if there is no increase in value during the year 2018, the German investor has no taxable amount). Following this, the actually taxable amount can be determined after NAV of December 31, 2018 is available. Fund distributions are always taxable.

If the fund units are with a German depositary bank of the German investor, the bank will calculate the preliminary lump-sum because this amount is the basis for the withholding tax. German banks are obliged to withhold taxes on the preliminary lump-sum from 2018 on. Please note that the preliminary lump-sum (which is calculated on the NAV of 2018) is only taxable as at January 1, 2019. If there is no German depositary bank the German investor has to include the preliminary lump-sum 2018 in its tax return for 2019.

Kindly be advised that this information does not constitute as tax advice, please consult your tax advisor.