Investor tax reporting services
The German Investment Tax Act (GITA), applicable since 1st January 2018, provides two tax regimes for collective investments vehicles. The retail funds regime completely revised the previous tax transparent approach and its reporting requirements.
Although simpler in appearance, asset managers need to properly address the requirements of the regime. Deadlines for the annual taxation reporting are heavily compressed and ensuring that fund managers use complete, accurate and on time data for tax calculations remains an operational challenge.
German Investment Tax Act ("GITA")
Key Features
Up-front registration |
✅ |
Taxation mechanism |
Asset based |
Annual reporting |
✅* |
Periodic reporting (daily) |
✅ |
*Under the GITA 2018, there is no tax filing to tax authorities. The tax prelevement is applied by German banks to German investors accounts by the end of January based on information available (on WM Datenservices, financial data platform in Germany). Verifying the correctness of the information available to German banks and providing a calculation of the annual lump sum together with the partial exemption status applicable to investors is necessary to ensure correct application of the preliminary taxation.
Main features
Two regimes possible: "Mutual Fund" or "Special Fund" ("tax status of the fund")
Mutual fund regime
German investors of foreign and domestic investments funds are taxed :
on dividend distributions made by the investment fund;
on an annual upfront prepayment charge (“annual lump sum taxation”); and
on capital gains upon disposal of the shares of the investments.
The annual lump sum taxation is calculated on the basis of, among other components, the initial net asset value and the German reference interest rate. The taxable basis is capped to the performance of the share which may lead to a nil taxation in case of negative performance.
The payment of tax is due by German investors within 30 days after the calendar year-end and German paying agents are expected to withhold the tax. They are relying on information provided by WM Datenservice, a financial service firm in Germany. The correctness of the annual lump sum taxation will be very much dependent on the completeness and accuracy of the information available on the WM Datenservice database.
Possibility to benefit from exemptions depending on the investment policy (= “partial tax exemption status for Mutual Fund”). The partial tax exemption applies to the dividend distribution, the annual lump sum, and the capital gains.
- Three principal categories: Equity Fund / Mixed Fund / Other Fund
The partial exemption status or the reference to the minimum investment in equity (“Equity”following the Germany tax definition) has to be defined in the contractual documents of the fund (prospectus).
Breach to the ratio may trigger a fictitious sale with the taxation of the fictitious capital gain. The equity ratio of each sub-fund has to be monitored on a daily basis.
For funds of funds, a daily equity ratio from the target funds is required to apply a look-through approach on the daily equity ratio computation. Publishing the daily equity ratio for “Equity” and “Mixed” funds has become a market practice but it can also apply to “Other” funds.
Funds not registered but meeting the conditions of an “Equity” or “Mixed” fund have the possibility to apply for a retroactive qualification according to the Art.20.4 of the Law.
- Three principal categories: Equity Fund / Mixed Fund / Other Fund
Operationally, to benefit from the access to the regime, funds must register their share classes to WM DatenServices under the retail fund regime with the identification of the applicable partial exemption status. A WKN number (WM Daten single identifier) has to be requested.
Main partial exemption categories:
Fund category / % exemption |
Equity ratio |
Private investor |
Business investor |
Corporate investor |
Equity fund |
> 50% |
30% |
60% |
80% |
Mixed fund |
>= 25% |
15% |
30% |
40% |
Other |
< 25% |
0% |
0% |
0% |
Special fund regime
The Special fund regime is eligible for special investment funds that meet certain requirements. This regime is not applicable to traditional investment funds.
For more information, please refer to the following page under the Alternative investment funds section.
German and foreign Funds are subject to the German corporate tax regime on their German source income–whether distributed to German investors or not. Income not subject to the appropriate withholding tax should be declared to the competent German tax authorities via the annual corporate tax return (or via the simplified notification procedure).
Fund Status certificate
Foreign funds can directly benefit from the reduced tax rate at source of 15% (without introducing reclaims) on their German source income by obtaining the so-called Fund Status Certificate. The certificate is valid for 3 years and is relevant for any investment funds investing in German assets (mainly equities), regardless of the distribution of the fund in Germany.
Benefits of the regime
The partial tax exemption is an opportunity for the fund to enable investors to benefit from a reduction of the taxable basis and refers to equity investments (“equity ratio”) which should be determined daily. Thus, depending on the funds’ tax classification (i.e. equity/mixed fund) and its disclosure in the prospectus’ investment policy and/or calculation of the daily equity ratio, the investor can benefit from a partial tax exemption.
Scope of services
- Calculation of annual and periodic (distribution / merger) lump sum reporting;
- Partial tax exemption and daily equity ratio monitoring;
- Fund Status Certificate application / preparation of the fund tax return;
- Withholding tax monitoring and reclaim for tax exempt investors;
- Regulatory watch on tax and fund reporting;
- Consultancy and fund structuring.
Regulatory reporting services
Asset managers are exposed to additional reporting requirements when distributing their funds to German institutions (credit institutions, pension funds, insurance companies). Providing regulatory reporting is key to these specific investors as it allows them to apply a look-through process on the assets of the funds and meet their own regulatory requirements.
GroMiKV Reporting - Reporting for German credit institutions
Key Features
Target investors |
German credit institutions |
Periodicity |
Monthly |
Deliverable |
Breakdown of the fund’s investments in a specific template |
Format |
Standard excel/csv format |
Main features
The "Groß- und Millionenkreditverordnung" (GroMiKV) is a German regulation which transposes the Committee of European Banking Supervisors (CEBS) guideline regarding the large exposure regime according to Art. 390 (7) of the Capital Requirements Regulation (CRR) into German law.
This regulation is relevant for German credit institutions which are obliged to report their large exposures to the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).
German credit institutions might ask investment funds to provide them with a look-through reporting according to the GroMiKV. Especially under CRR II, an intransparent approach might have an unfavourable impact on the institutional investor.
Providing these investors with a monthly reporting is necessary to enable them to fulfil their large exposure reporting requirements according to the GroMiKV.
VAG Reporting - Reporting for smaller German insurance companies and German pension funds
Key Features
Target investors |
German insurance companies and German pension funds |
Periodicity |
On a quarterly or monthly basis (Deadline: 10 BD) |
Deliverable |
Breakdown of the fund’s investments in a specific template |
Format |
Standard excel format |
Main features
The “Versicherungsaufsichtsgesetz” (VAG) is a German regulation on investment restrictions for smaller German insurance companies and German pension funds. These entities have to report the composition of their portfolio to the BaFin.
Smaller German insurance companies and German pension funds might ask investment funds to provide them with a look-through reporting according to the VAG.
Providing these investors with quarterly reporting is necessary for them to fulfil their portfolio reporting requirements according to the VAG.
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