GERMANY Law and Practice Contributed by: Tarek Mardini, Antonia Puglisi and Enzo Biagi, POELLATH
limited partner interest for and on behalf of the inves - tors as beneficiaries. Filing of the partnership agreement is not required, thus the fund terms remain confidential. However, if the fund is set up as a corporate fund (GmbH or AG), the statute (governing rules) of the fund needs to be filed with the respective commercial register, after which, the fund terms are publicly available (unless included in a separate document, eg, a shareholder agreement). AML Transparency Register In 2018, Germany introduced the transparency reg - ister under the EU anti-money laundering (AML) law. The transparency register must include all beneficial owners. The law was then revised, effective from 1 August 2021, by the Transparency Register and Finan - cial Information Act. As a result, almost all legal enti - ties in Germany are required to notify the transpar - ency register of all beneficial owners, regardless of the information already contained in other registers. With the adoption of the Financial Crime Prevention Act ( Finanzkriminalitätsbekämpfungsgesetz ) and the upcoming application of the new EU Anti-Money Laundering Regulation (EU AMLR), additional obliga - tions and structural changes are being introduced to the German Transparency Register regime. Certain new requirements already came into force on 1 January 2025. Key changes include mandatory trac - ing of complex ownership structures and enhanced due diligence and reporting obligations. While some provisions already apply, the majority of the new obli - gations will become effective on 10 July 2027, when the EU AMLR becomes fully applicable across all member states. Sustainable Finance Disclosure Regulation/ESG Reporting Further, Regulation (EU) 2019/2088 – the Sustainable Finance Disclosure Regulation (SFDR) on sustainabil - ity-related disclosures in the financial services sector – and Regulation (EU) 2020/852 – on the establish - ment of a framework to facilitate sustainable invest - ments (the “Taxonomy Regulation”) – both require dis - closure of information regarding the environmental,
social, and governance (ESG) status of a fund. The goal of the regulations is to allow investors to prop - erly assess how sustainability risks are integrated in the investment decision process, to prevent green - washing activities on the part of financial institutions and to monitor ESG activities. The level of disclosure under the SFDR depends on the relevant level of impact the fund intends to pursue. In general, funds are required to disclose pre-contractual information about the fund in the annex of the offering memo - randum and on the website of the fund manager, as well as ongoing disclosures of information about the fund as an annex to the annual report. Additionally, the fund manager is required to disclose information about itself on its website. Many details of these dis - closures are still subject to additional rule-making and ongoing changes. 2.4 Tax Regime for Funds Overview The applicable tax regime depends on the legal form of the fund in question. For funds structured as part - nerships (eg, the German KG), the German general tax rules apply. This is typically the case for closed- end AIFs. For funds structured in other legal forms (corporations or contractual-type funds), special tax regimes are applicable under the German Investment Tax Act ( Investmentsteuergesetz or InvStG). This is mostly applicable to open-end UCITS, certain open- end AIFs, as well as closed-end AIFs (if structured as corporations or contractual-type funds). Funds as Partnerships According to German general tax rules, partnerships are not subject to German income tax, that is, they are tax-transparent. However, funds structured as partnerships may be subject to German trade tax. If the fund is structured as a partnership, the main issue under the German general tax rules is whether the fund is conserved to be engaged in trade or busi - ness, or whether such activity is considered invest - ment activity (also called private asset management status). If the fund is considered to be engaged in investment activities only, it is not subject to German trade tax (ie, it is fully “transparent” for tax purposes). Any income derived by a partnership is immedi - ately allocated to its partners and taxed at the level
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