GERMANY Law and Practice Contributed by: Amos Veith, Jens Steinmüller, Ronald Buge and Stephan Schade, POELLATH
FATCA and CRS Regimes in Germany Germany has entered into a Model-1 intergov - ernmental agreement (IGA) with the USA and has incorporated the reporting and disclosure requirements under the Foreign Account Tax Compliance Act (FATCA) as modified by the IGA into German domestic law. Accordingly, German fund managers have to file information under FATCA with the German federal tax office, which exchanges such information with the US Internal Revenue Service (IRS). As a consequence, Ger - man fund managers do not have a direct obliga - tion towards the IRS regarding FATCA reporting and disclosure. Germany has also incorporated the Common Reporting Standard (CRS) into domestic law. As a result, German fund managers have an obliga - tion under German domestic law to file informa - tion under the CRS with the German federal tax office, which exchanges this information with the competent tax authorities of the participat - ing countries of the CRS. DAC 6 The tax treatment and tax structure of partner - ship-type funds is typically not subject to filing requirements under DAC 6 (EU Council Directive 2011/16 in relation to cross-border tax arrange - ments). In particular, the trading or non-trading status of a partnership-type fund should not give rise to filing obligations under DAC 6. Moreover, the German tax authorities have provided guid - ance that the PPM or a similar document that outlines the risks and benefits of an investment does not constitute standardised documentation within the meaning of Hallmark A 3 of Part II of Annex IV to DAC 6. Currently, there are discussions to extend fil - ing requirements similar to DAC 6 to merely domestic tax arrangements. Respective legis -
lation is still pending and it is not entirely clear if and when such filing requirements will enter into force. The Anti-Tax Avoidance Directive (ATAD) As Germany, like most other countries, treats partnerships as being tax-transparent, an invest - ment in a partnership-type fund should not give rise to hybrid mismatches. However, if an inves - tor is residing in a country that treats partner - ships as opaque, any income of a German part - nership-type fund attributable to such investor is subject to German tax to the same extent as if such investor were resident in Germany. Investments in funds of a contractual type, such as the German Sondervermögen or non-German fund vehicles that resemble a German Sonder - vermögen , may give rise to hybrid mismatches, particularly in situations where the home juris - diction of a non-German fund of a contractual type treats this fund as tax-transparent while Germany treats such funds as opaque under the German Investment Tax Act. Minimum Taxation As EU Member State Germany implemented Counsel Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multination - al enterprise groups and large-scale domestic groups in the Union including a qualified domes - tic top-up tax. However, this should not have an impact on funds themselves as they are exempt - ed from the scope of minimum taxation as ulti - mate parent entities. However, special rules may apply if a fund becomes part of an MNE group subject to minimum taxation.
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