GERMANY Law and Practice Contributed by: Amos Veith, Jens Steinmüller, Ronald Buge and Stephan Schade, POELLATH
4. Legal, Regulatory or Tax Changes 4.1 Recent Developments and Proposals for Reform Germany is constantly implementing any EU directives and modernising its rules, by a num - ber of amendments to the KAGB. Recent chang - es have already been discussed throughout this chapter, where relevant. Following the revision of AIFMD, the required changes to the KAGB are already in the legislative process and are expected to just mirror the revised AIFMD. In addition, BaFin reviews and updates its admin - istrative pronouncements and FAQs on a regular basis. Before the failure of the coalition in the federal parliament, the German government had launched legislative initiatives that would have affected, inter alia, the tax treatment of invest - ments by certain investment funds in Germany, the opportunities for German pension investors to invest, eg, in infrastructure projects and relief from German taxation of passive foreign invest - ment companies. It remains to be seen to what extent these projects will be taken up again by a new government.
investor’s allocable share of the taxable profits of a non-German fund is subject to German tax only on German-source items of income, in accordance with the rules explained above for German funds that are eligible for non-trading treatment. Corporate-Type Funds Non-resident retail individual investors Income derived from German or non-German corporate-type funds (including funds of a con - tractual type such as the German Sondervermö - gen and non-German fund vehicles that resem - ble a German Sondervermögen ) is not subject to tax in Germany. Resident retail individual investors The three items of income described in 2.6 Tax Regime and derived by them from a Ger- man or non-German corporate-type fund are subject to German income tax at a flat rate of approximately 26.4% (including solidarity sur - charge) plus church tax, if applicable. The partial tax exemptions for which they may be eligible amount to 30% in respect of equity funds and 15% in respect of mixed funds. Resident retail individual investors are not subject to trade tax.
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