Germany: Investment taxation reform, draft legislation

Germany: Investment taxation reform, draft legislation

The Federal Ministry of Finance in December 2015 proposed legislative changes that would reform the taxation of investment income. Certain measures would be effective beginning in 2016, and others in 2018. It is still early in the legislative process.

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A discussion draft on reform of investment taxation was released in July 2015. The draft legislative language differs from the July 2015 discussion draft. For instance, with respect to:

  • Investment taxation: Partial exemptions of earnings and gains from shares in investment funds would be increased on the part of the investor. 
  • Portfolio investment: A provision in the discussion draft that would affect the taxation of gains on the disposal of portfolio investments is not included in the draft legislative language. 
  • New provision on “cum/cum-trades”:  This new provision would allow investors to credit withholding tax on German dividends, provided that they held the shares for at least 45 days as legal and economic owners and assume a substantial risk of loss in value within this period of time. 


Read a 2016 report [PDF 429 KB] prepared by the KPMG member firm in Germany: German Tax Monthly (January / February 2016)


Other topics discussed in this report concern:

  • New income tax treaty with Japan 
  • Final losses of foreign permanent establishments
  • "Holding-company privilege" of abandoned thin capitalization rule
  • "Good cause" for early termination of a profit and loss absorption agreement
  • BMF guidance on the non-application of income tax law
  • Non-application decree—reduction of trade income by imputed income amounts under the controlled foreign corporation (CFC) rules for trade income tax purposes
  • Real estate transfer tax rates

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