Anticipated inheritance - Caution is required with respect to usufructuary arrangements
When the new Investment Tax Reform Act (Investmentsteuerreformgesetz, InvStRefG) comes into force, on 1.1.2018, it will profoundly change the current rules for the taxation of investment funds. The German government wants to ensure that investors in funds which do not distribute income (accumulating funds) and those that distribute only some income will also have to pay tax on a minimum amount in the form of an advance lump sum. The same partial tax exemptions will apply to these, as is the case in the taxation of distributions. The amount of the tax-exempt portion here will also be based on the type of fund.
Anyone who acquired funds prior to 2009 should basically hold on to them; when the funds are sold the tax-exempt amount of € 100,000 can be used. The tax-exempt amount can also be multiplied through gifting. You should continue to review the capital structure of investment companies in which you have invested. In any case, the new law is already very open to interpretation before it has even come into force. The first Federal Ministry of Finance (BMF) circular on questions was published already on 14.6.2017 (case reference: V C 1 - S 1980-1/16/10010) and others will follow.
Read more in PKF newsletter 01/2018.