The BMF has published an introductory letter on sales tax exemption for the management of venture capital funds in accordance with § 4 No. 8 letter h UStG.
With the law to strengthen Germany as a fund location and to implement Directive (EU) 2019/1160
amending Directives 2009/65/EC and 2011/61/EU with regard to the cross-border distribution of
undertakings for collective investment (Fondsstandortgesetz — FoStoG) of June 3, 2021 (Federal Law
Gazette | p. 1498), a VAT exemption for the management of venture capital funds was included in
Article 4.
The EU legal basis for the tax exemption for the management services of special funds is Article 135
Paragraph 1 Letter g of Council Directive 2006/112/EC of November 28, 2006 on the common value
added tax system (VAT Directive). According to this, the member states exempt the management of
special funds defined as such by the member states.
According to the previous national legal situation, the scope of the VAT exemption according to § 4
No. 8 letter h UStG extends to the management of undertakings for collective investment in securities
(UCITS) within the meaning of § 1 paragraph 2 of the Capital Investment Code and the management of
comparable alternative investment funds (AIF) within the meaning of Section 1 Paragraph 3 of the
Capital Investment Code.
Due to the objective of the Fund Location Act to strengthen Germany as a fund location through tax
measures and in particular to promote young growth companies (start-up companies) with competitive
financing options through venture capital investments, the VAT exemption in § 4 No. 8 letter h UStG
has been selectively extended.
A distinction must therefore be made between the newly introduced VAT-free management of venture
capital funds and the management of other funds that do not invest venture capital, which is stil
subject to VAT, insofar as this is not exempt under Section 4 No. 8 Letter h UStG.
Sources:
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