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escape clause

Good news for German Founders and Beneficiaries of foreign Foundations and Trusts

Top Article

12 May 2025

In its ruling of 3 December 2024, the Federal Fiscal Court clarified that the so-called escape clause to avoid attribution taxation is also applicable to foundations and trusts domiciled in third countries, such as Switzerland. The judgement strengthens the free movement of capital and creates more legal certainty for international succession and asset structures….

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    escape clause Good news for German Founders and Beneficiaries of foreign Foundations and Trusts

    In its ruling of 3 December 2024, the Federal Fiscal Court clarified that the so-called escape clause to avoid attribution taxation is also applicable to foundations and trusts domiciled in third countries, such as Switzerland. The judgement strengthens the free movement of capital and creates more legal certainty for international succession and asset structures....

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    Venture Capital Q&A on the German Venture Capital market

    Learn more about the German practice of venture capital law, including equity structure, typical investment periods, incentives as well as insights and opinions on the most common legal issues. ...

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    Direct Secondary Investments, Venture Capital, transactions, Secondary Investments Direct Secondary Investments – Revival in turbulent times

    The venture capital secondary market has developed into a significant part of the European venture capital ecosystem in recent years. In contrast to the private equity secondary market, which has been established for decades, the venture capital secondary market has only been enjoying increasing popularity for around ten years – fueled by the exponential growth of primary investments in venture capital-financed companies....

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    crypto, crypto assets, investors, staking Decree of German Ministry of Finance on crypto assets – Investors must act

    The German Federal Ministry of Finance (BMF) has revised the 2022 letter on the taxation of crypto assets and published it in a new version on 6 March 2025. The substantive legal assessment of most issues has not changed – but the tax authorities are significantly increasing the procedural pressure, particularly on private investors. Some expected issues have still not been addressed....

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    LP Secondary Transactions, ECI, FIRPTA US Tax Withholding Considerations for LP Secondary Transactions

    When a non-US person sells an interest in an entity that is treated as a partnership for US tax purposes, such as a private investment fund, the buyer may be required to withhold and remit to the US Internal Revenue Service a portion of the purchase price, unless the buyer receives from either the seller or the partnership a certification that no withholding is required by reason of an exemption. A buyer that fails to withhold may be liable for the underlying tax, and in some cases the partnership may be required to withhold from future distributions to the buyer or be liable for the underlying tax. This article provides an overview of the two applicable withholding regimes in the context of LP secondary transactions....

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    Private Markets 2025 – The Expansion of the Private Wealth Segment accelerates

    2025 is emerging as a pivotal year for the “democratization” of private markets, with the DACH region experiencing a significant shift in the personnel landscape....

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    Infrastructure quota, Risk Capital Investment Quota, German Investment Ordinance, GIO Amendment to German Investment Ordinance – Additional flexibility for alternative investments

    On 6 February, the Eighth Ordinance amending ordinances pursuant to the German Insurance Supervision Act (Versicherungsaufsichtsgesetz) was promulgated, introducing, among other things, amendments to the German Investment Ordinance (GIO). The revised GIO includes henceforth the implementation of an infrastructure quota, the expansion of the risk capital investment quota and the further utilization of the escape clause in the German Investment Ordinance (Anlageverordnung). ...

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    tax trap, hidden profit distribution, holiday home News on the taxation of a holiday home held through a corporation

    In many cases, holiday homes and other self-used properties are not held directly, but through a corporation. This is particularly the case in Spain, which is very popular with Germans, but also in many other regions of the world, such as the United Arab Emirates (Dubai) or South Africa. However, in a much-publicized decision in 2013, the German Federal Fiscal Court (Bundesfinanzhof, BFH) ruled that the private use of the property by the shareholders, either free of charge or at a reduced rate, constitutes a so-called hidden profit distribution, which leads to taxable income from capital gains for the shareholders in Germany. In a new decision dated October 1, 2024, the BFH once again confirmed its legal opinion and specified when a hidden profit distribution can be assumed and how it should be calculated....

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    Carried Interest, Art. 7 DTT-USA Carried interest from US funds – No ‘commercial profit’ within the meaning of Art. 7 DTT-USA

    The Schleswig-Holstein tax court has ruled that carried interest of US asset management funds does not constitute ‘commercial profits’ within the meaning of Art. 7 DTT-USA. Carried interest can therefore only be taxed in Germany if it is paid to a person resident in Germany. This affects all those carry beneficiaries who are also taxed abroad on their carried interest and is particularly relevant in light of the possible change in the taxation of carried interest in the United Kingdom....

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    DORA, Digital Operational Resilience Act, financial market digitization Bureaucracy relief and financial market digitization – What fund managers can expect in 2025

    The Fourth Bureaucracy Reduction Act (BEG IV) and the Financial Market Digitization Act came into force at the turn of the year. The aim is to reduce bureaucracy by making cross-legislative adjustments. In the area of digitalization, the financial market is simultaneously experiencing the introduction of new rules, including the EU regulation DORA (Digital Operational Resilience Act)....

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    exit tax on investment funds, ext tax, investment funds German Bundestag Passes New Exit Tax on Investment Fund Shares

    On 18 October 2024, the German Bundestag passed the introduction of a new exit tax regime as part of its session on the Annual Tax Act 2024. Provided the Bundesrat approves (as expected), in the future, shares in (special) Investment funds held privately will also be subject to exit taxation....

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    gift tax, income tax, double taxation, foreign trust Potential Double Taxation of Distributions from a Foreign Trust

    In individual cases, distributions from a taxopaque foreign family trust to a German tax resident beneficiary may be subject to both gift tax and income tax. This was recently decided by the Munich Fiscal Court, basically confirming the guidelines laid down by the Federal Fiscal Court. ...

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    Corporate Governance Laws, Corporate Governance Corporate Governance – What you need to know about German law

    The German Chapter of the international legal guide "ICLG - Corporate Governance Laws and Regulations" covers common issues in corporate governance laws and regulations – including in management bodies, shareholders & other stakeholders, transparency & reporting, and corporate social responsibility....

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    gift tax relief, gift tax, taxation Potential gift tax relief for capital contributions to corporate entities

    According to a recent ruling dated May 23, 2024, published on August 1, 2024, the Münster Fiscal Court has affirmed the requirement of a subjective element to trigger German gift tax pursuant to Section 7 para. 8 German Inheritance and Gift Tax Act....

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    entity classification, classification, US tax US Entity Classification Considerations for Non-US Investment Funds

    The US federal income tax system has a unique entity classification regime that allows certain types of entities to choose their tax classification (i.e., opaque versus transparent). This choice is made by mailing to the US Internal Revenue Service a Form 8832 on which the entity literally checks a box corresponding to its desired tax classification, hence the phrase “check-the-box” election. This article provides an overview of the check-the-box rules and discusses some related considerations for non-US investment funds....

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Investment Funds

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    crypto, crypto assets, investors, staking Decree of German Ministry of Finance on crypto assets – Investors must act

    The German Federal Ministry of Finance (BMF) has revised the 2022 letter on the taxation of crypto assets and published it in a new version on 6 March 2025. The substantive legal assessment of most issues has not changed – but the tax authorities are significantly increasing the procedural pressure, particularly on private investors. Some expected issues have still not been addressed....

  • Share
    • Facebook
    • LinkedIn
    • WhapsApp
    • Copy URL
    LP Secondary Transactions, ECI, FIRPTA US Tax Withholding Considerations for LP Secondary Transactions

    When a non-US person sells an interest in an entity that is treated as a partnership for US tax purposes, such as a private investment fund, the buyer may be required to withhold and remit to the US Internal Revenue Service a portion of the purchase price, unless the buyer receives from either the seller or the partnership a certification that no withholding is required by reason of an exemption. A buyer that fails to withhold may be liable for the underlying tax, and in some cases the partnership may be required to withhold from future distributions to the buyer or be liable for the underlying tax. This article provides an overview of the two applicable withholding regimes in the context of LP secondary transactions....

  • Share
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    • Copy URL
    Private Markets 2025 – The Expansion of the Private Wealth Segment accelerates

    2025 is emerging as a pivotal year for the “democratization” of private markets, with the DACH region experiencing a significant shift in the personnel landscape....

Alle Investment Funds-Beiträge im Überblick

M&A

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    Venture Capital Q&A on the German Venture Capital market

    Learn more about the German practice of venture capital law, including equity structure, typical investment periods, incentives as well as insights and opinions on the most common legal issues. ...

  • Share
    • Facebook
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    • WhapsApp
    • Copy URL
    Corporate Governance Laws, Corporate Governance Corporate Governance – What you need to know about German law

    The German Chapter of the international legal guide "ICLG - Corporate Governance Laws and Regulations" covers common issues in corporate governance laws and regulations – including in management bodies, shareholders & other stakeholders, transparency & reporting, and corporate social responsibility....

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    PE Transactions, Private Equity Transactions, companies, company, management, corporate governance Private equity transactions 2023 – How the German market works

    Quick reference guide enabling side-by-side comparison of local insights, including into types of private equity transaction, corporate governance, disclosure and timing considerations, dissenting shareholder rights, key purchase agreement provisions, participation of target company management, tax, financing, shareholders’ agreements, exit strategies (including IPOs), target sectors, cross-border considerations, club/group deals and key recent developments....

Alle M&A-Beiträge im Überblick

Tax

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    tax trap, hidden profit distribution, holiday home News on the taxation of a holiday home held through a corporation

    In many cases, holiday homes and other self-used properties are not held directly, but through a corporation. This is particularly the case in Spain, which is very popular with Germans, but also in many other regions of the world, such as the United Arab Emirates (Dubai) or South Africa. However, in a much-publicized decision in 2013, the German Federal Fiscal Court (Bundesfinanzhof, BFH) ruled that the private use of the property by the shareholders, either free of charge or at a reduced rate, constitutes a so-called hidden profit distribution, which leads to taxable income from capital gains for the shareholders in Germany. In a new decision dated October 1, 2024, the BFH once again confirmed its legal opinion and specified when a hidden profit distribution can be assumed and how it should be calculated....

  • Share
    • Facebook
    • LinkedIn
    • WhapsApp
    • Copy URL
    Carried Interest, Art. 7 DTT-USA Carried interest from US funds – No ‘commercial profit’ within the meaning of Art. 7 DTT-USA

    The Schleswig-Holstein tax court has ruled that carried interest of US asset management funds does not constitute ‘commercial profits’ within the meaning of Art. 7 DTT-USA. Carried interest can therefore only be taxed in Germany if it is paid to a person resident in Germany. This affects all those carry beneficiaries who are also taxed abroad on their carried interest and is particularly relevant in light of the possible change in the taxation of carried interest in the United Kingdom....

  • Share
    • Facebook
    • LinkedIn
    • WhapsApp
    • Copy URL
    gift tax, income tax, double taxation, foreign trust Potential Double Taxation of Distributions from a Foreign Trust

    In individual cases, distributions from a taxopaque foreign family trust to a German tax resident beneficiary may be subject to both gift tax and income tax. This was recently decided by the Munich Fiscal Court, basically confirming the guidelines laid down by the Federal Fiscal Court. ...

Alle Tax-Beiträge im Überblick

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