(September 18, 2015)
On September 16, 2015 on the website of the German Ministry of Finance a press release titled: “Promoting venture capital in Germany” was published. In the press release it is stated that on September 16, 2015 the German cabinet approved a key issues paper regarding the promotion of venture capital in Germany, developed under the lead responsibility of Germany’s finance and economics ministries. According to the press release, it is the German government’s conviction that Germany needs more new, innovative businesses in order for the country to utilize the economic opportunities offered by digitisation: Germany needs to be internationally competitive as a location for venture capital investment.
According to the press release with respect to taxes the key issues paper covers a.o. the following step:
“Innovative companies will be exempted from taxation on free-float shares: Many business angels, founders and investors invest through corporations for which legislators have foreseen a tax exemption on capital gains made by the corporation as long as they are not distributed to shareholders. In recently published draft legislation reforming investment taxation, the German Finance Ministry put forward a proposal on the taxation of capital gains and a tax reduction for business angels and start-ups. The German government will in any event ensure that new obstacles are not created for funding new and innovative companies. Before any possible legal rules enter into force, the German government will make certain that exemptions for innovative businesses are compatible with EU law from the point of view of the European Commission.”
The press release furthermore states:
“The government wants Germany to evolve as a competitive location for venture capital funds going forward:
· With regard to VAT on the management services of private equity funds, the German government will monitor case-law from the European Court of Justice and then examine whether this gives rise to scope for action which can be taken in line with EU law.
· The German government will preserve the conditions for conducting asset management activities in the case of private equity funds. Should case-law on the requirements for asset management activities become stricter, the German government will work to achieve legal clarity within the meaning of the 2003 administrative order (on whether venture capital companies engage in trading or asset management activities).
· Furthermore, the German government will advocate the retention of the tax concession on profit participation for fund initiators (carried interest).”
Click here to be forwarded the press release as issued on the website of the German Ministry of Finance.
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