[16388]
July 31, 2003
TO: INTERNATIONAL COMMITTEE No. 51-03
TAX COMMITTEE No. 47-03
RE: GERMANY INTRODUCES DRAFT OF NEW FUND LAW AND FUND TAX LAW
Attached is a memorandum from German counsel on the draft Investment
Modernization Act (Draft Act), which was published by the German Ministry of Finance earlier
this month. The Draft Act will, among other things, transpose the new UCITS Directive into
national law and modernize and harmonize Germany’s investment fund and tax laws.
One of the objectives of the Draft Act is to make Germany more attractive to the
investment fund industry. As described in more detail in the memorandum, the Draft Act
introduces the concept of an investment stock company with variable capital as a new form for
investment funds, which would be similar to the Luxembourg SICAVs (corporate-styled funds).
The Draft Act also will abolish the discriminatory treatment of foreign funds with
respect to dividends.1 The Draft Act, however, will restrict the registration of non-EU funds for
sale in Germany to funds domiciled in non-EU countries that have a reciprocity agreement with
Germany for the public sale of foreign funds. This provision effectively would prohibit US
funds from registering for sale in Germany. The Draft Act would grandfather foreign funds
that are already registered for public sale in Germany.
We understand that the Draft Act will be referred to the Federal Cabinet on August 4,
2003, and final adoption of the Act is planned for the end of November with effectiveness as of
January 2004.
Jennifer S. Choi
Associate Counsel
Attachment (in .pdf format)
1 See Memorandum to International Members No. 14-03 and Tax Members No. 25-03 (15904) (Apr. 16, 2003).