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By Peter KLEINGARN, Managing Partner AIQUNITED
Effective 1 January 2022, investors in Luxembourg investment funds resident in Germany may be subject to controlled foreign corporation (CFC) rules under the German Foreign Tax Act if the investment fund invests in assets through subsidiaries not resident in Germany.
CFC rules apply if an investor resident in Germany controls a foreign subsidiary of the investment fund together with persons who are related parties, the subsidiary generates “passive income” as defined in the German Foreign Tax Act and is subject to a tax of less than 25% abroad. In the case of so-called “investment companies” generating income from holding or managing cash, receivables, securities or participations, an (indirect)...
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