A taxing transition
New legislation in Germany could pave the way for mutual funds to regain market share lost to structured products. The rules will close a loophole that benefited buyers of certificates. But which way will the market turn before the clampdown takes effect, and are more changes to taxation in the pipeline?
Non-capital-guaranteed certificates sold in Germany are set to lose their tax-exempt status following the introduction of a flat tax rate for all capital income from January 2009 onwards. The legislation introducing the change was passed by the German upper house of parliament (Bundersrat) on July 6.
Capital gains taxes on mutual funds and certificates are governed by different rules, but this too will change from the end of 2008. At that point, investors will have to pay tax (Abgeltungssteuer)
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