BERLIN: The Ministry of Finance of Germany (BMF) has confirmed that a revised draft of the the German Investment Tax Act (GITA 2018) guidance notes is due within ten days, according to the International Securities Lending Association (ISLA) EY spokespersons, acting on behalf of ISLA during the discussions, stated that it had been verbally confirmed that “the tax base for securities finance transactions will be capped at the level of the underlying gross dividend”. This means that where a manufactured dividend is paid on the basis of a regular lending agreement, and then fees do not need to be taxed. The wording aims to prevent counterparts agreeing to reduce or eliminate the taxable manufactured dividend and increase the non-taxable fee instead. The German ministry made also clear that a foreign borrower couldn’t “act as a withholding agent for tax by another party.” This means the recipients of income including borrowers and lenders are taxable. Although, the ministry might allow the lender and the borrower to agree who collected the tax and this would be covered in an addendum to the GMSLA. ISLA submitted a letter on 5 December to the German Ministry of Finance asking for further clarification and expressing industry concerns around GITA. The association stated: “Due to a lack of clear understanding across the industry, lenders may determine that the risk of lending securities is no longer low and therefore will withdraw from the market, rather than accept a higher level of risk or uncertainty.
Germany Raises 2020 Growth Forecast Slightly to 1.1%
BERLIN: THE German government modestly raised its economic growth forecast for the country this year to 1.1%. Germany's economy, Europe's...
