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The main piece of legislation regulating the setting up & managing of RIFs in the state of Germany is KAGB. There’s several other regulations & standards supplementing KAGB (mostly those are good conduct rules issued by BVI).

Permits

Managing German RIFs requires applying for a BaFin permit. Also, BaFin’s approval must be obtained for selecting depositories for managing RIFs’ marketing activities.

Any types of investors can purchase German RIFs. These are individuals & companies that are authorized to sell German RIFs :

  • an MiFID company (provided it’s MiFID-licensed or has got s passport authorizing receipt of investment advice);
  • physical persons or companies or individuals having a financial mediator license;
  • RIFs’ managers.

Limitations

German RIFs are divided into several different kinds: real estate, closed-ended, UCITS & hedge ones. Hence, investment-related restrictions apply to specific funds (e.g. real estate-oriented ones can only conduct real estate-related investment activities; however, only forty nine percent of their net worth may be invested in funds specializing in investment or marketing tools.

Taxes

As per the recently amended taxation legislation, taxation rules apply to any foundations, including partnerships. What’s noteworthy about the amendments is the fact that a 2-tier taxation regime was introduced for both funds & investors.

Assets

Establishing & managing UCITSs and AIFs in Germany requires having a depositary or custodian. No custodians are required for establishing & managing AIFMs in Germany, provided they applied for registration with BaFin. Assets of funds are protected by special rules applicable to each & every of them. As far as internally managed KGs are concerned, they must have 2 asset types: investment & administrative ones. Investors provide the former for investment purposes, while the latter are utilized for financing KGs’ investment-related activities; no investor capital can be used to fund administrative assets.

Reporting

To set up an investment fund in the state of Germany, one must have an in-depth  understanding of financial reporting rules. Managers of RIFs must file annual financial reports, managers of investment-oriented companies & contractual foundations must file reports semiannually.

Conclusion

Thinking about launching an investment project in the state of Germany? Need advice on registering investment funds in the state of Germany? Why not reach out to IQ Decision UK?