Germany MOF Releases Court Decision Explaining Taxation of Compensation for Prospectus Liability of Commercial Funds

The German Ministry of Finance Nov. 10 released Tax Court Decision No. IV R 20/18, explaining the taxation of compensation for prospectus liability for participation in a commercial fund. The taxpayer, a limited partner of a commercial fund, filed for damages against the fund based on incorrect information in the fund prospectus. The taxpayer was awarded compensation against the assignment of all of his fund shares. The tax office deemed the compensation to be taxable income based on the taxpayer’s participation in the fund, while the taxpayer argued that the compensation was a capital gain. The court upheld the tax ...