Tag: Investment fund

Investment Fund means an entity or arrangement that meets all of the following criteria set out in paragraphs (a) to (f) below:

(a) it is designed to pool assets (which may be financial and non-financial) from an Excluded Entity or a number of investors (at least some of which are not connected);

(b) it invests in accordance with a defined investment policy and/or to reduce transaction costs and research and analytical costs and/or to spread risk collectively;

(c) it is primarily designed to generate investment income and/or gains or protection against a particular or general event or outcome;

(d) investors have a right to return from the assets of the fund, or income earned on those assets, based on the contributions made by those investors;

(e) the fund, or the management of the fund, is subject to the regulatory regime for collective investments in the jurisdiction in which it is established (including appropriate anti-money laundering and investor protection regulation); and

(f) it is managed by fund management professionals on behalf of the investors.

The definition also includes any entity or arrangement that is wholly-owned or almost exclusively owned, directly or indirectly, by one or more Investment Funds or other Excluded Entity and that does not carry on a trade or business but is established and operated exclusively or almost exclusively to hold assets or invest funds for the benefit of such Investment Funds or other Excluded Entity.

Germany vs "Asset management Gmbh", April 2013, Supreme Administrative Court, Case No I R 45/11

Germany vs “Asset management Gmbh”, April 2013, Supreme Administrative Court, Case No I R 45/11

Asset management Gmbh was a subsidiary of a Luxembourg investment fund management company. The German company paid substantial fees to a Luxembourg service company. Both companies in Luxembourg were wholly-owned by a Luxembourg holding company. Asset management Gmbh was obliged to follow the policies of the fund. These could only be revised by a two-thirds majority resolution of the investors. The German company argued that this restriction meant that its Luxembourg shareholder could not be forced to follow a common business policy with the service provider. Accordingly the two were not related parties within the meaning of the Foreign Tax Act and there was no requirement for it to furnish the extensive transfer pricing documentation in support of its transactions with associated enterprises as required by the Tax Management Act. In any case, the fact that these transfer pricing documentation requirements only applied to cross-border transactions was a restriction on the freedom to provide (receive) services and thus contrary to ... Read more