Capital Gains Tax on Free Float Investments: Open Letter to the Minister-Presidents

At the initiative of the Federal Association of German Venture Capital Companies (BVK), 19 SME-focused trade associations, including BIO Deutschland, have sent a joint open letter to the Minister-Presidents of all the German Länder. Their letter addresses the planned capital gains tax on free float investments, whichwill place new burdens on company founders and corporate investors.

The discussion on investment tax reform has raised the idea of increasing capital gains tax on free float investments (Section 8b (2) of the Corporate Tax Act). The implementation of this measure would not only send a fatal signal for the frequently postulated “start-up nation” of Germany, but would also have a highlyadverse effect on investment and business in the country as a whole.  Contrary to what is sometimes claimed, current capital gains tax is not a tax break, but rather a necessary regulation to prevent multiple taxation.  Against this background, the economic affairs ministers and senators of all German Länder voted unanimously against the taxation last year.

In their letter, the associations thus expressly urged the Minister-Presidents to support the maintenance of the status quo in further negotiations and to prevent the pending changes for the worse for start-up financing.