With regard to the 2013 Annual Tax Act, it has been recommended to the German Federal Council by its own Committees to convene the Mediation Committee, a joint legislative body comprising equal numbers of members from the German Parliament and the German Federal Council.

After several amendments suggested by the German Federal Council did not make it into the legislative draft of the 2013 Annual Tax Act, the Federal Council will again debate the draft on November 23, 2012. The Federal Council's position statement will be based on recommendations by its Committees issued on November 13, 2012. The Committees recommend convening the Mediation Committee, inter alia, to introduce tax liability for income from hybrid financial instruments, tax liability for dividends and capital gains on profit sharing of widely held stock (<10%) as well as rules for the avoidance of tax structuring models using so-called real estate transfer tax (RETT) blocker partnerships.

Germany is currently busy implementing the Alternative Investment Fund Managers Directive 2011/61/EU ("AIFMD") into German domestic law. In July 2012, the German legislator published an initial discussion draft of the legislation implementing the AIFMD into domestic law, the German Investment Code (Kapitalanlagegesetzbuch, or "KAGB"). This initial discussion draft of the German Investment Code went further than required by the AIFMD (see our Client Newsletter dated August 6, 2012), particularly with regard to the application of the German Investment Code to non-EU alternative investment funds (AIF) and non-EU alternative investment fund managers (AIFM).

The initial discussion draft of the KAGB has now been revised. This Newsletter addresses the main changes made to this revised draft of the KAGB.

In reaction to the ECJ sentence dated 20 October 2011, the German parliament published on 31 October 2012 a draft law according to which EU and EEA corporations are allowed to apply for a refund of the German dividend withholding tax on portfolio dividends under certain conditions. The refund procedure should generally apply for dividends received in 2013 and future periods but also retroactively for fiscal year 2012 or earlier if the claims do not yet fall under the statute of limitations.