The bill H.R. 591 proposes the introduction of Sec. 899 of the U.S. Internal Revenue Code, which would impose additional withholding taxes on U.S. income of foreign investors from countries which, from the U.S. perspective, apply extraterritorial or discriminatory taxes. These tax surcharges of up to 20 percentage points would also override double taxation treaties and could, for example, affect German investors in U.S. fund structures. Although certain existing exemptions—such as those for Qualified Foreign Pension Plans—could theoretically continue, their protection under Sec. 899 has not yet been conclusively clarified.

The bill H.R. 591 proposes the introduction of Sec. 899 of the U.S. Internal Revenue Code, which would impose additional withholding taxes on U.S. income of foreign investors from countries which, from the U.S. perspective, apply extraterritorial or discriminatory taxes. These tax surcharges of up to 20 percentage points would also override double taxation treaties and could, for example, affect German investors in U.S. fund structures. Although certain existing exemptions—such as those for Qualified Foreign Pension Plans—could theoretically continue, their protection under Sec. 899 has not yet been conclusively clarified.

In March, the German Federal Financial Supervisory Authority (BaFin) published a draft guidance notice on the scope of investors' influence on investment funds permitted under supervisory law. The description of the role of the capital management company as the final decision-making authority in portfolio management is not new. What is new is that the capital management company's role as the final decision-making authority is challenged if the initiative to acquire or sell assets comes from the investors.