Tax accounting for special investment funds is one of the most demanding disciplines in investment management. The interplay of highly complex regulatory requirements, growing data volumes, and dynamic markets means that traditional approaches quickly reach their limits.

With our solution IFTaaS® – Investment Fund Taxation as a Service – we are setting a new standard. IFTaaS® is a fully digitalised, quality-assured solution for tax accounting in accordance with the German Investment Tax Act (Investmentsteuergesetz). For our clients, this means above all one thing: relief. After a short onboarding process, we take care of every step – from the daily processing of fund tax accounting to the preparation of the tax assessment declarations under §51 InvStG by KPMG Germany.

Capital management companies provide us with their regulatory data via a dedicated module made available by Profidata free of charge. The result is a genuine “plug and play” service that eliminates the need for lengthy implementation projects. Instead of high fixed costs, only variable unit costs apply – and notably, the fee can be charged directly to the fund.

IFTaaS® calculates daily tax-related investor metrics. The approach is as straightforward as it is effective: a central tax hub combines the tax expertise of KPMG Germany with the technological strength of Profidata. KPMG handles the fund tax accounting, reviews the results, and ensures full compliance with the German Investment Tax Act (InvStG). XENTIS provides the software foundation, fully covering the requirements of the InvStG while enabling the processing of fund structures with multiple share classes, multiple investors, or even multiple investors across several share classes.

An ISAE-certified cloud infrastructure ensures smooth operation, resulting in a fully digital end-to-end process that integrates seamlessly into the existing workflows of capital management companies – economically efficient, regulatory compliant, and technologically future-proof.

Specific requirements of special investment funds

With assets under management amounting to several hundred billion euros, special investment funds are among the most significant investment vehicles for institutional investors in Germany. They are characterised by flexible investment strategies, high regulatory standards, and stringent supervision. Unlike retail funds, they are reserved exclusively for professional investors and therefore subject to specific tax regulations.

The German Investment Tax Act (InvStG) provides the legal framework for the taxation of special investment funds. It defines how income, distributions, and tax-relevant figures must be calculated, documented, and reported to both investors and supervisory authorities. This is where complexity becomes particularly evident: tax provisions under the InvStG must be continuously monitored and correctly applied. This includes, among other things, the calculation of investor-specific tax figures, the allocation of general costs under §40 InvStG, and the preparation of tax assessment declarations under §51 InvStG. Errors or inconsistencies can have serious consequences – ranging from tax corrections to liability risks towards investors.

While regulatory accounting fulfils the minimum supervisory requirements, it is insufficient for tax purposes. Without specialised processes, the necessary bases for assessment to correctly determine tax values under the InvStG are missing. Moreover, regulatory scrutiny has intensified in recent years: auditors increasingly focus on tax metrics and the correct application of the InvStG. As a result, capital management companies require systems and processes capable of providing accurate, up-to-date values at any time – otherwise they risk corrections or sanctions.

Redefining tax compliance for special investment funds

Tax accounting for special investment funds is far too complex to be managed efficiently and error-free using traditional approaches. With IFTaaS®, we offer our clients a secure solution that reduces administrative effort, ensures full compliance with the Investment Tax Act (InvStG), and delivers cost efficiency. This allows capital management companies to refocus on their core business.

Would you like to transform your fund tax accounting into a quality-assured, transparent process? We provide a solution that is unique in the German-speaking market. Speak directly with our expert, Ralf Spöth, and receive tailored advice.