18.12.2015 | KPMG Law Insights

Alternative Investments Legal – Alternative Investments Legal | Issue 11/2015

Dear Readers,

The fund industry can look back on a successful 2015.

Meanwhile, there is no standstill in the area of fund regulation at the end of the year. For example, ESMA updated its interpretative guidance on the AIFM Directive twice in December. According to a new ruling by the ECJ, administrative services provided to AIFs may be exempt from VAT under certain conditions.

The outlook for next year suggests an exciting start. The changes to the insurance supervisory regime resulting from the entry into force of Solvency II on January 1, 2016, and the associated national implementation and transition measures will increasingly occupy the insurance industry and the fund sector. Especially in the initial phase, further interpretation and implementation issues are likely to arise despite several years of preparation.

We wish you a Merry Christmas and a Happy New Year for the hopefully successful year 2016.

With best regards

Dr. Ulrich Keunecke



Extension and new regulation of the VersAufsVO NRW

The Insurance Supervision Ordinance of North Rhine-Westphalia (VersAufsVO NRW), which regulates, among other things, the investment of assets by the state’s pension funds, was originally intended to be amended in accordance with the German Insurance Supervision Ordinance (VersAufsVO NRW). § Section 11 sentence 3 VersAufsVO NRW shall cease to apply on December 31, 2015. This time limit was extended by three months, i.e. until March 31, 2016. According to information from the Ministry of Finance of North Rhine-Westphalia, a new decree is to be issued on the basis of a new authorization in the 2016 ISA.

Related links

You can access the ordinance amending the VersAufsVO NRW here.


ESMA updates FAQ on the AIFM Directive

ESMA has published updated versions of the question/answer catalog on the AIFM Directive as of December 2, 2015 and December 15, 2015 respectively.

The first update contains additions to the content of the reporting. Among other things, this clarifies that loans – including syndicated loans – are to be reported as “leveraged loans”. Where feeder AIFs invest in master AIFs, investments in AIFs managed by the same AIFM shall not be taken into account when calculating the total AUM. In addition, when stating the investment strategy, the strategy stated in the sales documents to the investor must be indicated in each case.

The second update clarifies that depositaries that are required to hold financial instruments and other assets in custody under the look-through approach are also subject to the liability regime in this respect in accordance with the German Banking Act. Art. 21 par.12 AIFM Directive are subject to. However, this shall not apply to fund of funds and master-feeder structures in which the target funds have a depositary that holds the assets of these funds in custody or that verifies ownership and performs record-keeping functions with respect to the assets of these funds.

Related links

You can find the updated catalog of questions and answers as of December 15, 2015 at this link.


ECJ ruling on VAT exemption for the management of investment funds

According to a judgment of the ECJ of December 9, 2015 (Case C-595/13, “Fiscale Eenheid X”), the management of investment assets other than UCITS may also be covered by the VAT exemption for management services under the aspect of fiscal neutrality. One of the prerequisites for this is that the respective member state concerned has subjected the other form of investment to special state supervision. Accordingly, certain administrative services provided by a KVG to an AIF may – at least in part – be treated as VAT-exempt under the further conditions set out in the ruling.

With regard to the scope of the term “management”, the ECJ is of the opinion that the actual management of a property (for example property management) transferred to a third party does not qualify as exempt management. According to the ECJ, this goes beyond the activities associated with the investment of the funds raised for joint account. In this respect, this was no longer to be classified as a specific activity of a fund and the exemption provisions under European law were to be interpreted narrowly in this case. The court leaves open the point at which an activity related to real estate can qualify as a tax-exempt fund management service.


BaFin publishes interpretative decisions on Solvency II

BaFin published twelve interpretative decisions on the application of quantitative requirements (Pillar 1) under Solvency II on its website on December 4, 2015.

Particularly noteworthy are the comments on valuation methods for assets and liabilities in accordance with Art. 9 para. 4 of the Delegated Regulation (EU) 2015/35 (DVO). In the event that an insurance company exercises the option to use different valuation methods within the meaning of Art. 9 para. 4 DVO, it explains the conditions under which accounting in accordance with HGB / RechVersV is compatible with Solvency II.

In the opinion of BaFin, the fair value to be disclosed in the notes to the financial statements pursuant to Section 56 RechVersV can generally be adopted for a valuation of investments in affiliated companies and participations as well as in shares, investment fund units and other non-interest-bearing securities.

Related links

All interpretative decisions are available on BaFin’s website.


EU Commission adopts third package on Solvency II

The European Commission adopted a third package of three implementing standards for Solvency II on December 2, 2015. The standards deal with:

  • Reporting forms for the transmission of information to the supervisory authority;
  • procedures, formats, and reporting forms for the solvency and financial condition report;
  • reporting forms and the structure for the information to be disclosed by the supervisory authorities.

Related links

You can find the draft implementing technical standards and their annexes at the following link.


IOSCO publishes report on third hedge fund survey

IOSCO published its “Report on the Third IOSCO Hedge Fund Survey” on December 11, 2015. The survey collects data from hedge fund managers regarding markets, trading activities, leverage, funding and counterparties. The report is intended to provide supervisors with a better overview of hedge funds.

Related links

You can find the IOSCO press release with link to the report here .

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Dr. Ulrich Keunecke

Leiter Sector Legal FS Insurance

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