The German parliament has voted to make it easier for property funds to invest in renewable energy.
Bundestag has voted in favour of increasing the annual limit for tax exemption on revenue generated by special investment funds, known as Spezial Investmentfonds, to boost investments in the production of renewable energy in real estate.
Under the new rule – part of the Annual Tax Act for 2022 passed by the Parliament – the limit increases from 5 to 10% of the total revenue, for income coming from the production or supply of electricity linked to the rental and leasing of real estate properties.
The new law lifts the threshold also for revenue generated from the operation of plants producing electricity from renewable energy sources and from the operation of charging stations for electric vehicles or electric bicycles.
The increase of the exception limit, according to the reviewed investment tax law (Investmentsteuergesets), would allow the Spezialfonds to retain their status even if the revenue coming from an active management in Germany and abroad exceed 5% of the total revenues of the fund.
Spezialfonds are therefore now allowed to generate income from the production or supply of electricity to a greater extent without losing their status, according to the law.
In response, Michael Schneider, managing director at German real estate fund manager Intreal, said the news will enable property funds to invest in photovoltaic (PV) systems on rooftops.
“However, the reform is not a game changer. We would have wished for yet more flexibility. One issue concerns partially or fully vacant properties, for example. In their case, income from rooftop PV plants would violate the limit immediately – and cause drastic economic consequences on the fund and investor levels.”
To read the latest edition of the latest IPE Real Assets magazine click here.