How to create optimal conditions for more private equity and venture capital in Germany
s needs excellent framework conditions for equity capital in all areas and a clear political commitment in this direction. What would actually be desirable is a separate legal regulation for the industry, a private equity law, which does exist in other countries. However, this is not foreseeable at present.
As BVK, we therefore see several measures as necessary, such as tax incentives that mobilize investors, more public investment by KfW and the development banks in equity capital. It would also be necessary to rethink the issue of turnover taxation of the funds and with regard to the tax transparency of VC funds. Here we call for a legal regulation that does not create unjustified preferential treatment, but eliminates disadvantages.
In any case, it would be desirable for the new federal government to refrain from raising taxes. Encouraging are the hints we hear from the negotiations regarding a possible tax incentive for young SMEs investing intensively in research and development. This would provide the right and important impetus for Germany as a location for innovation, which leading economists are also calling for. We see this funding as complementary to the usual project-oriented funding. We see another tax policy facet in the issue of so-called loss carryforwards for innovative start-ups, insofar as a VC fund enters the company to increase its capital. From our point of view, this regulation is simply counterproductive. As an association, we have followed the path taken by politicians towards regulation via the AIFM Directive and have actively and successfully contributed to the discussion in the interests of the industry. Politicians, for their part, should now act and get the necessary tax adjustment law on the directive underway very quickly so that a reliable legal basis is in place at the beginning of next year.
There is more than enough potential for equity capital or venture capital. The framework conditions can either put the brakes on or provide a boost. But especially in times of low interest rates on the one hand and also a dynamic economic development in Germany, compared to the rest of Europe on the other hand, we are moving in an environment that is attractive in this respect. Let’s not forget that equity capital opens up great opportunities, especially for SMEs, when we consider that many companies will be in desperate need of management succession in the coming years due to demographic trends.
It is also important to continue working on consolidating the international penetration of the German-speaking private equity region, i.e. in cooperation with Austria and Switzerland, the so-called DACH region. If we think about the export market, we need co-investments here. In terms of approach, BVK will continue to continuously fulfill two existential elements for its members: First, strategic communication with policymakers at all levels, and second, promoting equity capital and its opportunities in the business marketplace.