Regulatory challenges: We help you future proof your systems

Sowatec’s §5 InvStG solution

For many years, the basic principle of the German tax treatment of investment funds has been the restricted transparency principle in accordance with section 5 InvStG, which taxes on the investment investor level.

To prevent punitive taxation, investment companies are required to drastically increase their data procurement, data cleansing, as well as their tax calculation and documentation efforts, in accordance with the law.


A real-life example

  • The challenge

    The obvious solutions for handling the requirements of §5 InvStG in most companies include the use of spreadsheets or other Office applications. But these very quickly reach their limits. These include:

    • Limited expandability because of their unclear structure
    • Poor traceability, no guarantee of referential integrity
    • High maintenance costs because of decentralised or non-existent link to IT
    • Document storage restrictions due to a path lengths limited to 256 characters
    • Poor data quality and frequent data redundancies due to copy-and-paste functions
    • High training costs and loss of knowhow through staff changes
    • Operational risks due to misuse or handling errors
    • Inadequate filing system for reports can lead to reputational damage due to increased error potential
  • Our solution

    For the processing and preparation of reports, particularly in connection with §5 InvStG, already calculo’s 'off-the-shelf' version offers a range of core functionalities by means of which a tailor-made solution can be created with comparatively little effort.

    calculo takes charge of:

    • Calculating the amounts to be paid out, taking into account reinvestments, dividends, liquidation, etc.
    • Aggregation of tax identification numbers
    • Mapping of income and expenses
    • The creation and electronic issuing of mandatory reports by type of investor

The result

  • Easily manage §5 InvStG:
    • Automated importing of master and transaction data
    • Compact visualisation of large amounts of data makes it possible to analyse changes over time, using pivot tables
    • Automated calculation processes
    • Diverse control cycles that ensure error-free billing
    • Automated generation and issuing of reports
    • Seamless traceability through continuous documentation and archiving