After being called “locusts” by some German politicians last year, private equity firms and hedge funds seemed to be making some inroads with some new p.e.-friendly laws. The German finance ministry, however, is considering a new tax on private equity as a way to fund a proposed 36% cut in corporate taxes, Handelsblatt reports. Such a levy, reports the German business daily, would make Germany far less attractive for private equity than countries such as the U.S., the U.K., Luxembourg and France, which offer tax-exemptions to p.e. funds. “No investor in Germany would tolerate such a move,” an unnamed private equity professional told Handelsblatt, adding that international pension funds and private equity firms would set up shop abroad. The finance ministry denies that it wants p.e. out, according to an agency spokesman who said, “We are not working on concrete plans that go in this direction.” In fact, the “grand coalition” formed last November between the Christian Democrat and Social Democratic parties promised to work on laws that would boost private equity in Germany.
