Tax exemption on the basis of tax-privileged investors

(1) Income under section 6(2), with the exception of other domestic income under section 6(5), first sentence, nos. 2 and 3, is, on the application of the investment fund, exempt from tax insofar as 1. investors participating in the investment fund satisfy the conditions of section 44a(7), first sentence of the Income Tax Act, or comparable foreign investors with their seat and management in a foreign state providing administrative and recovery assistance participate, or 2. the units in the investment fund are held within the framework of retirement provision or basic pension contracts certified under sections 5 or 5a of the Retirement Savings Contracts Certification Act.
(2) Domestic real estate income is, on the application of the investment fund, exempt from tax insofar as the following participate in the investment fund: 1. domestic legal persons under public law, insofar as the investment units are not attributable to a commercial operation not exempt from corporate income tax, or 2. domestic corporations, associations of persons or funds of assets exempt from corporate income tax, insofar as they do not fall under no. 1, or comparable foreign corporations, associations of persons or funds of assets with their seat and management in a foreign state providing administrative and recovery assistance. The first sentence also applies to other domestic income that is not subject to a tax deduction on receipt; excepted is other domestic income under section 6(5), first sentence, nos. 2 and 3.
(3) For income subject to a tax deduction, the extent of the tax exemption is determined by the share that the tax-privileged investors hold in the total holding of investment units of an investment fund at the respective time the income accrues. For income to be assessed, the extent of the tax exemption is determined by the share of the average investment unit holding of tax-privileged investors in the average total holding of investment units during the investment fund's financial year.
(4) The tax exemption for domestic equity income requires that the investment fund satisfies the conditions for creditability of capital gains tax under section 36a of the Income Tax Act. The tax exemption under subsection (1) no. 1 or subsection (2) requires that 1. the investor has been the legal and beneficial owner of the investment units for at least three months, 2. no obligation exists to transfer the units to another person, and 3. no usufruct has been granted over the investment income and no other obligation exists to remunerate the investment income, wholly or in part, directly or indirectly, to other persons.