Industry Updates

WisdomTree real estate ETF loses German tax benefits as it drops equity status

Investors can no longer benefit from partial tax exemption

Theo Andrew

ESG green finance building

WisdomTree’s real estate ETF is no longer classified as an equity fund meaning investors will no longer benefit from partial tax exemption.

The $2.3m WisdomTree New Economy Real Estate UCITS ETF (WTRE) currently tracks the CenterSquare New Economy Real Estate UCITS index which offers exposure to equities and Real Estate Investment Trusts (REITs).

However, some REITs do not classify as equities under the German Investment Tax Act.

In a note to shareholders, WisdomTree said it would not be able to provide evidence to show the fund's investments exceed the equity threshold for equity funds under German tax law.

Under the system of partial exemption, for private investors and life and health insurance companies invested in equity funds, 30% of the income is tax-exempt. It is also the same for banks holding units on their trading books.

WisdomTree added investors who have claimed or benefitted from the partial exemption must identify their local tax office to inform them “without undue delay”.

WTRE launched in February 2022 and has returned -18.7% since inception.

The index is designed to track the performance of real estate companies with material or indirect exposure to technology, sciences and ecommerce-related business models.

Common stocks, REITs, American depository receipts (ADRs) and holding companies are all eligible for inclusion.

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