In mid-2016, the German legislature agreed on a fundamental reform of the German Investment Tax Act. The completely revised act – which will affect any fund that invests in German assets or that has German investors – will come into force on January 1, 2018, giving investment fund managers the balance of 2017 to prepare for such changes. In a guest article, Nadine Schader, an attorney at Flick Gocke Schaumburg, provides an overview of the new German tax regime as it relates to investment funds and their investors; clarifies the critical distinction between investment funds and special investment funds, along with how the new regime applies to each category; and provides guidance on the steps that investment managers should take to determine if their funds will be classified as investment funds or special investment funds as it relates to German source income. For more on tax reforms abroad, see “Recent Tax Developments May Make U.K. Limited Companies More Favorable Than U.K. LLPs for U.S. Fund Managers” (Apr. 20, 2017); and “Key Hedge Fund Tax Developments in the U.K., the European Union, Ireland, Germany, Spain, Australia, India and Puerto Rico” (Jun. 27, 2013).