Questions and answers (FAQ)
Enable entrepreneurs to build a sustainable future

Here we answer your most frequently asked questions.
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General information

Why do private, professional or institutional investors invest their money in companies through Innovestment?

Since 2011, Innovestment has provided investors with select growth-oriented companies with innovative products or services. With your investment you support these companies in increasing their value and, if interested, follow their long-term development. 

At innovestment.eu investors can get an overview of the investment opportunities. We attach great importance to transparency. You have the possibility to comfortably expand and manage your investment portfolio over time. All investment conditions are fixed in advance. The standardised contract model guarantees a balance of interests and the necessary legal security.

You can find more information about this under: Investment Opportunities.

What are the distinguishing features of Innovestment's offering?

Innovestment offers you transparent, efficient investment and capitalization processes. The Innovestment contract model, developed in cooperation with experienced legal experts and knowledgeable market participants, is compatible with other forms of financing for  small and medium-sized enterprises (SMEs). Companies can take advantage of a bank loan or public funding, or arrange co-investment with institutional investors. The contract is intended to provide a reliable legal basis for this and also the basis for a trusting relationship between all parties involved.

You can find more information about this under: Finance

How is Innovestment financed? What is Innovestment's business model?

Innovestment is the bridge between companies and investors. Small and medium-sized companies can raise capital on innovestment.eu in an uncomplicated and transparent way. From this we develop broadly diversified investment projects with manageable terms and fixed interest rates for private and institutional investors. For companies that finance via innovestment, there are basic costs of €5,500 for the legal process as well as variable costs of 5 percent during the financing phase and 0.5 percent during the follow-up phase. You can read the fee model here.   

How much does it cost to invest on Innovestment?

For private and institutional investors the use of innovestment.eu is free of charge. We also offer a fee-based subscription to Innovestment Premium.

What are the risks of an investment?

If the company develops positively and increases in value can be realised, investors also benefit from growth in the form of a return. However, an investment in companies is also associated with risks. In particular, if a business idea fails to establish itself on the market, there is a risk that investors may lose part or all of their investment.

The investment decision is to be made on your own responsibility and should be based on all documents provided, such as the investor information and the capital investment information sheet (Vermögensanlagen Informationsblatt - VIB).

Further information on the risks can be found under Status Related Information.

What has changed with the amendment of the Small Investor Protection Act 2019 bring?

On 10 July 2015 the so-called Small Investor Protection Act (Kleinanlegerschutzgesetz - KASG) came into force. This law regulates "crowd investing" for the first time. So-called "internet service platforms", such as Innovestment, operate within this legal framework, which was further adapted with the 2019 amendment. 

The most important aspects at a glance:

  • issue volume maximum €6 million without investment prospectus, with the use of (participatory) subordinated loans or participation rights (since 2019)
  • maximum amount per investor
    • up to €1,000: Investment possible without restrictions
    • over €1,000: self-declaration by the investors that they have freely disposable assets in the form of bank balances and financial instruments of at least €100,000 or invest a maximum of two net monthly salaries
    • €25,000 is the maximum amount for natural persons per year, investments over €25,000 are allowed for corporations
  • conducting an investor exploration of investor knowledge
  • capital investment information sheet (Vermögensanlagen Informationsblatt - VIB) must be approved by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin)
  • (electronic) confirmation of the warning of the VIB
  • advertising or promotion for investment opportunities always with a risk warning
  • licence for financial investment brokers according to § 34f Trade Regulation Act (Gewerbeordnung - GewO) for "Internet service platforms" obligatory
What is the minimum investment amount?

An investment is usually possible from €500 via innovestment.eu. However, there may be deviations. Please refer to the key data in the respective offer profile for the minimum investment amount.

Up to what amount can companies invest in Innovestment?

The maximum investment amount for legal entities varies from project to project. In general, we limit the investment opportunity per company and investment project to a maximum of 10 percent of the total volume. In this way, we ensure that all investors, both private and legal entities, have equal opportunities to participate in a project. If legal entities wish to subscribe to larger tranches, we are happy to develop alternative instruments.

Up to what amount can private investors invest in Innovestment?

Since July 2019 you can invest up to €25,000 per project, depending on your freely available assets. Before that, the upper limit was €10,000. From an investment of €1,000, you must confirm that you either have freely disposable assets in the form of bank deposits and financial instruments of at least €100,000 or that the total amount of your investment does not exceed twice your average monthly net income.

Which requirements must a company meet to acquire capital through Innovestment?

In principle, the following criteria should be met for a financing application:

  • already existing company form as GmbH, UG, AG or GmbH & Co KG
  • readiness to perform before a larger audience - online and offline
  • presentation of sustainable product quality in the recycling society on the basis of the Sustainable Development Goals (SDG)

Our focus is mainly on the following areas:

  • sustainability (impact investing)
  • innovation (growth and project financing)
  • entrepreneurship (revenue stage start-ups)
What are the costs of financing at Innovestment?

For companies that finance via Innovestment, basic costs of €5,500 are incurred as well as variable costs of 5 percent during the financing phase and 0.5 percent during the follow-up phase. You can read the fee model here.

Up to what amount can companies finance at Innovestment?

In July 2019, the upper limit for the offer of certain investments without a prospectus was raised from €2.5 million to €6 million per year. This does not include investments that have not been sold or fully redeemed. A prospectus must be prepared for financing beyond this.

What happens if Innovestment ceases to exist, for example through insolvency?

Innovestment merely acts as an intermediary between the investors and the companies to be financed. As all contracts are concluded directly between these two parties, the closing of Innovestment would not affect the contractual relationship. The invested capital would therefore not be at risk.

Legal model and investment process

Why does Innovestment offer subordinated loans as a financing instrument?

As part of the implementation of the Small Investors Protection Act (Kleinanlegerschutzgesetz - KASG) 2015, subordinated loans were included in the scope of application of the German Invest Management Act (Vermögensanlagengesetz - VermAnlG) and are now regulated as investments. However, the public offer of subordinated loans in the context of swarm financing (crowdinvesting) in a maximum volume of €6 million is exempt from the obligation to publish an investment prospectus under certain conditions. These conditions include, among others, that the investment is only distributed via a so-called "Internet service platform" such as innovestment.eu by way of investment brokerage.

What rights do investors have?

The content and scope of the rights of the investors is essentially determined by the subordinated loan agreement applicable in each case. The subordinated loans are so-called creditor rights that do not grant any corporate rights, in particular no participation, involvement or voting rights in the shareholders' meeting of the company. However, the subordinated loan agreement grants the investors certain information rights, e.g. with regard to the provision of annual reports.

Investors have no right to issue instructions to the management of the company.

How long is the minimum contract period for a system?

The minimum duration varies from project to project. Proper notice of termination by investors is possible at the earliest at the end of the minimum term with a notice period of six months. After expiry of the minimum term, termination at the end of a calendar year is also possible with a notice period of six months. The subordinated loans can be terminated via the Innovestment investment account, or you can send us an e-mail to: [email protected]

How is the company valuation carried out?

Since subordinated loans are not direct equity investments but loans, no valuation of the company is required here. However, we subject every company to a plausibility check.

Can I invest within the scope of further financing rounds?

Subsequent financing at the company is also conceivable in this way, in that the company again issues an investment asset for the purpose of raising capital. In this case, you as an investor basically have the opportunity to invest again in the offered investments and thus in the respective company.

What should be taken into account in the event of insolvency of a company?

The insolvency of a company can lead to the partial or complete loss of the invested capital. If necessary, investors may try to claim the losses for tax purposes. You can find out more about this under "tax matters".

Why is it necessary to register on the Innovestment website - innovestment.eu - to access the full profile of the companies?

On innovestment.eu there are sensitive company data, which require responsible handling. Investors can therefore only view a comprehensive company profile after opening an investment account within the registration process at innovestment.eu.

Why is previous experience with financial investments asked for during registration?

Pursuant to Section 16 (2) of the Financial Investment Brokerage Ordinance (Finanzanlagenvermittlungsordnung - FinVermV), we are legally obliged to conduct a so-called investor exploration. We must obtain your knowledge and experience with regard to certain financial investments in order to be able to assess the appropriateness of the financial investment for the investors.

How does Innovestment ensure that the data of investors and companies is protected and securely stored?

The technology of our website meets the latest requirements for security standards.  All data between browser and server are transmitted in both directions in encrypted form - among other things, this can be recognised by the small lock and the addition https://, which are displayed in your browser line. The data is stored on a server in Germany.

Can investors invest anonymously on innovestment.eu?

No, all investors, both individuals and company representatives, must register with clear names and confirm their identity by providing the number of their identity card or passport.

How do I cancel my investment account with Innovestment?

If you no longer need your investment account with Innovestment, please send us an email with the request to delete it to [email protected] In this way we can ensure that you have all the information about your investment, if you have made your own investments.

TAX MATTER

Important note on the following tax issues

The following tax FAQ is intended as general guidance for Innovestment investors. It is expressly not individual tax advice and cannot replace it. Please contact your tax advisor for further questions.

The subordinated loan agreements concluded via Innovestment can be held as both private and business assets. The following comments only concern contracts held as private assets by natural persons in Germany. If you have any questions regarding contracts held as business assets or in your country, please consult your tax advisor.

How is capital income taxed?

The income is income from capital assets within the meaning of Section 20 of the German Income Tax Act (Einkommenssteuergesetz - EStG) and is generally subject to the so-called flat rate withholding tax plus solidarity surcharge (Solidaritätszuschlag) and church tax, if applicable. Depending on their personal circumstances, investors must pay these taxes to the relevant tax office.

This final withholding tax is supplemented by various declaration obligations and options. For example, investors have the option of taxing all investment income at the individual tax rate (application for the so-called "Günstigerprüfung").

What has to be taken into account when paying church tax?

In order to ensure the correct deduction of church tax, an electronic rule check is made with the Federal Central Tax Office (Kirchensteuerabzugsverfahren - KiStAM) for each investor by 31 August each year at the latest. In addition, the query is applied for promptly when an investor joins the company. The regular search is carried out regardless of whether the investor belongs to a religious community. You will be informed of the query in good time (at least two months) in advance. The company will only refrain from deducting church tax if there is a so-called blocking notice. In such cases, church tax is levied directly on the investor.

What do I have to consider when preparing my tax return?

In general, nothing has to be enclosed with the flat rate withholding tax; when applying for the so-called "Günstigerprüfung" (tax concession), among other things, the profit or loss statements together with the annex "Kapitalertragssteuer" (KAP) have to be enclosed with the tax return.

As an investor, can I claim losses from an investment in a company for tax purposes?

If your investment should be lost, the latest case law provides for the possibility to claim these losses for tax purposes. The highest German tax court, the Bundesfinanzhof (BFH) in Munich, ruled in October 2017 (reference number: VIII R 13/15) that losses from private loans can be offset against other investment income. However, the BFH had left open in its ruling whether a settlement or waiver of claims between a private investor and the issuer should also be recognised accordingly for tax purposes. It is conceivable that investors would suffer only a partial loss of their investment.

However, a recent ruling of the Münster Finance Court of March 2018 (file number: 2 K 3127/15 E) strengthens investors' backing in this case. The court confirmed that the waiver of the claim would also lead to a final loss of the capital claim with an associated loss of the taxpayer's economic capacity. It was therefore necessary to take such circumstances into account for tax purposes. However, an appeal against the judgment of the Münster Finance Court was lodged with the Federal Finance Court (file number: IX R 9/18).

In any case, you should clarify the procedure for claiming losses with your tax advisor. Investors who have suffered a loss should not automatically assume that the tax authorities are aware of the BFH's ruling or share this legal opinion. It may well be that the tax authorities have a different tax perspective. You can find further information on the subject of "Tax Consideration of Losses in Crowdfunding" here (in German).

As an investor, what do I have to take into account when filing my tax return if the profit and loss statements of individual companies are missing, or if the profit and loss statements were submitted after the tax return was filed?

If interest income from the loan accrues after the investors have submitted their tax return, this is not problematic, as the flat rate withholding tax is paid by the company to the tax office and the tax liability of the investors is thus automatically settled.

What do I have to consider as an investor if my address changes?

Investors should always keep their addresses in the Innovestment investment account up to date for the purpose of sending out profit and loss notifications, among other things.

I live abroad. What do I have to consider from a tax perspective when investing via Innovestment?

Every country has its own tax laws. Please consult your tax consultant.

Can I submit an exemption order to Innovestment?

No, neither Innovestment as an internet service platform nor the project providers accept exemption orders.

Who can I contact if I have further questions?

This tax FAQ is intended as a general guide for investors in innovation. It expressly does not constitute individual tax advice by Innovestment and cannot replace such advice. Please consult your tax advisor for further questions.

Do you have any other questions?

Then call us at +49 30 577 010 870 or send us an

e-mail
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