Despite reports in the press concerning a German tax initiative aimed at redefining the tax treatment for special-purpose entities and applying trade tax to true-sale transactions, the fears of its effect on securitization are being played down by the market.

The tax authorities of a number of German states are seeking to establish the principle that foreign corporate vehicles used in securitization transactions and involving German assets serviced by German-based servicers should be treated as "onshore" and, therefore, are liable for German tax.

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