Germany's media funds areback in business - at least, for the time being.

The German government's proposed taxreforms, which would have seen the old-style media funds axed, have beenabandoned.

But the reprieve could prove to be temporary for the funds,which, according to analysts, raised a staggering raised Euros $13 bn between1997 and 2004, with about 80 percent of this being invested Stateside.

At the end of April, German Minister of Finance Hans Eichelannounced his intention to put an end to the funds as one of the ways offinancing planned reductions in the level of corporation and inheritancetaxes.

In a transitional period up to May 4, investors were ableto sign up to funds operating under the old regulations so long as the funds'placements had been launched before March 18.

After May 5, the future of the media funds looked bleakalthough many funds continued gathering money on the assumption that thereforms would never pass the Upper House (Bundesrat) where the opposition toChancellor Gerhard Schroeder's government has the majority.

A special session of theBundestag has now failed to agree on the financing of the tax reforms and threwout the controversial paragraph 15b of the Income Tax Code (regulating taxrelief schemes), thus returning the media funds to their previous status quo.

However, the funds' currentjubilation is not without reservations. Two important hurdles remain:firstly, the Investor Protection Improvement Act, which comes into force onJuly 1 and obliges all initiators of closed funds to have their prospectusesapproved by the Federal Agency for the Supervision of Financial Services(BaFin).

But, more importantly, theGerman political landscape may change if Angela Merkel's opposition party, theCDU, wins the general election in September - there have already been clearsigns from the CDU that abolishing tax relief schemes such as the media fundswould be revived if they win.

This could mean that theend of German media funds has only been postponed.

Speaking to, AndreasSchmid, CEO of VIP Medienfonds, said it was now crucial to work with thepoliticians on a long-term strategy for a more stable fiscal policy before newlaws were drafted.

'We are already in a dialogue withpoliticians about what advantages funds can offer the film industry here inGermany and promote the production location,' Schmid said, noting that theuncertainty about the tax situation had put off foreign producers from bringingprojects to shoot in Germany.