German funds - rates, eligibility, availability of relief etc. (CEU)
Reference
Withholding tax
| Standard rate of withholding tax: | 0% / 26.375% a | Trading restriction: | Yes |
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a. No withholding tax (Kapitalertragsteuer; KESt) and solidarity surcharge (Solidaritätszuschlag; SolZ) are deducted by Clearstream for fund distributions of German funds, if evidence is provided that the fund is an investment fund pursuant to § 1 of the Investment Tax Act (Investmentsteuergesetz; InvStG). For funds not certified accordingly, the current tax deduction logic is applied; if no tax base (Bemessungsgrundlagen) parts are delivered, the income amount is taken as the tax base.
The following information relates to the situation where the before-mentioned evidence is not provided.
For non-certified German funds, the effective standard withholding tax rate on income comprises a standard rate of 25% plus a solidarity surcharge (SolZ; Solidaritätszuschlag) of 5.5% of the standard rate.
The tax calculation for non-certified German funds is done on the following tax bases (Bemessungsgrundlagen):
Cash distribution:
- Domestic Dividend Part;
- REIT-Part;
- Estate Part.
Accumulation (Thesaurierung):
- Domestic Dividend Part;
- Foreign Dividend Part;
- Interest Part;
- REIT-Part;
- Estate Part.
Note: If no tax base (Bemessungsgrundlagen) parts are delivered, the complete income amount is taken as the tax base.
Distributions of tax liquidity are not processed by Clearstream.
Availability of relief
Click on the zoom icon to view the diagram showing the availability of relief at source and/or reclaim of withholding tax on income from German funds that are not certified and their distribution is therefore subject to KESt.
| Eligible beneficial owners | Relief at Source | Quick Refund | Standard Refund |
Residents of Double Taxation Treaty countries | No | No | No |
Residents of Germany | No | No | No |
| Dividends paid to a certified investment fund pursuant to § 1 “InvStG” a | No | No | No |
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a. According to the German Investment Tax Act, if an investment fund obtains and provides a Fund Status Certificate for classification of the fund pursuant to § 1 InvStG, the German KESt is reduced to 15% at source irrespective of the location of the fund. This is applicable to client accounts with standing instruction holding positions in taxable German securities on behalf of certified investment funds exclusively. Clients must in this case provide a break down to disclose the fund company (identified by the Ordnungsnummer) and the relevant holdings of the fund company per single income payment to get taxation at a reduced rate of 15% (withholding tax standard rate including solidary surcharge). This per payment information must be provided to Clearstream via Swift or Xact function no later than 30 business days after the record date of the taxable income event.
If the Fund Status Certificate of a foreign investment fund is submitted after the payment date of the event, the overpaid KESt amount (11.375%) can be reclaimed by applying the standard tax refund procedure and presenting the relevant documents to the Federal Central Tax Office within the statutory deadline.
Relief at source
Relief at source is not available through Clearstream.
Standard refund
A standard refund is available from the federal central tax office (“BZSt”) if the beneficial owner qualifies for the benefit of a reduced rate of withholding tax in accordance with a Double Taxation Treaty (DTT) between its country of residence and Germany.
A reclaim of withholding tax is currently not available through Clearstream.
