Equities – rates, eligibility, availability of relief etc. – Germany (CBF)
Withholding tax
| Standard rate of withholding tax: | 26.375% | Trading restriction: | Yes |
The effective standard withholding tax (Kapitalertragsteuer; KESt) rate on dividends from German equities comprises a standard rate of 25% plus a solidarity surcharge (Solidaritätszuschlag; SolZ) of 5.5% of the standard rate.
Availability of relief
Click on the image to view the diagram showing the availability of relief at source and/or reclaim of withholding tax on income from German equities.
| Eligible beneficial owners | Relief at Source | Quick Refund | Standard Refund |
Residents of Double Taxation Treaty countries | No | No | Yes |
Residents of Germany | No | No | No |
| Dividends paid to a certified investment fund pursuant to § 1 of the German Investment Tax Act (Investmentsteuergesetz; InvStG) a | Yes | No | Yes |
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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. As of 1 January 2023, it is still possible to get a reduced taxation for entitled certified foreign investment funds via CBF. This is applicable to client accounts with standing instructions 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 Banking 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.
In addition to relief at source described under a., quick refund is possible if an investment fund subject to full company tax rate in Germany (“unbeschränkt körperschaftsteuerpflichtig”) obtains and provides a Fund Status Certificate for classification of the fund pursuant to § 1 InvStG. The tax is reduced to 15% in this case. To gain reduced taxation for eligible investment funds clients must 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 Banking within 18 months after the payment date of the taxable income event.
Note: Clearstream Banking cannot consider a retroactive correction of the character of an income distribution. Clearstream Banking cannot make any correction regarding the taxability of tax-free payments based on KStG § 27 when changing to a taxable income payment based on EStG § 20.1 or vice versa. This is a matter between the issuer and its local tax office.
Relief at source and quick refund
Relief at source for beneficiaries other than certified investment funds is not available through Clearstream Banking. Quick refund is possible for investment funds with unlimited tax liability in Germany (“unbeschränkt körperschaftsteuerpflichtig”).
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 Banking.