Debt securities – rates, eligibility, availability of relief etc. – Germany (CBF)
Withholding tax
| Standard rate of withholding tax: | 0% / 26.375% | Trading restriction: | Yes |
Interest on most debt securities held in Clearstream Banking is not subject to German tax and is systematically paid gross with no action required of the client or beneficial owner to obtain exemption.
There is an effective tax rate of 26.375% on interest from the following corporate debt securities, depending on their character in each case:
- Convertible bonds (Wandelschuldverschreibungen);
- Jouissance shares: Profit participating rights that do not entitle the owner to liquidation proceeds (Genussscheine ohne Anteil an Liquidationserlös);
- Bonds conveying an interest in profits of the issuer (Gewinnobligationen).
This effective tax rate comprises a standard rate of 25% capital income tax (Kapitalertragsteuer; KESt) 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 debt securities.
| 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 |
| Income paid to a certified investment fund pursuant to § 1 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. 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 30 business days after the record date of the taxable income event at the latest. This is applicable to client accounts with standing instruction holding positions in taxable German securities on behalf of certified investment funds exclusively.
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 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 (“unbeschränkt körperschaftsteuerpflichtig”) in Germany.
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.