German Investment Tax Act – InvStG (CBL)
The German Investment Tax Act (Investmentsteuergesetz; InvStG) entered into effect on 1 January 2018 and significantly changed the taxation of dividends and similar income from investments in German equities, participation rights and convertible bonds held by foreign investment funds.
Income paid by a German investment fund (distributions)
No capital income tax nor solidarity surcharge thereon (KESt and SolZ) is deducted by Clearstream Banking for fund distributions of German funds, if evidence is provided that the fund is an investment fund pursuant to § 1 InvStG or a special investment fund pursuant to § 53 InvStG. For funds not certified accordingly, the tax deduction logic for dividend distributions on German equities is applied. If no tax base parts are delivered, the income amount is taken as the tax base.
Clearstream Banking does not process distributions of tax liquidity.
Taxable income paid to a foreign investment fund pursuant to § 1 InvStG as of 1 January 2023
As of 1 January 2023 relief at source or quick refund for foreign investment funds is not possible any longer for Clearstream Banking S.A. (CBL) clients or Clearstream Banking AG (CBFi) clients holding German taxable securities in an omnibus account. A foreign investment fund can reclaim overpaid tax exclusively from the federal central tax office (“BZSt”).
The refund procedure pursuant to Section 11 InvStG for foreign investment funds holding a fund status certificate is outlined on the federal central tax office website, please refer hereto for detailed information.
Quick refund is possible if an investment fund with unlimited tax liability in Germany (“unbeschränkt körperschaftsteuerpflichtig”) obtains and provides a Fund Status Certificate for classification of the fund pursuant to § 1 InvStG. 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% (capital income tax rate including solidary surcharge). Complete information must be provided to Clearstream Banking within 18 months after the record date of the taxable income event to get a quick refund.
How to disclose entitlements to gain quick refund for certified investment funds with full tax liability in Germany?
On 3 July 2023, asset servicing for CBF-issued securities has been migrated to OneClearstream Asset Servicing level (CAH – KADI DE migration to OneCAS). Xact Web Portal has been enhanced to provide clients with an extended tax functionality to improve tax users' experience. Clients can now instruct their BO disclosures in a formatted way using Xact Web Portal or via Xact File Transfer.
The per-payment instruction must contain all relevant fields indicated in the BO Allocation Upload template. Clients must ensure that they download the latest template available from Xact Web Portal under Tax, Instruction, BO Allocation Upload.
Clients using Xact File Transfer can also download the template from Xact Web Portal.
For full formatting requirements of these instructions, clients should refer to the MT564 Corporate Action Notification, to the Xact User Guide and Announcements C18050, C22037 and C23035.
How many instructions are provided? | One or several for the relevant Clearstream Banking account |
Who completes it? | Client |
How often is it provided? | Per taxable income event |
Medium? | Via Xact File Transfer or Xact Web Portal |
Note: Clearstream Banking does not offer services for full reclaim of German KESt (for tax-privileged German or comparable foreign investors, for example, churches, non-profit organisations, foundations, corporations under public law) or consideration of individual tax status of end investors (for special investment funds opting for transparency pursuant to § 30 InvStG). Consequently, Clearstream Banking cannot consider the Funds Status Certificate for special investment funds opting for transparency pursuant to § 30 InvStG and no tax reduction can be granted. Payments must be executed by Clearstream Banking with the full tax rate of 26.375%.
The BZSt is responsible for processing refund applications from investment funds with limited tax liability pursuant to Section 11 of the German Investment Tax Act (InvStG) since 1 July 2021.
BZSt - Refund procedure pursuant to Section 11 InvStG
Investment funds with unlimited tax liability in Germany should contact the tax office of the withholding agent. The local tax office of Clearstream Banking AG is:
Finanzamt Wiesbaden I
Dostojewskistraße 8
D-65187 Wiesbaden
(Clearstream Banking AG Tax-ID / Steuernummer: 040 220 13205)