Relief from German withholding tax on dividends and certain forms of investment income
Pursuant to Section 50 d, para. 1 of the Income Tax Act (EStG) in conjunction with the double taxation agreement (DTA) or Section 43 b of the Income Tax Act, the Federal Central Tax Office is responsible for granting relief from German withholding tax on dividends and certain forms of investment income.
In Germany, withholding tax of 25% respectively is collected on dividends and certain other forms of investment income. Foreign recipients (creditors) of this type of capital yields are to be granted total or partial relief from withholding tax pursuant to the DTA or Section 43b of the Income Tax Act. This usually takes place by way of a reimbursement procedure.
The full amount of withholding tax is initially retained by the domestic obligor (debtor) and paid to his competent tax office. At the request of the foreign creditor, the Federal Central Tax Office then refunds the excess tax paid in a computer-based procedure.
An exemption procedure whereby the debtor can wholly or partially omit tax deduction from the outset may also be possible under certain circumstances in cases involving major shareholdings. The possibility of exemption only applies if the creditor of the income from capital is a legal person, however.
Please see the attached overview for the maximum tax rates that Germany, as the state of source, may collect if the recipient of the dividends or interest is resident in one of the listed countries with which Germany has concluded a DTA. The overview does not take account of any special provisions for “major shareholdings” (or “cross-holdings”) whereby foreign corporate entities hold a minimum share (generally 10% or more) in German corporate entities.
The Federal Central Tax Office accepts no responsibility for the up-to-dateness, completeness and correctness of this overview. It is intended merely as a source of information for interested parties about possible claims for relief. The content of the relevant DTA transposed into German law by way of a legislative procedure is authoritative in all cases.
If the tax rate stipulated there is lower than the withholding tax (including solidarity surcharge) collected in the deduction procedure, relief can usually be claimed by submitting a refund application pursuant to Section 50d, para. 1 of the Income Tax Act.
The application forms required for this can be downloaded under “Forms”.
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