General information - types of securities, deadlines, other market specifics - Germany
Types of securities
The eligible securities issued in Germany are as follows:
Debt securities not subject to withholding tax
- Government debt securities (including coupon strips and principal strips of strippable government bonds as detailed in the Creation Link Guide - Germany);
- Agency bonds;
- Foreign bonds;
- Communal bonds;
Debt securities subject to an effective rate of withholding tax of 26.375%, 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).
Bearer equities and Registered Shares, subject to an effective rate of withholding tax of 26.375%
German funds certified according to InvStG
No withholding tax (Kapitalertragsteuer; KESt) and solidarity surcharge (Solidaritätszuschlag; SolZ) are deducted for fund distributions of German funds, if evidence is provided that the fund is an investment fund pursuant to § 1 of the German Investment Tax Act (Investmentsteuergesetz; InvStG) or a special investment fund pursuant to § 53 InvStG.
German funds not certified and subject to an effective rate of withholding tax of 26.375% on taxable elements
Note: If no tax base (Bemessungsgrundlagen) parts are delivered, the income amount is taken as the tax base.
The tax calculation on German growth (accumulation) funds is done on the following tax bases (Bemessungsgrundlagen), if the fund does not fulfill the above-mentioned requirements:
Cash distribution:
- Domestic Dividend Part (inländischer Dividendenanteil);
- REIT-Part (REIT-Anteil);
- Estate Part (Immobilienanteil).
Accumulation (Thesaurierung):
- Domestic Dividend Part (inländischer Dividendenanteil);
- Foreign Dividend Part (ausländischer Dividendenanteil);
- Interest Part (Zinsanteil);
- REIT-Part (REIT-Anteil);
- Estate Part (Immobilienanteil).
For German growth (accumulation) funds, distributions of tax liquidity are not processed by Clearstream Banking.
Beneficial owners recognised for tax purposes in Germany
The following types of beneficial owner of German securities are recognised for tax purposes in Germany:
- Residents of a Double Taxation Treaty (DTT) country;
- Residents of Germany.
Natural persons who have neither their residence nor their usual abode in Germany and legal entities, partnerships and assets that are neither managed nor domiciled in Germany have limited tax liability if they generate income in Germany within the meaning of §49 of the Income Tax Law (Einkommensteuergesetz; EStG).
Note: There are no domestic exemptions specifically available for foreign governments or supranational organisations. The conditions of the relevant DTT apply as appropriate.
Residents of a Double Taxation Treaty (DTT) country
A reclaim of the relevant amount of withholding tax is available through Clearstream Banking if a beneficial owner qualifies for the benefit of a reduced rate of withholding tax in accordance with a DTT between its country of residence and Germany.
Relief at source and quick refund of withholding tax on income from German securities are not available through Clearstream Banking.
The client can reclaim withholding tax on behalf of the beneficial owner through Clearstream Banking by submitting the appropriate documentation.
Residents of Germany
Residents of Germany cannot reclaim withholding tax through Clearstream Banking.
Residents of Germany who deposit their assets in Clearstream Banking, via Clearstream Banking S.A. or via a non-German depository bank, can request German Tax Vouchers for their yearly tax statement via their depository bank in Clearstream Banking.
Statutory deadline for reclaiming withholding tax
The statutory deadline for reclaiming withholding tax is four years after the end of the year in which the income payment was made.
Clearstream deadline for standard refund applications
The deadline by which Clearstream Banking must receive the documentation is, at the latest, two months before the Double Taxation Treaty (DTT) deadline or, if there is no DTT deadline, two months before the statutory deadline.
All standard refund applications received after this deadline will be processed by Clearstream Banking on a "best efforts" basis. However, in such cases, Clearstream Banking will apply an extra charge and accepts no responsibility for forms that have not reached the German Authorities by the date considered as being the statute of limitations deadline.
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 and deadline.
As from 1 January 2023, taxpayers with restricted tax liability in Germany (German non-resident taxpayers), will need to transmit their standard refund application forms to the Federal Central Tax Office (BZSt) electronically. Please see announcement C22029.
Note: If a reclaim application is not accepted by the tax authorities, the applicant has one month to appeal against the decision before it becomes binding. According to Rule §51 of the Administrative Procedure Act, the authorities can reverse their decision in a specific case for only a very limited set of reasons (for example, if there are new proofs or other evidence).
When are refunds received?
Debt securities and equities
The estimated time for receiving a refund can vary depending on the time that the application is filed and the complexity of the information supplied in the reclaim form. Clearstream Banking has collected information from sources considered reliable but does not guarantee the accuracy of the timings presented.
German funds that cannot provide evidence that they are an investment fund pursuant to § 1 InvStG or a special investment fund pursuant to § 53 InvStG
The applicant must reclaim, by accumulation of funds under the same tax voucher, through two different channels:
- For the domestic dividend part (inländischer Dividendenanteil), through the Federal Central Tax Office (BZSt); and
- For the interest part (Zinsanteil), through the fund company or fund management company (Kapitalanlagegesellschaft).
The estimated time for receiving a refund can vary depending on when the application is handled by the two different channels.
In such cases, it has been agreed, between the responsible department in the BZSt (St III 3) and the responsible supervisory department in the German Ministry of Finance (BMF IV B 3), that the applicant can request, without need of a form, that the BZSt return the original tax voucher, which the BZSt will do before the completion of the application processing.
Notes on tax reclaims
Clients warrant the completeness and accuracy of the information they supply to Clearstream Banking.
It is the client's responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.
With respect to tax reclaims in general, clients are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country.