Market Taxation Guide - Germany
This Market Taxation Guide (Germany) provides the following details:
- Reference information about taxes applied at source, through Clearstream Banking1 and its local depositories, to securities deposited in Clearstream Banking and
- Instructions for obtaining relief at source or a refund of withholding tax, where these are available, through Clearstream Banking.
Additional and improved tax information and procedures that are available will be included on an ongoing basis.
Important note:
This Market Taxation Guide (including any attachments and other links) is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. Readers of this Market Taxation Guide, whether clients or otherwise, should not act or refrain from acting on the basis of any information included in this Market Taxation Guide without seeking appropriate legal or other professional advice.
Withholding tax
There is an effective withholding tax rate of 26.375%, which comprises a standard rate of 25% plus a solidarity surcharge (Solidaritätszuschlag; SolZ) of 5.5% of the standard rate.
| Debt securities | Trading restriction? | Withholding tax rate | Relief at source | Quick refund | Standard refund |
Yes | 0% / 15% / 26.375% | ||||
Residents of Double Taxation Treaty (DTT) countries | No | No | Yes | ||
Residents of Germany | No | No | No | ||
Coupon payments subject to German withholding tax paid to a certified investment fund pursuant to § 1 of the German Investment Tax Act (Investmentsteuergesetz; InvStG) (a) | Yes | No | Yes | ||
| Equities | Trading restriction? | Withholding tax rate | Relief at source | Quick refund | Standard refund |
Yes | 0% / 15% / 26.375% | ||||
Residents of Double Taxation Treaty (DTT) countries | No | No | Yes | ||
Residents of Germany | No | No | No | ||
Dividends payments subject to German withholding tax paid to a certified investment fund pursuant to § 1 InvStG (a) | Yes | No | Yes | ||
a. Clients can request Fund Status Certificates from the German Tax Authorities (in most of cases from the Federal Central Tax Office (Bundeszentralamt für Steuern; BZSt). If an investment fund obtains and provides a Fund Status Certificate for classification of the fund pursuant to § 1 InvStG, the German withholding tax (Kapitalertragsteuer; KESt) will be 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 latest, using the existing Upload Beneficial Owner List functionality. 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 not submitted before the payment due date of the event, full tax will be withheld by Clearstream Banking. The overpaid tax amount (11.375% KESt including SolZ) can be reclaimed by applying the standard tax refund procedure and presenting the relevant documents to the Federal Central Tax Office.
Clients that hold German taxable securities in their omnibus accounts on behalf of an investment fund that is subject to full company tax rate (“unbeschränkt körperschaftsteuerpflichtig”) in Germany, can request a reduced tax rate of 15%. (KESt incl. SolZ) on relevant income payments by providing the status certificate and tax reduction breakdown within 18 months following the taxable income event (§7(5) InvStG). CBF will refund the overpaid tax for those beneficial owners (11.375%).
German funds | Trading restriction? | Withholding tax rate | Relief at source | Quick refund | Standard refund |
Yes | 0% / 26.375% (a) | ||||
Residents of Double Taxation Treaty (DTT) countries | No | No | Yes | ||
Residents of Germany | No | No | No | ||
a. From 1 January 2018, no KESt and SolZ are 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 current tax deduction logic is applied; if no taxation base parts are delivered, the income amount is taken as the taxation base.
Capital gains tax
There is no capital gains tax withheld through Clearstream Banking on securities held in Clearstream Banking. Capital gains tax may however be payable on specific gains. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Stamp duty
There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Trading restriction
The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA D) of the U.S. Inland Revenue Service makes it unlawful for the issuer of the affected securities or the sales partners of such issuer to sell those securities, within 40 calendar days of issue, to a U.S. citizen or to any persons who have spent more than 183 days in the U.S.A. (thus qualifying as U.S. residents for tax purposes).
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1. “Clearstream Banking” refers to Clearstream Banking AG