Newbie question on German individual stock dividends, IBKR

Investing / Brokers
1

I received the first time dividends: it’s from a German stock I own.
Noramlly the amount should be 1764.6 Euros.
Initially I saw this on IBKR Client Portal
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had no idea where this 1344 number is from. Does anyone know? (this is a side question, doesn’t really matter as this number seems intermediary)

Then finally when I received the cash it was only 1,299.19 Euros. it seems the difference is for withholding tax.

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It’s roughly 26.37%

My questions:

  1. how can I verify the accuracy of the tax rate? Is it a Swiss rate or German rate?
  2. Based on my reading on forum posts, I should declare this withholding tax next year in my Swiss income tax declaration and hopefully can get this money back?

Thanks

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2

These are your 1299.19 EUR expressed in the base currency of your account, obviously CHF.

From my notes:

German withholding tax on dividend payments from German (!) companies:
25% + 5.5% solidarity surtax thereon = 26.375%

15%.

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…in Switzerland, through the Swiss tax declaration.

And, in principle and theory, the remaining 11.375% directly from the German tax authority.

If (s)he started a new thread and then followed through with that, I‘m sure we‘d all be having a blast.

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On a side-note: 1764€ is a lot of dividends for one stock. If we look at 4% return, that’s 44k invested. If 5% return, that’s still 35k invested.

I don’t know about your overall portfolio size, but having such large amounts in one stock only can be risky. Just as a word of caution.

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wow such concise and accurate reply. Thanks a lot Dr PI, please feel free to PM me your city and I am happy to invite you coffee. BTW I can’t open the last link, tried both with my laptop and phone.

you mean start a new thread trying to get the 11.375% from the Germans? sorry for having annoyed you with my previous thread. :sweat_smile: I am happy to invite you coffee too as you replied to my questions recently.

thanks for your kind word, for this one the stock is BASF, I have invested 27k Euros in start of April but it went down now

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No worries. I didn’t mean to go back to that again really - I was rather pre-empting someone, anyone to do it regarding refund of German WHT. :wink:

Regarding the tax refund of WHT, it’s important to distinguish:

  • Swiss DA-1:
    „Hello cantonal tax administration. I promise that I own this stock in my portfolio, for which I received dividends, on which 15% (non-refundable) withholding tax have been with withheld. Will you please give not tax me for them, so I don‘t pay double tax?“
    :point_right: „No problem. We‘ll give you the 15%. And definitely charge you personal income tax (>15%) afterwards. We‘ll just set both off against the other, OK?“

  • Refund from foreign tax administration:
    „Hello foreign tax administration. I promise that I own this stock in my portfolio, for which I received dividends, on which x% refundable withholding tax have been with withheld. I also promise don’t live in your country, so will you please refund this tax to me? You can just transfer the amount to my bank account, here’s my IBAN and SWIFT code.“
    :point_right: „Sure …but not so fast, my friend. If you don‘t want to pay or leave your taxes with us, we have to make sure that you really do live in Switzerland and pay your taxes there. Also, you better bring convincing evidence that you really did own these stocks, on the dividend date! You see, without good proof, anyone could make a claim, and we‘d pay out and lose good tax money on it…“

And that‘s where the research should start: It’s less about how to fill that application form - but what kind of prerequisites and documentary evidence the foreign tax administration requires (spoiler: from what I‘ve picked up, the Germans require a tax voucher that can be so cumbersome or expensive, even impossible to obtain from to obtain, that it isn’t worth any small personal investor’s while or fees).

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Funny enough that they let the big fish get away with it for years. Just search for the Cum-Ex and Cum Cum story. But I guess what you write is just another reminder that owning German stocks might not be the best idea when it comes to taxes.

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I’m in the same position, funnily also BASF stock, just a bit more. :grinning:

From what I understand, for the 11.375% we have to fill the R-D1 document from Internationales Steuerrecht – Deutschland | ESTV

And then send it to the cantonal tax office so that they sign off that we indeed have declared the dividend income, and then send that document to Germany.

Problem seems that on point 5a of R-D1 document, they state that they require proof from a German entity that the tax was paid. Probably German banks or the companies which paid the dividends.That looks difficult for us to obtain through IBKR, that’s a tradeoff from using a cheap online brokers. The big Swiss banks could perhaps have a network with Germany and be more helpful.

In the cash.ch article a guy wrote he got the tax refund from Germany with just a confirmation from the cantonal tax office without any bank proof. So it might be worth a try, at least I will try at some point with the proof from canton and the IBKR statements, we have 3 years. No one would declare income that they never received, so the German offices should accept the cantonal office proof if they are reasonable

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11

Interestingly enough, I have not had the same experience in Canton de Vaud. When I submit my tax declaration, inputting all individual stocks, dividends, and taxes withheld, I get all the divi withholding taxes credited against my calculated income tax. No need to contact German authorities.

Note that I am in a high marginal tax bracket and my tax rate is above the German withholding tax rate of 26.375%. Perhaps this plays a role?

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As per the DTT, only 15% can be credited back by your cantonal tax authorities (maximum as per tax treaty). The difference, 11.375% shall be reimbursed by the German tax authorities using the dedicated German forms.

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I assume you can request this from IBKR, I think this is what they refer to as “Einzelsteuerbescheinigung” in their price list. But never went further with it, as the money I would get back did not warrant the time I needed to invest.

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Did you fill the DA-1 form? Thanks

15

I concur.   

16

Yup - standard DA-1 with individual stocks in question.

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I am a bit surprised myself… I own a few dividend-paying stocks and I listed all income from foreign individual stocks in the DA-1 form and all the local Swiss stocks with 35% withholding in section under code 410.

I used VaudTax, which calculated the withheld taxes as “Impots anticipe” for CH shares, “Retenue supplementaire d’impot USA” for the extra 15% withheld for US shares held by my Swiss broker, and “imputations forfaitaire d’impots” which is the foreign withholding tax for my US (15%), DE (26%) and FR (25%) shares held in IBKR.

This calculated a tax credit which was added-back to what I owed as tax payment. And when the final tax resolution from Vaud tax authorities came back, it matched PERFECTLY to what I submitted. And I mean, to the penny. Well, almost to the penny - let’s not forget the 400 CHF they charged me in interest due… :smiley:

18

If you received 25% and 26.375% of tax credit for French and German dividends, respectively, you cheated. The Zürich version of DA-1 makes the applicable tax rates (for non-refundable WHT) very clear.

19

Ouch, a bit harsh, eh? Care to elaborate how? The local tax authorities review tax teturn submissions and I listed all individual stocks one-by-one and attached all statements… Last year they actually corrected my wife’s tax return (it actually reduced her taxes, if you can believe it).

I am simply asking if anybody from Vaud canton experienced sth like this. My “issue” before, when I did not get the full credit for withholding taxes, was the “montant maximum” where the wht rate was above my swiss tax rate.

Now, for better or for worse, my swiss tax rate is above the wht rate, so no more max amount issues.

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It’s impossile to comment further without the details of dividends received (gross and taxes), what you reported in your tax return and a copy of your tax bill.

Most likely the DA-1 auto-filled using the tax treaties rates (15% most of the time for individuals) and the tax authorities accepted it. They reimbursed to the penny, but to a limited amount.

21

VaudTax software assigns full 26.4% as tax credit reimbursement for DA-1, not just 15%. I just checked this year’s calculation in VaudTax and what tax authority sent back. I even re-opened previous years’ VaudTax submissions and logic checks-out; tho I did not get full reimbursement previous years due to the max. amount rule.

It’s impossile to comment further without the details of dividends received (gross and taxes), what you reported in your tax return and a copy of your tax bill.

Bon, I guess I’ll be calling my dear friends at the district tax office to clarify… Perhaps federal rules don’t apply in Vaud as always :smiley:

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OK, let’s say unwittingly perhaps. I wasn’t trying to be accusing.

I absolutely fail to see how this could be correct.

The paper/PDF DA-1 clearly asks for “foreign withholding tax not refundable”. 15% is not refundable for German dividends - the remaining 11.375% are refundable (though maybe not worth it).