In Germany there is the tax exempt amount (Freibetrag) of 801€ for singles for which one does not have to pay taxes on dividends and other. I know that with German brokers, you can fill out a form (Freistellungsauftrag) so that the broker gives you the total gross amount of the dividend until you reach the 801€.
According to this side such a form is not necessary with IB because they are based in the UK. I recently obtained dividends from a German stock, but IB did not transfer the full amount to me.
Does anyone know if such a form can be sent to IB or what is the best way to get the full amount?
Isn’t it easier to ask it bad from the tax office?
(Also, how would you do it if you use several brokers?)
Are you a Swiss tax resident? If that’s the case I wouldn’t expect to be eligible for income tax cuts that are available to German residents.
In general if you have a withholding tax on dividends (it might be 15% for Germany but I’m not sure) you can reclaim it back using the DA-1 form, in order to avoid double taxation.
Only with Germany-based financial institutions.
Sure, Germany has withholding tax.
The WHT in Germany is 26.xx%, you can only claim 15% on your DA1 and the rest directly with the german tax authority. IB issues tax vouchers (for a fee), if the 11% are worth the hastle to claim is another story
…if he or she is tax-resident in Switzerland for capital income.
The original post above suggests this may not be the case (i.e. that he/she is tax-resident in Germany).
Though in that case they wouldn’t be with IB UK. (but a EU subsidiary)
Yes, sorry for the missing information. I am a Swiss resident. (But I am German.) Thanks for your replies. I was hoping it would be easy until I get to the 801€, and by easy I mean just like dividends from the UK.
I still have a bank account with Comdirect in Germany. Do you guys think it would make sense to buy the German stocks at Comdirect, so that I would not have to pay withholding tax on dividends until I reach the 801€? Does anyone have any information on that case? Or would that still not work because I am a Swiss resident? There are no fees with Comdirect when you buy stocks, and I could transfer them to IB once I want to sell. (This procedure unfortunately takes 4-6 weeks.)
In short: forget everything you ever heard about Freistellungsaufträge.
…if you are tax-resident personal investor in Switzerland, not tax-resident in Germany anymore - whicb is the usual case for employed people that live and work in Switzerland.
Using a German Freistellungsauftrag with a German bank as a non-resident to avoid tax (even withholding) would probably violate the tax rules, i.e. be illegal. Though the bank should work that out itself, once and when you notify them of your new residency abroad (which you have to do).
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I agree with @San_Francisco, this mirrors my experience (German citizen residing in Switzerland).
For example, I just tried to apply for exemption with ING, and it tells me
Für die Konten von Steuerausländern ist die Erteilung eines Freistellungsauftrages für Kapitalerträge nicht möglich.
(It is not possible to issue an exemption order for investment income for the accounts of non-residents for tax purposes.)
But the good news is: You should receive your dividend without any taxes deducted, again because you’re a non-resident. At least I get my dividends like that, so no hassle with getting 15% back here and the rest with a lot of effort or not at all.
Sometimes, the German broker may register this automatically, sometimes not (my experience with two brokers). They don’t do this based on a non-German address alone, though. May it has to do with a certain transition period (in Germany, you are still taxed for certain things until a few years after leaving the country).
In any case, it may be worth getting in touch with the broker to clear this up.
Cheers,
J.
As above posters have said, you are not a German Tax resident and are not eligible for the 801€ exemption.
You need to apply Swiss tax rules.
Ok, thanks for clarification guys!
Hold on.
Non-resident personal investors (i.e. “regular working guys” like you) definitely should have withholding tax deducted on dividends payments from German companies! Of which they can reclaim 15% in Switzerland and the rest with the German authorities.
See here, for example.
Did they force migration upon existing accounts/customers?
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For EU resident, afaik yes.
Hi there,
I’m not an expert in these things.
I can only refer to the latest annual income statement (“Erträgnisaufstellung”) of my German broker: Neither capital gains tax nor solidarity surcharge was deducted from my dividends in 2020. In the individual dividend payments, no taxes were mentioned, either.
Some brokers mention the possibility of becoming a non-resident taxpayer but don’t mention the consequences: ING, DKB
This explanation at deutscheskonto.org with DKB as example is morre to the point.
And another one on non-resident taxpayers in general at gevestor.de.
It might be worth inquiring at other German brokers to ask for treatment as non-resident taxpayers (“Steuerausländer”). It certainly removes the hassle around recovering the associated taxes.
Cheers,
J.
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Was this for German stocks/ETFs or others? I would expect German withholding tax for dividends of German stocks/ETFs (independent of the location of the broker) but no German withholding or capital gains tax for non-German stocks/ETFs at a German broker (as Swiss tax resident). I could certainly be missing something, though.
Let’s not conflate two things here:
First:
German Kapitalertragssteuer (Abgeltungssteuer):
25% + 5.5% solidarity surtax thereon = 26.375% + church tax (if applicable)
For German residents, a German broker will deduct this tax on the capital gain realised from sale of a security - or income (dividends) received thereof. Automatically. Best case, you therefore don’t even have to include this income on your tax return. This tax is subject to a tax-free allowance of 801€/year (in income/capital gains), that you can opt for by sending your broker the so-called Freistellungsauftrag.
Second:
German withholding tax on dividend payments from German (!) companies:
25% + 5.5% solidarity surtax thereon = 26.375%
Same rate as the aforementioned Kapitalertragssteuer for German residents - rather conveniently. German residents are of course only paying one of the two, and they’re basically at the same rate anyway. This is why most German residents don’t even have to include their capital income on their tax return. Kind of makes sense, doesn’t it?
Third:
Foreign withholding tax at the foreign country’s rate and (possibly) applicable DTA:
Well, maybe this third one is also worth pointing out. Depending on the circumstances, it may be - wholly or partially - reduced or offset against German Kapitalertragssteuer. But we won’t be getting into the details like this guy (in German).
Now to the Swiss resident investor banking with the German broker / bank:
Upon emigrating from Germany, he or she should notify the German bank (which may request some proof of deregistration from Germany and/or the new residency in Switzerland) to become a non-resident account holder. Because …you surely don’t want to pay Kapitalertragssteuer on capital gains, do you? He or she will not be eligible for Freistellungsauftrag anymore though.
The Swiss resident will still be subject to withholding taxes on dividend payments though:
26.375% on dividends from German companies.
35% on dividends from Swiss companies.
…and so on.
Disclaimer: all this is somewhat simplified. And I’m speaking of stock dividends from companies, not investment funds gere. (And I’ll never get into the church tax thing without getting paid for that).
Also, I’m just an 
with a 
and a German securities account, not your flippin’ tax advisor!
Spot on.
As evidence, my recent Calida payout:
35% Swiss withholding tax deducted. Which, being a Swiss resident, will get credited in full against my Swiss taxs through my usual tax return (not DA-1, since it’s Swiss WHT).
Is these were from a German company, the tax withholding should have been 26.35%. And Don already explained it above: I could get back 15 percentage points through DA-1 and the remainder from the German authorities (though it’d probably not be worth the bother).
Hi jay,
that was for four ETFs, two domiciled each in Germany and Luxemburg.
J.
Edit: Domicile corrected.