How does withholding tax work for non-German residents?

If you are not liable to pay tax in Germany, taxes are not automatically paid by the custodian bank. An exception is the withholding tax on dividends. This tax is incurred directly in the source country where the benefit arose and is automatically paid there.

If you are not resident in Germany and receive a dividend from Germany, you therefore pay the withholding tax due in Germany of 25% plus the solidarity surcharge of 5.5%.

If you are resident abroad and recieve these German domestic dividends, you can be fully or partially relieved of the withholding tax deduction in accordance with the agreements for the avoidance of double taxation (DTAs). The relief is achieved by reimbursement of the tax withheld and paid. This requires an application to the Federal Central Tax Office. As proof of the tax deduction, a tax certificate will be issued to you in the spring of the following year.

Please note that we cannot provide tax advice. If you have any questions about your individual tax situation, please contact your tax advisor, income tax assistance association or your tax office.