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MiKaDiv Reporting - New requirements for applying for German tax certificates from 2025

Zurich, May 2024

The new notification procedure for capital income tax on dividends from shares and depositary receipts (MiKaDiv), which will be introduced on 01.01.2025, will result in fundamental changes for the issuance of German tax certificates by the Federal Central Tax Office. This has implications for all German financial institutions and banks worldwide that trade in German stocks or hold such securities. 

The changes are related to the Law on the Modernization of Relief from Withholding Taxes and the Certification of Capital Gains Taxes (AbzStEntModG), which came into force in June 2021. It aims to create more transparency through electronic reporting obligations and tightened liability regulations to counteract abuses in tax refunds. 

To obtain respective issue a German tax certificate or a UUID (which is required for the reclaim of German taxes for non-resident taxpayers), an extensive set of data must be provided to the German Federal Central Tax Office (BZSt). As part of the MiKaDiv procedure, German banks report this to the BZSt either directly or foreign banks along the custody chain of the German shares they hold. 

The updated reporting procedure as of January 1, 2025, contains a wide range of information. This includes, but is not limited to, beneficial owner data, details of dividends and taxes withheld, acquisition dates and disposals of dividend-entitled shares within a specified period of time, and the status of open securities lending positions at the time of dividend payment. 

For financial institutions, this means they must adapt their internal processes and systems to meet the requirements of MiKaDiv. They must be able to collect and process additional data and then transmit it to the next financial intermediary or tax authorities in the specified format. Additionally, banks must ensure that they comply with legal and regulatory requirements and minimize potential liability risks. 

By the deadline, German paying agents, intermediaries, and foreign banks must find solutions for how the data exchange will be regulated in the future. Non-German banks, in particular, must clarify in advance how they intend to implement this procedure and then approach their custody agents accordingly. German financial institutions distributing income, on the other hand, must directly address the reporting procedure to know which information needs to be reported to the BZSt.   

Although MiKaDiv undoubtedly brings new challenges, it also provides financial institutions with the opportunity to optimize their processes and modernize their systems.
Stay updated on our company page for more information on how financial institutions can navigate the new laws and challenges.