All you need to know about MiKaDiv reporting

News on MiKaDiv reporting - an opportunity to increase efficiency through automation and compliance with TaxTrail

Zurich, Sep 2024

With the introduction of MiKaDiv reporting in 2026 for applying for German tax certificates, financial institutions are faced with a variety of new requirements. These range from recording and forwarding additional information about customers and their transactions to ensuring adherence to strict compliance regulations. Non-German banks that trade in German shares must also be able to correctly and efficiently apply to the subcustodian for the required tax certificates.

The challenges associated with MiKaDiv

MiKaDiv brings with it a number of new requirements that will have a profound impact on banks' internal processes. The main changes include the need to collect and process extensive data records in order to apply for German tax certificates. This includes information on the beneficial owner and detailed information on dividends, taxes withheld, and purchase and sale dates of dividend-bearing shares. Banks must also ensure that they forward this data correctly and comply with all regulatory requirements.

Issues with manual processes

The process for applying for German tax certificates has so far been (semi-)manual at most financial institutions. Continuing to implement the new requirements for dividend inflows from 2026 using manual processes will not only be very time-consuming, but also prone to errors. The complexity of the required data is almost impossible to manage manually and often leads to delays and increases the risk of errors, which can lead to costly liability issues. When MiKaDiv is fully in force, the need to optimize and automate these processes will become even more urgent.

Process automation with TaxTrail

This is where TaxTrail comes into play. The software solution enables financial institutions to automate the entire process of applying for and managing tax certificates. Through automation, repetitive tasks can be completed more efficiently, allowing employees to focus on more value-adding activities. TaxTrail offers comprehensive monitoring options that ensure that all steps of the process are compliant and that no manual errors occur.

TaxTrail is also integrated into our reclaim software Reclaimer, creating a seamless end-to-end solution. This integration allows the entire withholding tax reclaim process to be incorporated directly into the TaxTrail workflow, further increasing efficiency and accuracy in both tax certificate applications and withholding tax reclaims.

Increased efficiency and better accountability

TaxTrail not only offers increased efficiency, but also improved monitoring. An audit trail system allows all steps in the process to be traced, which enables better liability control. This function is particularly important as banks are liable for the accuracy of the data transmitted. With TaxTrail, banks can ensure that they fulfill their obligations completely and correctly.

Conclusion: TaxTrail gives banks the opportunity to optimize the process of applying for German tax assessments. Despite the complex additional requirements resulting from MiKaDiv reporting, the process can be handled more efficiently in future and therefore more cost-effectively and in compliance. The automation of processes minimizes errors, increases efficiency and allows banks to concentrate on their core tasks.

Stay tuned to our company page to learn more about how TaxTrail can help you master the challenges of MiKaDiv reporting.