MiKaDiv

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MiKaDiv - New digital German WHT reporting framework

(German: Mitteilungsverfahren Kapitalertragsteuer auf Dividenden aus Aktien und Hinterlegungsscheinen)

Notification procedure regarding capital income taxes on dividends from shares and depositary receipts

MiKaDiv is the new reporting framework to prevent abuse in the taxation of dividends and the refund of withholding tax (WHT) on dividends from German shares, profit participation certificates and convertible bonds. In addition, German publicly traded companies are required to report the owners of their shares (Aktionärsregister) to the Federal Central Tax Office (BZSt).

It is one of the most drastic, process-driven overhauls to WHT compliance Germany has seen in years, affecting all the participants in the custody chain. The legal basis are §45b and §45c of the German Income Tax Act (EStG).

How MiKaDiv Will Reshape German WHT Reclaim Processes

MiKaDiv takes effect on January 1, 2027 and will ultimately have an impact on the reclaim of WHT in Germany. The reporting is necessary for all the participants (domestic and foreign) of the custody chain in case of a German dividend payment.

The German paying agent (the institute deducting the WHT) has to provide the data via the electronic interface DIP to the BZSt. Therefore, all the participants in the custody chain need to provide the relevant data along the custody chain, the paying agent will send all the data to the BZSt.

One event, several reporting streams

Dividend event distribution on a share class

Every distribution generates three kinds of notification

§45b — Individual notification

paying agent · per investor

§45b Sec 9 — Shareholder Register

listed company · per ex date

§45c — Collective notification

Sec 1 · paying agent & central (auszahlende Stelle) — aggregated
Sec 2 · Wertpapiersammelbank (CSD) — depository level

§45b is individual, per creditor; §45c is collective — once by the paying agent (Abs. 1) and once by the central securities depository (Abs. 2).

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MiKaDiv Industry Whitepaper

Balancing technical expertise with practical insights, this paper is a go-to resource for navigating your MiKaDiv compliance journey—no matter where your organization currently stands.

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Main data points

The relevant data points are stated in the §45b sec. 2. The reporting framework requires substantial master data on the investor, the custody chain and the position within the custody chain to be delivered. In addition, if there were any recent purchases before the ex-date and or any financial arrangements for this stock, it needs to be reported as well.

Beneficial Ownership

Beneficial owner of the recipient of the dividend (address data etc.)

Share Holdings

Holding amount on the ex-date (FiFo method)

Trading History

Trading of any stocks which are less than a year before the ex-date

Financial Arrangements

Financial Arrangements which are still open around the ex-date

Main challenges

MiKaDiv requires ongoing reporting workflow with up to date, accurate and complete data. In addition, the indirect reporting regime adds another level of complexity for the German paying agent. The paying agent has to rely on the data delivery of other participants of the custody chain in order to create the full data set for the MiKaDiv report.

Data Exchange

Financial market participants have to align on the data exchange

Data Quality

Get correct and complete data in time

Owner Transparency

The data must be on the level of a beneficial owner

Reporting Processes

Set up the new reporting workflows (to the BZSt, between the different market participants, to the investor)

Motivation to report

Within the MiKaDiv reporting, the paying agent generates a UUID for each reported dividend payment. This very same UUID needs to be used for an investor, in case of a reclaim of WHT. In addition, for relief at source, this is still possible, however might be questioned by the BZSt, in case they do not get the necessary MiKaDiv reports.

MiKaDiv vs. FASTER

The aim of the EU Faster initiative is to ease the reclaim of WHT within the EU member states. The financial industry sees MiKaDiv as a first step, a blueprint, for the upcoming EU FASTER initiative.

Contact

Robert Welzel

Partner WTS Germany

Based on our broad and long-lasting work within the tax world of the financial industry and together with our global WTS network, we can help you with any question regarding MiKaDiv.

We offer events on MiKaDiv to inform about the new reporting framework (please see calendar), we can help you analyzing your data in order to make you aware of the upcoming effort for MiKaDiv, we can help you with legal / tax matters originating from the new requirements of MiKaDiv and more.

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