FAQ ADR taxation

Germany applies a withholding tax on dividends paid to investors of German securities at a current rate of 25% with an additional “solidarity surcharge” of 5.5% of the 25% withheld.

The net effective rate of taxation on the dividend is therefore 26.375%. Tax rates are subject to change. BNY Mellon as Depositary Bank (“the Depositary Bank”) will provide withholding tax rates in their dividend notices to the market.

The German Tax Authority has stopped accepting ADR tax reclaims and as a result GlobeTax has halted processing German ADR claims until further notice.

U.S. investors need to provide a Certification of Residency (IRS Form 6166) from the IRS as proof of their tax residency to apply for a reduction of tax withheld.

As of January 2013 this form costs $85 and can be obtained by completing an IRS Form 8802 and submitting it along with a check for the $85 fee to the IRS at the address below:

Form 8802 is available at the following web address: http://www.irs.gov/pub/irs-pdf/f8802.pdf

One must weigh the cost of obtaining this form along with the processing fees associated submitting tax relief claims through the Depositary Bank and its agents against the anticipated amount of recovery from German source income to determine if it is cost-effective to file reclaims in the German market.

You may also request assistance in sourcing this document from a third party. For more information on assistance in obtaining an IRS Form 6166 you may go to: https://edocs.globetax.com/ecerts

IRS Form 6166s are only valid for dividends that were paid in the same calendar year as the “Tax Year” shown on the IRS Form 6166 so these forms must be renewed annually.

If your bank or broker files for a refund of German WHT through the Depositary Bank via Globe Tax Services, you may also be required to complete a Letter of Authorization granting the Depositary Bank the ability to file reclaims on your behalf with the BZSt.

If you are a U.S. Pension, U.S. Charity, or a fiscally-transparent entity, you may be required to file additional documents.

If your bank or broker files the claim within the first 6 months after the payment of the dividend to the Depositary Bank, you will need to provide your bank or broker with a Letter of Authorization granting the Depositary Bank the ability to file reclaims on your behalf with the BZSt. In some cases, upon audit from the BZSt, you may also be required to provide a Certification of Residence.

If your bank or broker files the claim after the 6 month period following the dividend payment, you will be required to file a German Tax Reclaim Form certified by your local tax office as well as other documents to prove your entitlement.

If you hold ADRs through a bank, broker, or custodian, you should contact them to submit your claim. If you hold the ADRs in your name as a registered holder, you will receive additional information by mail after the record date of the dividend. Banks and Brokers will receive information by way of an Important Notice posted in DTCC by the Depositary Bank and Globe Tax Services.

Questions regarding German WHT on Depositary Receipts can be sent to: GermanDRs@globetax.com.  

If the application from the U.S. bank or broker is provided to the Depositary Bank and Globe Tax Services by the Quick Reclaim deadline listed in the DTC Important Notice (approximately 6 months after the payment of the dividend event), you should receive payment in 6 - 10 weeks. If the application is filed after the Quick Reclaim deadline or directly with the BZSt, it generally takes 6-8 months for the payment to be received.

If you apply directly to the BZSt, you will be paid in Euro Currency (“EUR”). If your U.S. bank or broker applies through the Depositary Bank, your bank or broker will receive payment in U.S. Dollars.

The BZSt does not currently charge investors who file claims directly; however, the investors may be required to submit a proof of payment issued by the final German Institution in the payment chain between the Issuer and the investor in order to validate the claim.

As of January 2013, this document costs $0.015 per ADR and the USD equivalent of EUR 20.00. These fees need to be paid prior to filing the reclaim to the BZSt and would represent an out-of-pocket cost for the investors.

As of January 2013, if an investor’s U.S. bank or broker files the claim through the Depositary and by way of its agent Globe Tax Services within the first 6 months of the payment of the dividend, a processing fee of $0.0115 per ADR will be deducted from the refund obtained on your behalf from the BZSt.

As of January 2013, if an investor’s U.S. bank or broker files a claim through the Depositary and Globe Tax Services after the 6 month period following the payment of the dividend, a processing fee of $0.015 plus the USD equivalent of EUR 20.00 to secure a tax voucher will be deducted from the refund obtained on your behalf from the BZSt.

Reclaims for less than $50 will not be processed.

These fees are independent of any fees or charges you may need to pay to obtain a proper proof of residence. As mentioned before, the IRS assesses an $85.00 fee to produce and deliver Form 6166.

These fees are subject to change.