A new law in respect of dividend taxation was published in the Federal Gazette on 21 March 2013. This law has been introduced following a decision of the European Court of Justice in 20 October 2011 which required a review of the taxation of portfolio dividends. The law amends the taxation of portfolio dividends. As per the new law portfolio dividends paid to entities with a shareholding of less than 10% at the beginning of a year will be subject to corporate income tax. The new tax rules will be applicable for the first time to portfolio dividends distributed after 28 February 2013.
In certain situations, non-resident EU/EEA companies will be able to apply for a refund of the tax withheld by the German tax authorities if the dividends were received before 28 February 2013. The German federal central tax office (BZSt) is now responsible for processing these refunds.
