• Service: Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 3/11/2013

Germany - Proposal to revise taxation of portfolio investments 

March 11: Because of a judgment of the Court of Justice of the European Union (CJEU)—concerning the German tax treatment of outbound dividends—Germany has taken steps to amend its tax law and repeal the “discriminatory” tax treatment of dividends from portfolio investments distributed to foreign companies.

The CJEU judgment in Commission v. Germany, C-284/09 (20 October 2011) held that the German tax treatment of dividends from portfolio investments (of less than a 10% ownership interest) was an unjustified restriction to the free movement of capital.

In late February 2013, a legislative “conciliation committee” made recommendations for a draft law, to bring the German tax rules into compliance with the judgment of the CJEU. The recommendations agreed on full taxation of dividends for corporate investors for shareholdings of less than 10%, regardless of the domicile of the shareholder.

The new rules, if adopted by the German parliament and enacted into law, would be effective retroactively as of 1 March 2013.

If enacted, the new taxation regime would not only affect direct investments in German shares—e.g., foreign investments in German stocks— but also investments made via investment funds. The calculation of the so-called “equity gain” (Aktiengewinn) would also be amended.

Read a March 2013 report [PDF 58 KB] prepared by the KPMG member firm in Luxembourg: New German legislation regarding taxation of portfolio investments

©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Share this

Share this


Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)

Already a Subscriber? Login

Not a member? Subscribe now