Withholding tax reporting procedure for dividends within corporate groups

How it works

The reporting procedure replaces the collection and refund of withholding tax on dividends within group companies. Reporting is also possible at an international level, but is limited to the portion of the withholding tax that is refundable under the relevant double taxation agreement or international treaty.

National groups (Art. 26a (1) Federal Withholding Tax Act (VStV))

As of 1 January 2023, the validity of the reporting procedure for national groups is dependent on qualifying holdings of 10 per cent of the share capital of a corporation or cooperative (previously: 20 per cent). In addition, the reporting procedure now is applicable to all legal entities within the group (this was previously limited to stock corporations and cooperatives).

International groups

For international groups that are subject to a double taxation agreement or a different international treaty, the rules regarding the significant shareholding ratio and any minimum holding period are set out therein. If the significant shareholding ratio is not regulated in the DTA or by international treaty, the 10 per cent ratio – corresponding to the national ratio – applies.

As of 1 January 2023, the scope of the reporting procedure includes all companies within the group (this was previously limited to corporations). The definition of the respective companies depends on the applicable double taxation treaty or international treaty.

The validity of the reporting procedure for group dividends in an international group is subject to approval by the Federal Tax Administration (FTA). If applied for by the company concerned, this approval shall be granted provided that the necessary requirements are met. In particular, a stable ownership structure based on a majority shareholding is a prerequisite for such approval. Furthermore, this approval is now granted for five years instead of the previous three. The longer validity period applies to all approvals granted or extended as of 1 January 2023. The FTA must be informed immediately of any changes in the company’s ownership structure.