In 2021 the German legislation introduced MiKaDiv as a digital reporting regime for German dividend income, supplementing existing tax certification, tightening liability for financial institutions, and making MiKaDiv report identifiers mandatory for German withholding tax reclaims from 2027 onward.
MiKaDiv requires granular reporting for both domestic and non-domestic investors, including various report types, correction logic, and a strong focus on abuse prevention, particularly around over-claiming and financial arrangements.
MiKaDiv was introduced to simplify, modernize, and digitize Germany’s approach to withholding tax reporting on dividends and fight tax fraud and abuse. Traditionally, investors relied on a process including paper-based tax certificates to reclaim withholding tax or, in the case of German investors, to declare taxes that had already been withheld. This process was slow, prone to errors, and created loopholes that facilitated tax abuse/fraud – most notably in Cum/Ex trades – resulting in German taxpayers losing billions of euros.
By modernizing the system with MiKaDiv, the German Tax Authority can now monitor custody chains and transaction timings more effectively, particularly around dividend dates, which were critical points exploited in Cum/Ex schemes.
MiKaDiv enters into force for dividend income as of 1 January 2027.
German custodian banks and domestic paying agents will act as the reporting entities to the German Tax Authority, consolidating MiKaDiv reports received from downstream parties. They are required to submit a digital report, which will result in either an ordinal number (UUID) from the German Tax Authority for non-German investors or a German tax certificate for domestic investors.
Foreign financial institutions are required to report the relevant MiKaDiv information along the custody chain. The UUID will be used for e-filing of tax reclaims for non-German investors, whereas German tax certificates will be handed over to German investors.
Global custodians: Reports from custody clients must be validated and aggregated before being sent along the custody chain.
Service providers: As they are mandated to process tax reclaims and relief at source on behalf of their clients, they are also expected to manage MiKaDiv reporting.
The new MiKaDiv process replaces the existing fiscal German tax voucher procedure and ads a reporting component. Under MiKaDiv the investor’s bank initiates the reporting process by submitting the relevant data to the upstream custodian.
After the report is accepted by the German Tax Authority, the unique reference number (UUID, for non-German investors), which replaces the older paper format, respectively the German tax voucher for a German investor, is sent along the custody chain to the investor.
Non-German investors use a unique UUID when submitting tax reclaims, allowing them to claim tax relief on German investment income.
Since 2024, all tax reclaims must be submitted digitally through the BOP portal. In July, the German Tax Authority introduced DIP.KaFE, a platform that enables investors and intermediaries to submit tax reclaims in bulk.
Also, for relief at source applications for investment funds that have obtained German status certificate, MiKaDiv reporting must be provided along the custody chain.
MiKaDiv reports are based on the following content sets:
As both frameworks move towards their implementation, it is crucial to understand where they align. Similarities can be found in the following areas:
We see MiKaDiv as the precursor to the FASTER Directive of the European Union.
The RAQUEST MiKaDiv Software is a comprehensive solution to comply with the German MiKaDiv reporting as part of RAQUEST’s Withholding Tax Software Suite. Various modules cover all roles that a financial institution can have within the framework of MiKaDiv regulations.
The MiKaDiv reporting requirements vary depending on the role of the financial institution within the reporting chain. RAQUEST’s role-specific MiKaDiv modules, which can be used individually or in combination, deliver tailored compliance for:
The solution enables data exchange along the process chain, right up to the German Tax Authority, via RAQUEST’s module for the Secured Transfer of Tax Information (STTI).
Naturally, the modules interact seamlessly with RAQUEST’s existing Tax Reclaim and Relief at Source solutions.
RAQUEST’s MiKaDiv solution supports the collection of all required data sets and their integration into reports for institutions across all roles. For foreign financial institutions or German reporting banks this happens through standardized interfaces. For intermediaries the information is received from client banks, assigned to and validated against own data and sent along the custody chain towards the German paying agent or the BZSt.
