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MiKaDiv: The Future of Tax Reporting in Germany

How to prepare for the new reporting process for investment income in Germany by the 2027 deadline

What is MiKaDiv?  

MiKaDiv is Germany’s upcoming mandatory digital reporting process for investment income such as dividends and interests, introducing new reporting requirements through the custody chain, replacing traditional paper-based tax certificates with a fully digital, standardised reporting system.  

Originally introduced under the German Withholding Tax Relief Modernisation Act in 2021, German paying agents and foreign financial institutions involved in dividend payments are directly responsible for implementing the new procedure, which is set to come into effect on January 1, 2027, and apply to all income received after December 31, 2026. 

Why is MiKaDiv being implemented? 

MiKaDiv has been introduced to simplify, modernise, and digitise Germany’s approach to withholding tax reporting on dividends and aligns with the upcoming EU FASTER initiative (to avoid repetitive regimes), which is designed to streamline reporting across the EU and reduce administrative burdens. The procedure will:  

 

  • arrow-puple Reduce tax abuse and fraud by removing loopholes traditional methods posed.
  • arrow-puple Modernise and digitise the tax reporting process.
  • arrow-puple Improve transparency across the custody chain.
  • arrow-puple Simplify tax certificates as all relevant information is required to be reported directly to the German Federal Tax Office.
  • arrow-puple Provide earlier reporting deadlines to enable faster processing by tax authorities.

What data does MiKaDiv require financial institutions to report on?

Beneficial owner and account details

Beneficial owner and account details

Identifying the actual investor behind each dividend.

Custody chain and Legal Entity Identifiers (LEI)

Custody chain and Legal Entity Identifiers (LEI)

Mapping all intermediaries involved, attributing their chain position in the chain & identifying the intermediary using LEI.

Securities and income information

Securities and income information

Covering relevant trades before and after the dividend event, including details on financial arrangements.

Transaction activity

Transaction activity

Covering relevant trades before and after the dividend event, including details on financial arrangements.

UUID Generation

UUID Generation

ach submission must include a Universally Unique Identifier to track reports and corrections.

Exemption reports

Exemption reports

Exemption reports must be filed where applicable, including whether tax relief was granted & under what conditions.

How MiKaDiv Works 

  1. Under the new regime, once MiKaDiv reports are submitted and accepted, investors receive a unique reference number (UUID) (which replaces the older paper format).  
  2. Investors use the UUID when submitting tax reclaims and are then able to access tax relief on German investment income.

Since 2024, all tax reclaims must be submitted digitally via the BOP portal. In July, the German Tax Authority launched DIP KAFE, enabling bulk tax reclaim submissions by investors and intermediaries. 

Who is affected? 

  • German custodian banks and paying agents: Responsible for reporting dividend income data directly to the German tax authorities (BZSt) using the new digital format.  
  • Foreign financial institutions are required to provide detailed data to German paying agents.  
  • Investors must ensure their data is accurately captured and transmitted through the custody chain.  

Ready to discover what Xceptor can do for you?

As a trusted partner to 8 of the top 10 global custodians for tax processing, Xceptor is at the heart of the MiKaDiv transformation.  

Get in touch with our team to learn how Xceptor simplifies MiKaDiv compliance with intelligent data automation and prepares existing clients for the deadline and how we can help you do the same.  

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