BZSt demands no-double-relief confirmation in US disregarded cases

Applicants claiming German withholding-tax relief on dividends paid by German corporations that elected transparent treatment under United States tax law — classified as Disregarded EntitiesBzst — must confirm, in selected cases, that no credit of the German Kapitalertragsteuer has been or will be claimed in the United States on top of the relief requested from the Bundeszentralamt für Steuern (BZSt).Bzst The confirmation covers both routes: Freistellung from the withholding deduction and Erstattung of tax already withheld and remitted.Bzst Its purpose is to prevent double relief — the treaty reduction at source plus a United States foreign tax credit for the same German tax.

The BZSt requests the confirmation separately and only in suitable individual casesBzst; it is not a document every Disregarded Entity applicant files with the application as a matter of courseBzst. The requirement also reaches applications already pending with the BZStBzst: where the office asks for the confirmation in a pending file, the applicant must supply it before the file can be closedBzst. No form for the confirmation is prescribed in the announcement; the applicant states that no United States credit of the German withholding tax has been effected and none is being applied for.

Capital income paid to domestic recipients is subject to a 25 percent withholding deduction plus a 5.5 percent solidarity surcharge on the Kapitalertragsteuer, regardless of whether the recipient is resident in Germany or abroad. Recipients resident abroad obtain relief in a written application procedure through Freistellung from the deduction or Erstattung of tax already withheld. Attachments go exclusively through the BZSt online portal, not by post or email, and a file is only decided once every document is complete — a pending Disregarded Entity file held up for the new confirmation therefore waits with the rest of the queue, where Erstattung cases currently face processing times of over twenty months and files are handled in order of receipt.

Legal basis: the United States–Germany double taxation convention for dividend relief from German Kapitalertragsteuer, applied through the BZSt Freistellung/Erstattung procedure; domestic deduction at 25 percent plus 5.5 percent solidarity surcharge.