Please be advised of an important opportunity for U.S. investors in German companies. Recently, the European Commission filed an action against Germany before the European Court of Justice. The action is based on a potential violation of the EU principle of the free movement of capital as Germany is withholding corporate tax on portfolio dividends and refunds only a portion of the withheld tax as determined by Double Taxation Treaties or European Directives. In order to benefit from a possible decision of the European Court of Justice in favor of the foreign taxpayers and to receive a refund of the entire withheld tax, it would be necessary to file a claim for refund with the German tax authorities now to avoid the risk of missing any deadlines.
The EU principle of the free movement of capital is available to U.S. investors, too. The application of this principle should not be limited to participations of up to 10 percent. Additionally, investors with participations between 10 and 25 percent who receive only a refund of the withheld tax down to 5 percent under the U.S./German Double Taxation Treaty may benefit from a verdict of the European Court of Justice. A more innovative position would be that the percentage of the participation does not matter at all.
Please note that financial institutions, life and health care insurer and holdings with a short-term trading business of shareholdings may not be eligible for the refund.