Dividends explained for dummies

WhenLambo · 2025-04-15T11:53:24.116815Z

I am looking more into dividends for the first time. Can someone please help me understand the following? 17.45 USD today is ~15.40 €. Final amount (what is paid out) is 9.12 €. That's a sick ~40% tax?! I understand the tax withheld 1,62 € the statutory (German) withholding tax 5.23 USD (25%) what I do not understand is the assessment base of € 6.14 Is that the same for you private individuals $O the same?

Sebi@Seebi

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You have:
65 shares of Realty Income
Gross dividend: USD 0.2685 per share
Total: USD 17.45 (before tax)

Withholding tax (USA)
30 % on USD 17.45 = USD 5.23
This is retained directly by the US state

German withholding tax + solidarity surcharge + church tax if applicable
Is calculated on the so-called assessment basis (€ 6.14)
- 1.62 was withheld for this (capital gains tax + solidarity surcharge)
The assessment basis is not simply the euro value of the full dividend, but is reduced if foreign withholding tax can be credited.

Gross dividend: approx. 15.40 € (according to exchange rate)
Creditable withholding tax (USD 2.62) is deducted from the gross amount to avoid double taxation
This results in a taxable amount of € 6.14

Gross: USD 17.45 (€ 15.40)
Withholding tax USA: -5.23 USD
German tax on € 6.14: -1,62 €
Net payout: € 9.12

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WhenLambo@SoonLambo

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@Seebi understood, thank you very much!

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Heiko G.@Ozzel

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@Seebi Thanks for the explanation. Top.

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Dividende > Zinsen@GoDividend

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And don't be surprised next year ->
#stornoreitgodividend

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Oleg@ScorpionfromBW

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@GoDividend Thanks for the article. I've saved it and will read through it soon

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WhenLambo@SoonLambo

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@GoDividend don't know what you mean by that :)

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Dividende > Zinsen@GoDividend

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@SoonLambo read it through then you'll know 🧐

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WhenLambo@SoonLambo

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@GoDividend oh, that's a contribution :)

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TotallyLost@TotallyLost

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And that's exactly why people buy Irish ETFs for US shares, so that they don't have to pay half the withholding tax. 😘

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WhenLambo@SoonLambo

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@TotallyLost If you want a basket of titles, definitely the better approach. Thanks for the tip

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Uwe@SchlaubiSchlumpf

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@TotallyLost if you have a broker who is registered as a QI and offsets the withholding tax, it should work, right? Then, of course, depending on the ETF, reinvestment would be possible, or you have a partial exemption (depending on your tax domicile 😉)

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Gomerdoc@Gomerdoc

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@SchlaubiSchlumpf Consors. They only deduct 15% US withholding tax. This also applies to direct investments in US equities.

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Uwe@SchlaubiSchlumpf

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@Gomerdoc Trade Republic does it for me (Germany) too.

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Tom@Tom_laeuft

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@TotallyLost do you have any tips on which ETFs? Thank you

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TotallyLost@TotallyLost

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@Tom_laeuft very simple, look at the ISIN, if it starts with IE then it is an Irish ETF.

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Stefan@DesasterArea

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@Tom_laeuft IE0003UVYC20

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Tom@Tom_laeuft

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@DesasterArea Danke🍻

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Kai@Dividenden-Sammler

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In the case of withholding tax, many German brokers have the corresponding agreement that only 15% withholding tax is due and this is offset in full against the German withholding tax. However, there are still a few where this is unfortunately not the case and where the full withholding tax is payable in the USA plus the full final withholding tax in Germany. The only thing that helps here is to file a tax return or apply for a refund in the USA. But I would also try to change my broker because it's just annoying and doesn't have to be.
Which broker are you with?

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Dividendenopi👴@Dividendenopi

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@Dividenden-Sammler That would have been exactly my question 😇. For me, this is also offset in full and the bottom line is that I even get a little more than I would with the full flat-rate withholding tax in Germany.

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WhenLambo@SoonLambo

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@Dividenden-Sammler I am with flatex. With which broker is it automatically offset? Do you know anything?

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Kai@Dividenden-Sammler

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@Dividendenopi Yes, this has to do with the fact that only 10% capital gains tax is calculated and of this, also the solidarity surcharge and corporation tax. This is why the credit is higher as there is less solidarity surcharge and corporation tax than if you pay 25% capital gains tax in full.

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WhenLambo@SoonLambo

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@Dividendenopi very convenient :) which broker are you with?

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Kai@Dividenden-Sammler

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@SoonLambo with almost everyone. This is actually standard with German brokers.

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WhenLambo@SoonLambo

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@Dividenden-Sammler ok, can you please give specific examples :D where are you, for example?

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Kai@Dividenden-Sammler

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I am with TR and LBBW. But it also works with Smartbroker, SC, Finanzen.net Zero, comdirect, Consors, ING. DKB even offers exemptions from other countries with QSt. of more than 15% (France, for example). I think I have now listed the brokers that are most used here in the community. There are others as well.
As far as I know, interactive brokers also have the problem that they do not do anything for tax purposes and you would have to take care of everything.

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Dividendenopi👴@Dividendenopi

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@SoonLambo I am less of a benchmark 🤷‍♂️ My private banking is with the savings bank

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Pedi@Pedi

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@SoonLambo Go to Finanzfluss and Depot Vergleich. There you will also find information on which securities account deducts withholding tax for you. But of course check it again with the respective broker :-)

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Shell@Shell

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Better not to invest in high dividend stocks because dividends are taxed and most of these companies don’t compound value very much when share price isn’t increasing that much or even decreasing. especially true for long horizon investing. Just go with high quality stocks that compound value in stock price with a high ROIC

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WhenLambo@SoonLambo

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@Shell I am already thinking about selling 👌

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Oleg@ScorpionfromBW

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Then the REITS are not worthwhile at all. Or do you still get some of the withholding tax back?

One often reads that several processes take place in the tax calculations for REITS.

I always thought that everything was covered with 25% + withholding tax etc.

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Dividende > Zinsen@GoDividend

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@ScorpionfromBW For this reason, some of them are already held in a separate custody account where no exemption order is deposited-this is offset immediately

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Oleg@ScorpionfromBW

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@GoDividend Good point, thanks. So if I ever buy REITS, it would be best to have an extra custody account just for that without an exemption order 👍

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