Your $400 US Dividend Keeps $340 in Germany, or $298 Once Your Allowance Is Gone
Rates and rules below were checked against primary sources on September 10, 2026: the US–Germany income tax treaty (1989, as amended by a 2006 protocol) and the IRS treaty rate tables for the American slice, Germany’s Income Tax Act, Solidarity Surcharge Act and Fiscal Code for the German slice, and the 1980 estate, inheritance and gift tax convention (as amended by a 1998 protocol) for the estate-tax question.
Take a $10,000 position in US dividend stocks at a 4% yield. That is $400 a year in dividends, and if you are a German tax resident the United States keeps 15% of it under the treaty. Then a German peculiarity: the first €1,000 of capital income each year is tax-free, and if that allowance is still open, the entire German layer on these dividends comes out at zero. You keep $340, and at a German broker there is nothing to file.
This page is mostly the second layer, written for German tax residents. Think of it as two layers of tax system and two slices of your money: the first layer is American and the same for everyone, the second is whatever your own country adds. Germany’s second layer is the tidy one in this series: one flat rate, one surcharge, one allowance, and a credit that usually finishes the job at source. The one real fork is logistical. A German broker settles everything for you; a foreign broker hands you a form. If your home country is different, the China, Japan and UK versions of this page show how different the second layer can look.
Layer one: the US keeps 15%
The short version, because the long version lives elsewhere on this site: US law imposes a 30% withholding tax on dividends paid to foreign investors, and the US–Germany income tax treaty cuts that to 15% for a German resident holding a portfolio investment. One precision worth knowing: the treaty dates from 1989, but its dividend article was rewritten wholesale by a 2006 protocol, and the 15% lives in that replacement text. The cut is not automatic. It lives inside a form called the W-8BEN that you file with your broker, and it quietly expires three full calendar years after you sign it, with nobody sending a reminder. Mine expired once, and the next dividend came in at the full 30% instead of my own treaty rate of 10%. Why treaty rates exist at all, and who gets one, is covered in the treaty rate gap article; your own number is in the treaty rate atlas.
Two corners of the treaty deserve a sentence each. Dividends from US REITs keep the 15% rate as long as you are an individual holding no more than 10% of the REIT, which describes essentially every retail position. And dividends paid to German pension funds can carry 0% US withholding; that is treaty text, not a loophole, and not something a retail investor can use directly. From here on, assume the ordinary case: 15% withheld, paperwork alive. On $400 of dividends that is $60 gone, $340 in the account.
Layer two: one flat rate, one surcharge, one shield
One threshold question comes first. Germany taxes its residents on worldwide income, and residence is set by the Fiscal Code: keeping a home in Germany that you use, or staying more than six months, which counts as residence from day one. If either describes you, every US dividend is in scope wherever the account sits. (German statutes are published in German; the translations on this page are unofficial.) This page assumes the ordinary case: German tax resident, holding US shares in a normal brokerage account. Germany has no ISA-style wrapper, so no special account changes what follows. One boundary: this page covers shares you hold directly. Funds and ETFs run on a separate statute, with its own advance lump sum and partial exemption, and the US tax paid inside a fund does not reach your personal credit at all. That is a different page.
The German layer is a flat tax on capital income, the Abgeltungsteuer: 25%, plus a solidarity surcharge of 5.5% of the tax. You will read 26.375% almost everywhere as the combined rate, and on fully German income that figure is right. On US dividends it is slightly too high, because the surcharge is levied only on the tax actually due after the US credit; the effective combined rate on a US dividend works out to about 25.55%. The tax base is the gross dividend converted to euro, and actual costs are never deductible. What you can deduct is one fixed amount: the Sparerpauschbetrag, €1,000 a year per person, €2,000 for couples filing jointly. At a German bank you put it to work with an exemption order, the Freistellungsauftrag; at a foreign broker it is applied later, in your tax assessment.
If you are a registered member of a tax-collecting church, add church tax: 8% of the capital tax in Bavaria and Baden-Württemberg, 9% in every other state. A German bank collects it automatically through a data query; the statute trims the 25% base to compensate, and on US dividends the all-in figure lands around 26.2%. A privacy valve exists: you can file a blocking notice, a Sperrvermerk, with the Federal Central Tax Office, and your bank stops withholding church tax. The trade is that your church tax is then assessed through a tax return, and the return becomes mandatory. Not a church member, or content with the default? Leave it alone.
One myth to retire on the way: you may have read that Germany abolished the solidarity surcharge in 2021. For most wage earners, yes; the statute says in as many words that capital income tax is excepted from that exemption, so on dividends the surcharge is very much alive. Now the arithmetic, at $1 = €0.86 (an assumption for illustration, not a quote). Our $400 is €344. If your allowance is open, the German layer is zero and you keep $340; your effective rate is the treaty’s 15% itself. If the allowance is already spent, the numbers run: 25% of €344 is €86, the bank credits the €51.60 the US kept, collects €34.40, and adds €1.89 of surcharge. That is about $42 more, leaving roughly $298, or 74.5%. A church member in a 9% state lands near $295, 73.8%.
The credit: two tracks to the same euro
Germany does not merely allow a credit for the US tax; the treaty obliges it. Article 23, also rewritten in 2006, has Germany credit the US tax on dividends, subject to German law’s own credit rules. Those rules cap the credit per item of income at 25%, reduce it by any refund claim you hold against the United States, never let it exceed the German tax on that same income, and give it no afterlife: unused credit does not carry forward.
At a German broker the credit is statutory and automatic. The bank is required to take foreign withholding into account when it settles your tax, so on each US dividend it computes 25%, credits the 15% the US kept, and collects only the difference plus the surcharge. Settled at source means finished: for these dividends, there is nothing to declare. Filing becomes optional in two cases: your personal income tax rate is below 25% and a favourable-rate review pays off, or allowance and losses went unused at the bank. Two other situations make a return mandatory: a Sperrvermerk, which pushes church tax into an assessment, and the foreign-broker case in the next paragraph.
At a foreign broker, Interactive Brokers and the like, no German tax is withheld at all, and that flips a legal switch. Capital income that escaped withholding must be declared, on a schedule called Anlage KAP, and the assessment is mandatory, regardless of the thresholds that excuse ordinary filers. The credit itself is the same, applied by the tax office instead of the bank, and the euros come out identical. Only the road changes: automatic at a German bank, self-declared everywhere else.
One edge of the credit deserves respect. It can never exceed the German tax on the same income, so when the allowance absorbs your dividends and the German tax on them is zero, the credit is zero too. The US 15% on those dividends is simply final, the same way it is for US dividends inside a UK ISA. The allowance saves German tax; it cannot save the American slice. Size makes it visible. Take €1,500 of US dividends against an untouched €1,000 allowance: €500 stays taxable, the German bill is €125, and the credit is capped at €125, so €100 of the US tax you paid is gone for good. The allowance still saved you about €158 of German tax, but it burned €100 of credit doing it. Where the split of your Freistellungsauftrag lets you choose, spend the allowance on income with no foreign tax attached, German interest or German dividends, and let the US dividends stay fully taxable so they absorb their credit in full.
Where it breaks: the 30% trap
The credit’s hard edges show exactly when the US side has gone wrong, and they bite in a fixed order. First, only tax actually withheld counts. Second, the credit is reduced by any refund claim the treaty gives you. Third, what survives is capped at 25% per item. If your W-8BEN lapses, the US withholds the statutory 30%: $120 on $400 instead of $60. Because the treaty entitles you to reclaim 15 points from the IRS, Germany credits only 15%; the rest is not creditable, not refundable in Germany, and not carried forward. At a German bank this happens silently: the system credits 15% whether you were charged 15% or 30%, and the loss finalizes itself on the statement. On $400 the American slice doubles from $60 to $120, and Germany absorbs none of the difference. With your allowance open you keep $280 instead of $340; with it spent, $238 instead of $298. Either way the lapse costs you $60. The only route back is a refund claim to the IRS, slow and paperwork-heavy, and prevention is the form. The fix and the refund path are here.
Telling the Finanzamt: when, how, and with what
Germany’s tax year is the calendar year. At a German broker there is, in the ordinary case, nothing to tell: the bank settled everything at source. At a foreign broker, the dividends go on Anlage KAP with your income tax return, filed through the tax administration’s ELSTER portal or on paper, due 31 July of the following year; with a tax adviser the deadline stretches to the end of February two years later (pandemic-era extensions ran through the 2024 tax year; from 2025 the ordinary dates are back). The credit runs on paper either way. Keep your broker’s dividend statements and the Form 1042-S if you receive one, because the tax office can ask for evidence that foreign tax was actually paid, and “the app showed it” is not a document.
One conversion rule pins the numbers down, and it matters most when you fill in Anlage KAP yourself; at a German broker the bank does the conversion for you. German law counts income when it reaches you, so each dividend converts to euro at the rate of the day it lands in your account, and the US tax you claim converts the same way. There is no single statutory exchange rate; the ECB’s euro reference rates are the standard reference. Note the rate you used next to each statement as it arrives. Brokers redesign their menus, and hunting a four-year-old voucher in July is a special kind of pain.
Does the Finanzamt actually check?
The obligation exists whether or not the money ever reaches a German bank account; residence, not the location of the account, is the trigger. Germany exchanges financial account information automatically with other jurisdictions under CRS, dividends at a German bank pass through the withholding system in plain sight, and foreign accounts are precisely what the mandatory-declaration rule aims at. I am not going to guess at audit odds. Between the allowance, the credit and the flat rate, the compliant route is also the cheap one, and that is enough reason.
What you can actually do
- Confirm the US slice is 15%. Log into your broker, find the W-8BEN status, screenshot it with the date. If it lapsed, here is what the fix and the refund path look like.
- Put your €1,000 to work deliberately. The allowance is consumed in the order income arrives, so the real lever is where you file your Freistellungsauftrag: split the €1,000 towards the bank holding your German interest or German dividends, and let the US dividends stay fully taxable so they absorb their credit in full. At a foreign broker the allowance is applied in the assessment instead, and you cannot steer it.
- Foreign broker? Calendar 31 July. Anlage KAP goes with your income tax return through ELSTER, and the assessment is mandatory. Save every dividend statement as it arrives, and the 1042-S if you get one.
- Size the drag at your numbers. Your position size changes the figures, not the ordering. The withholding calculator models the annual drag at your actual holdings.
- Remember the other US exposure. Dividends are not the only thing America taxes. US estate tax reaches nonresidents from $60,000 of US-situs assets.
Two countries, one dividend, and a system that settles itself at a German bank and waits for one form everywhere else — legible either way, and legible is all a long-term plan needs.
Frequently asked questions
I hold my US stocks at a German broker. Do I have to file anything?
Usually not. The bank credits the 15% US withholding against the 25% German tax and settles the rest at source, and for these dividends no return is due.
Two things make a return mandatory: you filed a Sperrvermerk against the church-tax data query, so church tax has to be assessed instead; or you also hold a foreign brokerage account, where no German tax was withheld at all. Two more make it merely worth doing: your personal tax rate is below 25% and a favourable-rate review pays off, or saver’s allowance or losses went unused at the bank.
My broker withheld 30% instead of 15%. Will Germany credit all of it?
No. The credit is reduced by the refund claim the treaty gives you against the IRS, so only 15% counts; the extra 15 points are not creditable, not refundable in Germany, and not carried forward. The only route back is a refund claim to the IRS. Prevention is the form, and the form is the W-8BEN.
Can Germany refund the 15% the US keeps?
No. It is credited, not refunded, and only up to the German tax actually due on those dividends. Above the saver’s allowance the credit absorbs the 15% in full. Inside the allowance the German tax is zero, so there is nothing to credit against: the 15% is simply gone, no refund and no carryover.
Do I pay church tax on US dividends?
If you are a registered member of a tax-collecting church, yes: 8% of the capital tax in Bavaria and Baden-Württemberg, 9% in every other state, with the statute trimming the base rate to compensate. A German bank withholds it automatically; at a foreign broker it is settled in your Anlage KAP assessment. A Sperrvermerk stops the bank’s data query, but the tax office then assesses you instead, so the privacy it buys costs you a filing.
Which exchange rate do I use for USD dividends in Anlage KAP?
Convert each dividend at the rate of the day it reaches your account, and convert the US tax withheld the same way, so both sides of the calculation ride the same rate. There is no single statutory rate source; the ECB’s euro reference rates are the standard reference. Note the rate you used next to each statement; if the tax office ever asks, that note is the answer.
Does the $60,000 US estate tax threshold really apply to me?
In practice, usually not. Germany is one of the few countries with its own estate, inheritance and gift tax treaty with the United States, signed in 1980 and in force since 1986, entirely separate from the income tax treaty. Under its Article 9, property the treaty does not expressly carve out, and portfolio stocks are not carved out, is taxable only in the country where the decedent was domiciled. For a German domiciliary who is not a US citizen, listed US shares sit outside the American estate tax entirely, and the $60,000 threshold never comes into play. Treaty domicile tracks the German side of your life here: a home or habitual abode in Germany is enough.
For the assets America may still tax, chiefly US real estate and business property, the treaty adds a backstop: a 1998 protocol grants the estate a prorated share of the full US-citizen exemption, apportioned by US assets over worldwide assets, and never less than the flat $13,000 credit every nonresident estate gets. The price of the prorated share is disclosure, since the IRS allows it only if the estate reports the worldwide total on the American nonresident estate tax return. And the treaty only decides who may tax; Germany still taxes inheritances its own way. The general rule for nonresidents is here; this is the Germany-specific exception to it.
Written and maintained by the DivAtlas editor, a long-term holder of US dividend stocks who files a W-8BEN, the same as most people reading this. I am an investor working from primary sources, not a licensed tax adviser. The rates and rules on this page were checked against the sources listed at the top of this page on September 10, 2026, and the page is reviewed annually and whenever the underlying rules change.
DivAtlas is an educational reference, not tax, legal or investment advice. Cross-border tax outcomes depend on your facts; tax rules change. Verify the details that apply to your situation with a qualified professional before acting.