More than 20 publicly traded companies in Germany plan to pay their dividends entirely or partially tax-free from capital reserves in 2025. Private investors can thus benefit from higher net returns.
How Does the Tax-Free Dividend Work?
The distribution is not made from the company’s current earnings, but from so-called capital reserves or the tax deposit account according to §27 of the Corporate Tax Act (KStG). As a result, the dividend is initially credited to the investor tax-free. Only when the distributions exceed a certain exemption threshold can retroactive taxation occur, which is, however, rare for private investors with smaller portfolios.
Example: MPC Capital
A concrete example is the Hamburg-based financial services provider MPC Capital:
- Dividend: €0.27 per share for the financial year 2024
- Ex-Date: June 16, 2025
- Payment from: June 18, 2025
- Dividend Yield: approx. 5%
- Tax Status: The distribution is made tax-free from the deposit account
Benefits for Private Investors
- Higher Net Return: Since no withholding tax or solidarity surcharge is deducted directly, more money remains with the investor.
- Attractiveness in a Low-Interest Environment: Such offers are particularly interesting, especially when interest rates are low.
- Transparency and Predictability: Companies usually announce early whether and how much they will distribute from reserves.
Important Notes
Although the distributions are initially tax-free, there can be retroactive taxation in the income tax return – especially if all received dividends together with other capital income exceed certain exemption amounts. In many cases, however, the increase in yield remains noticeable.
Conclusion
For private investors, these models offer an attractive way to increase their after-tax returns. Financial service providers like MPC Capital are currently in the spotlight, with a projected dividend yield of around five percent and a planned tax-free distribution after Pentecost.