Tax-Free Dividends for Shareholders in 2025
In Germany, Europe, and the USA, around 50 publicly listed companies plan to distribute dividends in 2025 that are completely or partially tax-free from capital reserves. This practice has significant impacts on the net returns for shareholders as it directly affects the tax burden.
Background and Legal Foundations
Capital Reserves: The tax-free dividends do not come from the companies’ current profits but from capital reserves. These reserves arise from past contributions by shareholders that are now being returned in the form of dividends.
Tax Treatment: In Germany, dividends are generally subject to a flat tax of 25% plus solidarity surcharge and possibly church tax, which can lead to a total tax burden of up to 27.99%. Tax-free dividends from capital reserves are exempt from this tax burden, as the distributions do not qualify as income from capital assets.
Examples of Companies
Edel SE & Co. KGaA: An example of a company distributing tax-free dividends is the media company Edel SE & Co. KGaA. It plans to distribute a dividend of 30 cents per share in 2025 that is tax-free.
Other Companies: There are about 25 German publicly listed firms that apply similar practices. These companies utilize their capital reserves to distribute tax-free dividends.
Impact on Shareholders
Tax Deferral Effect: Shareholders who invested in such companies after 2009 benefit from a tax deferral effect. Upon selling the shares, the tax-free amount is deducted from the purchase price, and only the remaining profit is taxable.
Long-Term Tax Exemption: Shareholders who acquired their shares before 2009 can realize tax-free capital gains upon selling their shares.
Tax Developments
Saver’s Allowance: In Germany, 1,000 euros (for singles) or 2,000 euros (for married couples) of capital income are tax-free. This can be utilized through targeted investment strategies to save taxes.
SPD Plans for Capital Gains Tax: There are political efforts to raise the capital gains tax to at least 30%. This could diminish the appeal of dividend investments and put pressure on private retirement savings.
Conclusion
Tax-free dividends from capital reserves offer shareholders a way to increase their net returns. Private investors should stay informed about the tax conditions and potential future changes to optimally adjust their investment strategies.