Tax-exempt dividend: Leading DAX company Deutsche Telekom to dole out dividends without tax deductions applied.
Approximately 25 German-listed companies plan to distribute dividends tax-free this year, including Deutsche Telekom from 2025 onwards.
Tax-free distribution basis:
Historical accounting restructuring serves as the legal foundation for tax-free distributions. Contributed capital accounts, which separate shareholder equity contributions from the company's profits, facilitate tax-free distributions to shareholders, unaffected by savings allowances (€1,000 for singles and €2,000 for married couples).
Distribution without deduction:
Deutsche Telekom has announced the proposed dividend for the 2024 financial year, to be presented at the Annual General Meeting scheduled for April 9, 2025. The proposed dividend per share is €0.90, subject to the approval of the Annual General Meeting and other legal requirements.
Permanent tax exemption:
Shareholders who purchased dividend papers prior to the introduction of the withholding tax in 2009 will continue to enjoy tax-free capital gains upon subsequent sales. The stock market debut of Deutsche Telekom took place on November 18, 1996.
Tax deferral effect:
Shareholders who joined after 2009 can anticipate a "tax deferral" effect from dividend payments from the contributed capital account. Upon sale, the tax-free distributions will be deducted from the purchase price, with the difference between the reduced purchase price and the sale price subject to capital gains tax.
Further capital measures:
Deutsche Telekom has also announced plans to repurchase up to €2 billion of its own shares in 2024 and 2025 to offset dilution from a previous capital increase.
Relevant consideration:
Dividends paid by Deutsche Telekom may be subject to withholding tax under German tax law. Tax treatment may vary based on shareholders' residency, type of ownership, and applicable double taxation treaties. Conditions for tax-free or reduced-tax dividends often involve holding shares during a specific record date, possessing the requisite documentation, or qualifying for participation exemption regimes available to corporate shareholders. Retail investors in Germany typically receive dividends net of withholding tax, but may reclaim some or all via their tax filings. Institutional or corporate investors domiciled in jurisdictions with tax treaties with Germany may effectively receive dividends tax-free or at reduced rates under those treaties. For a comprehensive understanding of Deutsche Telekom's specific tax-free dividend policy and shareholder conditions, consult their official investor communications or contact the Investor Relations department.
Personal-finance planning for investors interested in Deutsche Telekom might consider the tax-free dividends offered by the company after 2025, as announced by the company's financial reports. The tax-free distribution basis for these dividends is rooted in historical accounting restructuring, and shareholders, whether individuals or businesses, can benefit from these tax-free distributions if they meet certain conditions and comply with legal requirements.
