MiKaDiv and FASTER are part of the same broader shift in withholding tax: more reporting, more transparency and more data-driven access to relief.
Both regimes have been shaped by the same historical context. Following large-scale cum-ex and cum-cum abuse, tax authorities have placed greater focus on transactions around dividend ex date, beneficial ownership, custody chain transparency and proof of entitlement to relief. The aim is to reduce duplicate or fraudulent claims while giving tax authorities clearer visibility over who received the income, how it moved through the chain and why relief was applied.
The two regimes are related, but they are not the same.
MiKaDiv is Germany’s domestic reporting framework. It applies from January 1, 2027, and is mainly designed to support the validation of entitlement to claim German withholding tax through more detailed reporting and the generation of a new tax voucher serial number, known as the UUID.
FASTER is the EU-wide framework. It applies from January 1, 2030, and is designed to standardize relief at source and quick refund procedures across Member States. It also introduces Certified Financial Intermediaries, electronic certificates of tax residence and standardized reporting through the payment chain.
In short: MiKaDiv comes first, applies to Germany and makes German reclaims more reporting-dependent. FASTER comes later, applies across the EU and aims to create a more harmonized relief framework, although key details will still depend on Member State implementation.
Before looking at the practical impact, it is worth breaking down each regime in more detail: what it requires, how reporting works and where the main open questions remain.
MiKaDiv is Germany’s new withholding tax reporting framework. It was initially expected to apply from January 1, 2025, then postponed to 2026, and is now due to apply from January 1, 2027.
The purpose of MiKaDiv is not to fundamentally change the German withholding tax reclaim process. Instead, it makes the existing process more dependent on structured reporting. The core objective is to give German tax authorities fuller transparency across the custody chain and better data to validate reclaim entitlement.
MiKaDiv is intended to:
Germany will use an indirect reporting model. Intermediaries will collect and pass data up the custody chain to the German paying agent. The German paying agent will then aggregate, validate and submit the data to the BZSt through the DIP interface.
The investor must initiate a request for the tax voucher number. Under MiKaDiv, that number is the UUID. If reporting is complete and accepted by the BZSt, the UUID is generated and passed back down the chain. This UUID replaces the paper-based tax voucher and will need to be included in the reclaim portal process.
That makes the UUID the practical link between reporting and reclaims. If reporting is missing, incomplete or rejected, there may be no valid UUID. Without a valid UUID, a German reclaim may be delayed or rejected.
MiKaDiv reporting must be submitted in XML format based on the FSAK schema. For each dividend event, a detailed data set must be submitted. This includes paying agent data, investor data, custody chain data, securities and income data, holdings, transaction history, and payment and tax certificate data.
The transaction history requirement is particularly important. It generally covers acquisitions and disposals from one year before the ex-date to 45 days after the ex-date. It also requires transaction type data, including purchases, securities lending and repo transactions. This is directly linked to the anti-abuse focus behind the regime.
MiKaDiv also introduces different reporting streams depending on investor type and scenario, including domestic taxpayers, non-domestic taxpayers, omnibus accounts and notification reporting.
The key reporting deadlines fall in the year after the dividend payment:
Although reporting is submitted annually, MiKaDiv will require continuous data collection and validation throughout the year. Custodians and intermediaries will need to capture investor data, transaction data, beneficial ownership information and entitlement data in time to support accurate reporting.
MiKaDiv also introduces a strict correction framework. Corrections must be made regardless of when an error is identified. If a new tax certificate must be issued, a new serial number is generated. The corrected data set must reference the original UUID and include a full corrected data set, not only the changed fields.
MiKaDiv introduces a multi-layered liability regime. The German paying agent may be liable where reporting is incorrect, incomplete or not submitted. Other intermediaries in the chain, including German and foreign custodians, may also face liability where incorrect data or reporting failures lead to tax loss or unjustified tax benefits.
Administrative penalties can apply where data is incorrect, incomplete or not transmitted. These penalties can reach up to 20,000 euros per offense. The industry is still waiting for clarity on how liability will apply to non-German custodians, and contractual liability arrangements are expected to become important.
Financial arrangements remain one of the main open issues. The concept is drafted broadly and may capture any arrangement where economic exposure to a shareholding is transferred, shared or otherwise altered. This may include securities lending, repo transactions, put options, derivatives and dividend-equivalent adjustments.
There is still no clear guidance on how all relevant financial arrangements should be identified. This creates a practical risk area for intermediaries, especially where transaction data sits across multiple systems or custodians.
FASTER is the EU Directive that introduces a common framework for withholding tax relief procedures and reporting across Member States. It is due to apply from January 1, 2030, and EU Member States must transpose the Directive into national law by December 31, 2028.
FASTER has two linked objectives. It aims to make relief at source and quick refund procedures more efficient and harmonized across the EU. It also gives tax authorities more transparency over income, transactions, holdings and entitlement to relief.
The main components of FASTER are:
The eTRC is intended to simplify tax residence documentation for EU investors. It does not replace non-EU tax residence processes, such as IRS or CRA documentation.
Certified Financial Intermediaries (CFIs) are central to FASTER. These are financial institutions in the payment chain that are formally registered under the regime. They may include central securities depositories, credit institutions, investment firms and equivalent third-country entities.
Large EU custodians and CSDs must register as CFIs. Smaller EU financial intermediaries and non-EU financial intermediaries may register voluntarily. Registration will take place through the European Certified Financial Intermediary Portal, but national approval will still be required.
Once registered, CFIs will have significant obligations. They will need to report to tax authorities, perform investor due diligence, verify tax residence, collect beneficial ownership declarations, review holding periods and identify potential financial arrangements. They must also retain documentation for five years.
FASTER allows Member States to choose between direct and indirect reporting. Under direct reporting, each CFI reports directly to the tax authority. Under indirect reporting, data moves up the custody chain and the last CFI reports to the tax authority.
An issue arises where there is a non-CFI in the chain (e.g. a non-EU intermediary that did not register as a CFI). If a non-CFI sits in the payment chain and no CFI takes responsibility for that non-CFI, there may be a break in the reporting chain. In that case, relief at source or quick refunds may not be available, and the investor may need to rely on retrospective reclaims.
The FASTER reporting framework is built around Annex II of the Directive. Reporting will be XML-based, although the draft XSD requirements are still being finalized. Required data is expected to include CFI data, investor data, tax residence data, custody chain data, issuer and payor information, payment details, transaction data, holding data, financial arrangement data and depositary receipt information where relevant.
Like MiKaDiv, the transaction and anti-abuse data is a key feature. CFIs may need to report acquisition dates, disposal dates, settlement dates, transaction types and positions before and after the dividend ex-date. Financial arrangements such as securities lending, repos and swaps are also in scope.
FASTER introduces standardized relief at source and quick refund procedures, but not all cases will qualify. Certain higher-risk cases are excluded from relief at source and quick refund routes.
Excluded cases include:
These excluded cases may still require retrospective reclaims.
Where relief at source applies, the CFI must pre-validate the investor’s eligibility. This includes checking tax residence, beneficial ownership and entitlement to the relevant rate as well as validating against KYC and AML records. Where relief at source is not applied, investors may access the quick refund process, provided the case is eligible.
Under the quick refund process, CFIs must submit requests no later than the second month after the month of the dividend payment and Member States are required to issue refunds within 60 calendar days.
Liability is still one of the main unresolved issues. CFIs are expected to be the primary liable parties under FASTER. They may be accountable for incorrect reporting, failed due diligence, incorrect relief and tax loss to Member States.
There is no harmonized EU liability and penalties framework. Each Member State will define its own liability and penalty rules. This creates a risk of fragmentation across the EU and a potential liability-versus-control issue for CFIs, especially where data is provided by other parties in the chain.
WTax is preparing for both regimes through direct engagement with tax authorities, industry stakeholders and the EU Commission. WTax is also part of the EU Commission’s larger working group and is investing in technology and AI-enabled reporting capabilities to support the reporting requirements under MiKaDiv and FASTER.
For custodians and intermediaries, WTax can support:
For investors, WTax can assist with:
Data collection becomes particularly important where assets are spread across multiple intermediaries. MiKaDiv and FASTER both require data that may sit across different custodians, systems and markets. Financial arrangement data, transaction data and custody chain information will need to be collected and reconciled in a way that supports reporting and relief.
The main practical takeaway is that both regimes require preparation well before their effective dates. MiKaDiv will make German reclaims dependent on successful reporting and UUID generation from 2027. FASTER will create a broader EU relief and reporting framework from 2030, but the final impact will depend on CFI strategy, Member State implementation, liability rules and intermediary readiness.
As industry change continues to increase reporting, transparency and data requirements across withholding tax, firms need clear processes and the right support to protect access to relief.
Speak to the WTax team today to understand how FASTER, MiKaDiv and wider regulatory developments may affect your withholding tax operations.