Taxes on Digital Credit Dividends: Germany, Switzerland, Austria

Short answer: You pay tax on Digital Credit dividends like on any other foreign dividends. In Germany you pay about 26% flat-rate tax including the solidarity surcharge, in Austria 27.5% KESt (capital gains tax), in Switzerland your personal income tax rate. The US often withholds 15%, which you can credit against your tax. Strategy reporting the payments as return of capital in the US does not automatically apply to you.

You hold STRC or SATA, and every day a few cents of dividend land in your account. The statement shows deductions in dollars, euros or francs, sometimes none at all. And somewhere you read that the payments are "tax-free" in the US. Here you'll find out how to pay tax on Digital Credit dividends in Germany, Switzerland and Austria, what you actually keep and which mistakes cost money.

What is different about taxing Digital Credit

For tax purposes, bitcoin preferred stocks such as STRC, STRF or SATA are shares in a foreign company. Their distributions are dividends. That is the easy part. How the securities themselves work is explained in the guide Digital Credit explained.

Three things still make the tax trickier than with an ordinary share:

1. Two countries take a cut. The company's country can withhold tax at source, and your country of residence taxes the dividend again. A double taxation treaty sets how much of the first you can credit.
2. The payment has a different name in the US. Strategy declares its distributions as return of capital, not as dividends. What that means for you is explained below.
3. Many small payments. Since November 2026, STRC, SATA and SATS pay daily. Each payment is a separate entry, converted at that day's exchange rate.

US withholding tax: 15% with W-8BEN

Almost all bitcoin preferred stocks come from US companies: Strategy and Strive. On dividends paid to foreigners, the US withholds 30% by default. With form W-8BEN you confirm to your broker that you live in Germany, Austria or Switzerland. Under the respective double taxation treaty, it is then 15%.

Your country credits these 15% against its own tax. Anything withheld beyond that you only get back by filing a claim with the US tax authority, the IRS. For small amounts that is hardly worth it. So check once whether your broker has your W-8BEN. With most brokers you sign it when you open the account.

The same applies to STRE: it pays in euros, but the issuer is Strategy, a US company.

Return of capital: tax-free in the US, not for you

Strategy has reported that 100% of its 2025 distributions on its preferred stocks count as return of capital in the US. The reason: under US tax law, Strategy has no accumulated earnings and profits. The company expects this to stay that way for the foreseeable future, but does not guarantee it.

For a US investor this means: no tax now. In exchange, his cost basis falls, and when he sells he pays tax on a larger gain. The tax is deferred, not forgiven.

For you in Germany, Austria or Switzerland, this classification does not apply automatically. Each country decides by its own rules whether a payment distributes profit or returns capital:

• Germany: Since a letter from the Federal Ministry of Finance dated Apr 21, 2022, a company outside the EU can also make a tax-free return of contributions. What counts, however, is the distributable profit in its annual financial statements, not its US tax calculation. You have to provide the proof in your tax return.
• Austria: A return of contributions (Einlagenrückzahlung) lowers your acquisition cost instead of triggering KESt. For a foreign company you have to substantiate it with suitable documents.
• Switzerland: Repayments of capital contributions are tax-free even from foreign companies, if you can prove them. What counts is how the Federal Tax Administration (ESTV) lists the payment in its price list (Kursliste).

Whether US withholding tax is still taken from a payment reported as return of capital depends on how your broker and its custodian classify it. Look at your statement: it shows what was deducted.

Taxing Digital Credit dividends in Germany

Dividends are income from capital assets. You pay 25% flat-rate tax (Abgeltungsteuer) plus a 5.5% solidarity surcharge on that tax, 26.375% in total. If you pay church tax, 8 or 9% of the flat-rate tax is added.

€1’000 of investment income a year (€2’000 for married couples) stays tax-free, the saver's allowance (Sparer-Pauschbetrag). With a German bank or a German neobroker you use it by filing an exemption order (Freistellungsauftrag).

What you keep from €1’000 in dividends

Say your securities pay you €1’000 a year, which is about €8’300 in STRC at 12%. Your allowance is already used up by other income, and you don't pay church tax.

In the last case you can only reclaim €150 through the IRS.

The allowance trap

If a dividend stays tax-free within your allowance, you pay nothing in Germany against which the US tax could be credited. Your bank keeps a record of the US tax and credits it as soon as flat-rate tax falls due in the same year. If your allowance is still unused at year-end, the US tax is lost. Of €1’000 you then keep €850, not €1’000.

Price gains and losses

If you sell a preferred stock at a gain, you also pay flat-rate tax on it. The calculation is in euros: purchase and sale are each converted at the dollar rate of the day. A weaker dollar can turn a dollar gain into a euro loss.

Losses from selling shares, preferred stock included, can only be offset against gains from selling shares. You cannot offset them against dividends. If you sell after a price drop like the one in June 2026, you build up a loss that only reduces a later gain on shares. More on these risks is in The risks of bitcoin preferred stocks.

Foreign broker

If your account is with a broker without a German presence, nobody withholds flat-rate tax. You then enter the dividends and the US tax paid in Anlage KAP (the capital income schedule) of your tax return. Convert each payment into euros at that day's rate. For securities that pay daily, your broker's annual statement helps.

How bitcoin itself is taxed, with its holding period and exemption limit, is explained in Bitcoin taxes in Germany. The holding period does not apply to preferred stocks: they are shares, not bitcoin.

Taxing Digital Credit dividends in Austria

In Austria you pay capital gains tax (KESt) of 27.5% on dividends. There is no allowance. The 15% US tax is credited, which lowers the KESt to 12.5%.

The result is simple: of €1’000 you keep €725, whether the US withholds 15% or nothing. Only without W-8BEN does it get more expensive: you then keep €575, and you have to reclaim €150 from the IRS.

One advantage over Germany: you may offset losses from selling shares against dividends in the same year. An Austrian bank does this automatically across all the accounts you hold with it. The same KESt applies to gains on bitcoin itself, see Bitcoin taxes in Austria.

If your account is abroad, you enter the dividends in the E1kv schedule: foreign dividends under code 863, the creditable US tax under code 998. If your personal tax rate is below 27.5%, you can apply for standard income taxation (Regelbesteuerung).

Taxing Digital Credit dividends in Switzerland

In Switzerland, dividends count as part of your income. You pay tax on them at your personal rate to the federal government, canton and municipality. On top comes wealth tax on the market value at Dec 31. In return, price gains are tax-free for private investors, but price losses are not deductible either, just as with bitcoin in Switzerland. That does not apply if the tax administration classifies you as a professional securities trader.

If your account is with a Swiss bank, it withholds 15% twice on US dividends:

1. 15% US withholding tax. You have it credited with form DA-1, filed together with your tax return.
2. 15% additional US tax retention (Steuerrückbehalt USA). You get this back in full with form R-US.

The US tax is only credited if your foreign withholding taxes add up to more than CHF 100 in the year. At 15%, that corresponds to about CHF 667 in dividends. Below that, the US tax is lost.

How Strategy's return of capital is classified in Switzerland is shown in the ESTV price list for each security. If it lists the payment as taxable income, it belongs in your income. For wealth tax you also use the price from the price list.

Germany, Austria, Switzerland compared

As of Nov 13, 2026, tax year 2026. Germany without church tax and with the allowance used up, Switzerland with a 25% marginal tax rate.

How to keep more of your dividend

1. Check your W-8BEN. Without the form you lose 15% of every payment until you reclaim it from the IRS.
2. Think net. A 12% dividend is about 9% for you in Germany and about 8.7% in Austria. A weaker dollar lowers it further.
3. Use the allowance deliberately (Germany). It works best on income without foreign tax, such as interest from German banks.
4. Keep your records. Keep the statements and the annual summary. You need them for DA-1 and R-US in Switzerland, and the deadlines are limited.
5. Declare foreign brokers yourself. Nobody withholds tax for you, but the tax office learns about your account through international data exchange.

How much capital you need for a given net amount per month is shown in Monthly cash flow with Digital Credit. How much arrives net each month you can work out in the Digital Credit calculator. It calculates before taxes; subtract your rate from the table above:

The payment dates of all securities are in the dividend calendar, rate and yield per security in the Digital Credit overview. Where STRC's yield comes from is explained in STRC (Stretch) explained.