Another very sophisticated type of stock transaction

Div-arb (dividend-arbitrage) transactions have become a very popular way of avoiding taxes on dividends, especially with German holdings by the big money people here. Some German investment funds and banks need not pay tax on German dividends or can claim refunds for tax withheld. So, the big money here briefly lends out some of their German holdings each year to those German funds that pay no tax. The time for lending is a few days or weeks before dividends are to be paid. The banks or funds that borrowed the shares receive the dividends tax-free and then transfer that money to the stocks’ original owner, minus fees for middlemen. The foreign investors typically end up with added income equivalent to about half the dividend tax that would have been owed.