What are the tax consequences of double taxation of capital income?
January 18, 2022 | 120,00 EUR | answered by Albrecht Schneider
Dear tax advisor,
I am Tina Fischer and I am currently dealing with the issue of double taxation of capital income. I have a securities account with a foreign bank and regularly receive dividends and interest from my investments there. Now I am worried that these income could be taxed both abroad and in Germany.
Currently, I am already paying taxes in the country where my capital income is generated. However, since I am also liable to tax in Germany, I fear that I may be taxed here again.
My concern is that in the end, I may have less of my capital income left, as it could be subject to double taxation. This would of course reduce my returns and I would like to know what tax consequences this could have for me.
Therefore, my question to you is: What options are there to avoid or at least minimize the double taxation of capital income? Are there any specific regulations or agreements between Germany and other countries that could help me with this? I would greatly appreciate it if you could provide me with more information and possible solutions.
Thank you in advance for your help.
Best regards,
Tina Fischer
Dear Mrs. Fischer,
Thank you for your inquiry regarding the issue of double taxation of capital income. It is understandable that you are concerned that your income could be taxed both abroad and in Germany. In fact, double taxation is a problem that affects many investors who receive income from abroad.
In your case, where you are already paying taxes on your capital income abroad, there is a risk that you may also have to pay taxes in Germany. This would indeed reduce your return and leave you with less of your income.
However, there are ways to avoid or at least minimize double taxation. Firstly, it is important to check if there is a double taxation agreement between Germany and the country in question. These agreements determine which state has the right to tax and ensure that there is no double taxation.
If a double taxation agreement exists, you should carefully review the regulations and see if you can benefit from them. Often, such an agreement allows for taxes paid abroad to be credited against German tax in order to avoid double taxation.
It is also important that you keep all relevant documents and receipts regarding your capital income carefully and report them in your tax return in Germany. This way, you can prove that taxes have already been paid abroad and prevent double taxation.
If you are unsure about the best course of action or need more information on specific agreements, I recommend that you consult a specialized tax advisor. They can provide you with individual advice and help you find the best possible solution to your tax issue.
I hope this information helps you and that you can avoid double taxation of your capital income in the future. If you have any further questions, please feel free to contact me.
Best regards,
Albrecht Schneider
Tax Advisor
