What are non-German capital gains?
Capital gains are earned abroad if they are paid into a foreign securities account or bank account.
Domestic capital gains, on the other hand, are received from a German financial institution.
The relevant factor is therefore not the domicile of the company from which you hold shares, but where you receive the income and where your custodian bank is located.
For example, if you have invested in an ETF with a bank in Germany that is domiciled abroad, capital gains from this are not considered foreign, as the income flows into your German account. Your bank or depositary institution will automatically take care of paying the taxes.
If, on the other hand, you have a share deposit account with a bank abroad and your investment income flows into a foreign account or your domestic account, then this is foreign investment income that has not yet been taxed under German law.
Which non-German capital gains can I declare in the Taxfix app?
Whether you can record your foreign investment income in the Taxfix app depends on the type of income and when you received it.
Non-German capital gains abroad
There are no restrictions on foreign capital gains that you received while you were resident abroad. This is because no tax is due on this income in Germany and you do not have to declare it in your tax return.
Non-German capital gains during your time in Germany
If you had foreign capital gains while living in Germany, we can help you if the income was interest or dividends. Unfortunately, we cannot cover other types of capital gains in this case.
How are non-German capital gains taxed in Germany?
The taxation of non-German capital gains depends on your place of residence and the type of capital gains. The following applies to the capital gains that you can declare with Taxfix:
Taxation of non-German capital gains while abroad
Non-German capital gains received during your time abroad are not taxed in Germany. Therefore, you do not have to declare them in your tax return.
Taxation of non-German interest and dividends during your time in Germany
Foreign interest and dividends that you received while you were resident in Germany are generally taxed in Germany in the same way as domestic capital gains: If the total capital gains exceed the saver’s allowance amount (2023: € 1,000 for single assessment and € 2,000 for joint assessment), the German flat-rate capital gains tax of 25% as well as solidarity surcharge of 5.5% and, if applicable, church tax of 9% or 8% will apply. It is therefore obligatory to declare your foreign capital gains in your German tax return.
At the same time, non-German capital gains are often subject to tax withholding abroad. Withholding tax means that the tax on the capital gains is already withheld at the source of the payment, e.g. the bank.
Your foreign interest or dividends are therefore often taxed twice, once at the source abroad, and a second time in Germany as your place of residence. In some cases, the withholding tax you have already paid abroad can be credited against the German tax burden. You can find out in which countries and how much withholding tax can be credited in this list: Foreign withholding tax.
However, in many cases you can offset the withholding tax you have already paid abroad against the German tax. This means that you pay less tax in Germany. Unfortunately, it is not possible to record this in the Taxfix app. Therefore, after submitting your tax return, contact your tax office and ask for the foreign withholding tax to be taken into account if it applies to the respective country.