Extended limited tax liability
December 26, 2011 | 30,00 EUR | answered by Oliver Burchardt
In the case of limited tax liability, the taxable income in Germany is 16,500 euros.
Questions:
1. Do interest from deposits at German banks count as taxable income or are they subject to withholding tax (no assessment)?
2. Should or must one inform the bank in Germany that they are a non-resident for tax purposes (what are the advantages and disadvantages)?
3. Are loan interest for rental apartments deductible?
Thank you.
Dear inquirer,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
Since you are classified as subject to limited tax liability according to § 2 AStG, interest income is subject to income tax. The question remains as to which tax rate should be applied to this interest income. The Federal Ministry of Finance holds the legal opinion that the flat tax does not apply, and instead the income tax to be calculated according to § 32a is determined.
If you have financed a rental apartment in Germany with a loan, you are entitled to deduct the interest payments as advertising costs. The determination of the surplus of income over advertising costs is also to be determined for subject to limited tax liability individuals according to normal principles.
From a purely tax perspective, informing the bank that you are a non-resident for tax purposes due to being subject to limited tax liability has no impact.
I hope I have been able to assist you with your query.
Best regards,
Oliver Burchardt
Certified Public Accountant
Tax Advisor
