Tax prepayments on profits from abroad?
June 30, 2013 | 50,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
I made profits with a foreign broker in 2012 (CFDs with IG Markets) and declared them in full in my tax return.
IG Markets is known for not withholding any taxes.
Although these profits were considered in my 2012 tax assessment, the tax office is now demanding tax prepayments for 2013 and 2014 amounting to 25% of the profits made in 2012.
I have three questions regarding this:
1. Is it generally correct to demand tax prepayments in such cases?
2. Is it legal for the profit from 2012 to be automatically assumed for 2013 and 2014 in the same amount, especially considering that profits from instruments like CFDs can vary greatly?
3. If the answer to the first two questions is yes, is it possible for me to reduce the amount of the prepayments if I can prove that I have not made similar profits this year (the mid-year balance is even slightly negative)?
Thank you very much!
Dear Client,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your situation in a first consultation as follows:
The conditions for the determination of income tax prepayments are regulated in § 37 of the Income Tax Act.
According to this, the prepayments are always due on the 10th of March, June, September, and December (§ 37 para. 1 sentence 1 of the Income Tax Act).
The prepayments are determined by a prepayment notice (§ 37 para. 3 sentence 1 of the Income Tax Act). The prepayments are generally based on the income tax that resulted from the application of tax deduction amounts (§ 36 para. 2 no. 2) in the last assessment (§ 37 para. 3 sentence 2 of the Income Tax Act).
Therefore, the tax office was authorized to determine income tax prepayments for the years 2013 and 2014 based on the year 2012, provided they amount to at least 400 euros per calendar year and at least 100 euros for a prepayment date (§ 37 para. 5 of the Income Tax Act).
However, you can at any time, including retroactively to March 10 or June 10, 2013, request in writing a reduction or zeroing of the income tax prepayments if there have been changes in the taxable basis. Since you can prove that no profits corresponding to the year 2012 were generated in 2013, you should submit a zeroing request to the tax office. The tax office will then set the prepayments to zero.
I hope I have been able to assist you with my explanations.
Best regards,
Ulrich Stiller
Tax advisor/Dipl. Business economist
