What impact does the flat-rate withholding tax have on my capital investments abroad?
March 12, 2023 | 50,00 EUR | answered by Anna Karpinski
Dear tax advisor,
my name is Phillip Baumgart and I am currently focusing intensively on my investments abroad. In recent years, I have increasingly invested in foreign securities to diversify my portfolio and potentially achieve higher returns. However, I now have concerns regarding the impact of the withholding tax on my investments abroad.
The current situation is as follows: I have various securities in foreign markets, particularly in the USA and Asia. So far, I have not paid taxes on my capital gains abroad, as they have been taxed in the respective countries. Now I am wondering if I also have to pay withholding tax on my foreign capital gains in Germany and how this would affect my overall return.
My concerns are that the withholding tax could significantly reduce my return and that I might have to pay additional taxes. Additionally, I am unsure if I have complied with all tax regulations and have not committed tax evasion.
Therefore, my question to you is: What specific effects does the withholding tax have on my investments abroad? Are there possible solutions to optimize taxes or avoid double taxation? I would greatly appreciate a thorough consultation on this matter to optimize my financial situation and minimize legal risks.
Thank you in advance for your assistance.
Sincerely,
Phillip Baumgart
Dear Mr. Baumgart,
Thank you for your inquiry regarding the impact of the withholding tax on your investments abroad. I understand your concerns and would like to address your questions in detail.
In Germany, capital gains originating from abroad are subject to the withholding tax. This means that your foreign capital gains must be taxed in Germany, regardless of whether they have already been taxed abroad. The withholding tax is currently 25% plus solidarity surcharge and, if applicable, church tax.
However, there is a possibility to avoid double taxation of capital gains. There are various instruments available for this, such as the Double Taxation Agreement (DTA) between Germany and the respective country where you have invested. This agreement regulates how income from capital assets is taxed to avoid double taxation.
It is important to comply with all tax regulations to avoid tax evasion. I recommend seeking advice from an expert to optimize your tax situation and minimize legal risks.
There are various ways to optimize your taxes, such as choosing the right investment vehicle or utilizing tax allowances. A tax advisor can help you find the best solutions for your individual situation.
Overall, it is important to handle your investments abroad in a tax-compliant manner to avoid unpleasant surprises. I am available to clarify your questions in a personal consultation.
I hope that this information has been helpful to you. Please do not hesitate to contact me if you have any further questions.
Best regards,
Anna Karpinski
