Withholding tax for residents living abroad. Which country as the location for the depot?
April 11, 2011 | 25,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
I will be moving to Thailand during the course of the year and will no longer maintain a residence in Germany. I currently own 2 condominiums in Germany which are still burdened with about half of their market value and the rents are still being paid off. Furthermore, I have capital income exclusively from dividends amounting to approximately €35,000 per year. Since I have an international portfolio with many foreign assets and the taxation in Germany is very complicated, resulting in an effective tax burden significantly higher than the 28% flat tax, I would like to legally declare this capital income outside of Germany. In such a case, would it make sense to transfer the portfolio to Luxembourg, Austria, etc. in order to pay the flat tax there? Are the local withholding taxes taken into account there? Or do I only pay the respective country's flat tax rate? As I mentioned, I only receive dividend income and am looking for the most advantageous way for me to pay as little tax as possible in Germany.
Dear inquirer,
Thank you for your request, which I would like to answer based on your information and in the context of your commitment in an initial consultation as follows:
If you do not have a residence or habitual abode in Germany, then you are subject to limited income tax liability according to § 1 paragraph 4 EStG if you have income within the meaning of § 49 EStG. This includes income from renting and leasing as well as income from capital assets.
According to the Double Taxation Agreement (DTA) with Thailand, the right to tax domestic capital income lies with Thailand. If you can prove your residence to the German bank in Thailand, the banks in Germany will not withhold withholding tax.
However, this applies to the capital gains listed in § 49 paragraph 1 no. 5 EStG. Taking into account the saver's allowance (§ 50 paragraph 1 sentence 3), withholding tax will be retained here. This includes, among others, dividends from stocks. However, only 15% withholding tax can be withheld. If the bank has withheld 25% withholding tax, you can claim back the difference of 10% (25-15) from the German Federal Central Tax Office or have it offset against income tax on other German income.
I hope this information was helpful.
Best regards,
Ulrich Stiller
Tax advisor / Business Administration graduate
