Capital gains tax when moving abroad in the middle of the year
September 3, 2014 | 30,00 EUR | answered by Anton Pernitschka
Dear Sir or Madam,
I moved to Thailand on September 1, 2014 and will be living there continuously for at least the next two years (my wife works there / I am quitting my job in Germany). However, I have capital gains in a German deposit account. My bank has informed me that they will not deduct withholding tax from the moment of our deregistration.
My question is: Do I have to declare the capital gains earned but not withheld for the remaining months of the year in my tax return for 2014 and pay taxes on them because I am still fully tax liable for the entire calendar year? And would it be acceptable for simplicity's sake to inform the bank of the change of address only on January 1, 2015, so that they are already withheld by then?
Or am I not obligated to pay taxes on my capital gains from the moment of deregistration, even if this is in the middle of the calendar year? (The same would of course apply in reverse if we were to return in the middle of the following year).
Thank you very much and kind regards.
Dear questioner,
In the context of an initial consultation and your fee commitment, in compliance with the regulations of this forum, I would like to answer your question.
Foreigners who do not have their residence in the Federal Republic but earn domestic income (e.g. capital gains) are not subject to withholding tax. In the context of foreign trade law legitimacy checks, the bank determines the foreign exchange and tax status of an account or deposit holder. In your case, the bank has determined that no withholding tax is to be deducted or paid for you from the month of deregistration in Germany.
The notification of the later change of address on 01.01.2015 is irrelevant in your case if you deregistered with the registration authorities (officially) at an earlier date.
According to Article 10 (1) of the Double Taxation Agreement with Thailand dated 10.07.1967 (DTA), dividends paid by a company resident in Germany to a person resident in Thailand may be taxed in Thailand. According to Article 4 DTA, "a person resident in a contracting state" means a person who is taxable in that state based on their residence or habitual residence according to the law of that state.
However, these dividends may also be taxed in Germany according to the provisions of Article 10 (2) and (3) DTA. For example, the tax may not exceed 25% of the gross amount of dividends. Double taxation can be avoided under Article 22 (3) DTA.
The capital gains not subject to withholding tax must be reported in your 2014 income tax return.
The timing of deregistration is generally irrelevant according to the above criteria.
The response was based on the facts you provided. Missing or incorrect information regarding the actual circumstances may affect the legal outcome.
Best regards,
Anton Pernitschka
Tax advisor
