How does the crediting of foreign withholding tax work in the tax return?
April 17, 2024 | 40,00 EUR | answered by Wolfgang Stricker
Dear tax advisor,
My name is Friedhelm Meier and I have a question regarding the crediting of foreign withholding tax in my tax return. I have been working for an international company for several years, which also conducts business in various countries. As a result, I regularly receive dividend payments from abroad, for which withholding tax is deducted.
So far, I have reported these earnings in my tax return, but I am not sure how the crediting of foreign withholding tax works. I am worried that I may be paying taxes twice or that I am not taking advantage of all opportunities for tax savings.
Could you please explain to me how the crediting of foreign withholding tax in the tax return works exactly? Are there specific forms that I need to fill out or information that I should provide to ensure that I correctly credit the tax? Are there also ways to get a refund of the foreign withholding tax in whole or in part?
I would be very grateful if you could help me with this matter, as I am really unsure about how to proceed. Thank you in advance for your support.
Kind regards,
Friedhelm Meier
Dear Mr. Meier,
Thank you for your question regarding the crediting of foreign withholding tax in your tax return. It is understandable that you are unsure about how to proceed in declaring this income in order to avoid potential double taxation and make the most of tax advantages.
Crediting foreign withholding tax in the tax return usually works as follows: If you receive income from abroad for which withholding tax has already been deducted, you can claim this tax in your German tax return to avoid double taxation. This is usually done in the context of the "Anlage KAP" (Income from capital assets).
In order to credit the foreign withholding tax, you usually need a tax certificate from the foreign tax office certifying that the withholding tax has indeed been paid. You should attach this certificate to your German tax return. Additionally, you must indicate the amount of dividend payments received and the amount of withholding tax paid.
There is also the possibility of getting a full or partial refund of the foreign withholding tax. For this, you typically need to contact the foreign tax office directly and submit a refund request. However, the process may vary depending on the country and tax agreement, so I recommend seeking advice from a specialized tax advisor if necessary.
It is important that you carefully document all relevant information about your foreign income and the withholding tax paid, and correctly report it in your tax return to avoid potential inquiries from the tax office.
I hope this information has been helpful to you. If you have any further questions or need assistance, I am at your disposal.
Best regards,
Wolfgang Stricker
