Income from capital investments

  • Mainly interest income and dividend income are classified as "income from capital investments". Since 1 January 2009 gains from selling securities (for example shares) are also regarded as income from capital investments.
  • In practise, the allocation of the right of taxation for this income to different countries often involves problems.
  • If a Double Taxation Agreement between Germany and the country concerned exists, the country in which the tax payer is resident generally has the right of taxation. However, dependent on the Double Taxation Agreement, the country from where, for example, the dividend income originates can withhold source tax.
  • If you maintain a residence both in Germany and abroad, you are deemed to be a resident of that country in which you have stronger personal and economic relations in terms of the corresponding Double Taxation Agreement. This needs to be checked in each individual case.