Flat rate withholding tax (Abgeltungsteuer)

The capital gains tax in Germany is a form of collection of income tax and corporation tax. As a source control it is by the investment income paying agent ( such as a bank, an insurance company or a corporation ) will be retained for the account of the creditor of the investment income and paid to the tax office.

Together with the introduction of separate tax rate for income from capital assets they can since 1 January 2009, with private investors for certain investment income abgeltende effect ( withholding tax ). Before that date the capital gains tax had only (eg purely foreign ) corporations abgeltende in special cases effect.

The capital gains tax is if they is not definitive, treated as a tax prepayment in the tax assessment.

Operation

General

The capital gains tax is just like the payroll tax is a form of collection of income tax ( and corporate ). Like the income tax it arises already with inflow of income ( § 44 para 1 sentence 2 ITA). The aim is to raise as accurately as possible by the capital gains tax, the tax on capital income. The tax is obtained either from the normal tax rate or from the separate tax rate for income from capital in accordance with § 32d Income Tax Act. As in the case of application of each separate Tariff provide for both of these as well as the capital gains tax a tax rate of 25 % plus surcharge taxes, an at least approximate match of the actual and the tax charged is often encountered. To the extent this is the case, the capital gains tax is generally configured as a flat tax. Nevertheless, there are often discrepancies, particularly when the use is "normal" tariff control (eg business income from capital gains ). In that regard, it should occur, a correction between the legally owed and the amount charged on the capital gains tax tax ​​on the annual tax return.

Capital income with tax deduction

The capital income subject to withholding tax, are exhaustively listed in § 43 paragraph 1 of the Income Tax Act. These are i.d.R. all income from capital assets within the meaning of § 20 section 1 and 2 Income Tax Act even if they are associated with other types of income ( such as business ). These are, for example, interest (if the debtor is a domestic credit institution ), dividends, income from certain insurance contracts, silent partnerships, options, futures and securities transactions, certificates, and (limited) from investment funds.

Capital income through capital gains, which make the purchase process took place until December 31, 2008 are not affected in accordance with § 52a para 10 Income Tax Act, with few exceptions (eg certificates ).

Not the tax deduction subject, for example,

• Income from other loan agreements of a non- financial institution (esp. other corporate and private lending transactions),
• Current income from a foreign accumulation fund ( even if they are in a domestic custody account )
• Income from interest on mortgages and land charges and annuities from pension liabilities,
• Income from the sale of a silent partnership or endowment insurance,
• Income from certain foreign currency transactions.

This can be explained by the creditor of income later.

The KapESt is especially to be raised in certain areas where a regular basis are also obtained substantial offsetting spending next to corresponding income. Due to a lack of crediting the expenditure (see also assessment ) it would come here to an excessive tax burden that would be correctable only with a predisposition. This is particularly true in the interbank area to (interest income of KapESt would be subject to interest payments but would not lead to any refund / credit). The situation is similar when (especially higher -traffic ) trading in securities. Again, could not be offset against gains and losses during the year. To prevent any resulting liquidation problems thereof ( in-year payment of KapESt, refund only through years of tax assessment) and also to simplify the administrative work, could which are incurred by the high number of transactions, is apart under certain conditions, the collection of KapESt ( § 43 para 2 Income Tax Act). The actual tax expense is determined only with the annual tax return.

Calculating the capital gains tax

The capital gains tax rate is 25% plus solidarity surcharge (5.5 % of the capital gains tax) and if applicable, church tax ( 8 or 9% of the capital gains tax ) (§ 43a Paragraph 1 No. 1 German Income Tax Act ). This is not to be confused with the special rate for capital income, which is also 25 % plus surcharge tax amounts (see also General ).

In church tax liability, the tax base is reduced due to the deductibility of church tax. Details can be found in subchapter capital gains tax and church tax.

This results in the following possible percentages:

The tax deduction subject to the full capital gains generally without any deduction. In the cases of capital income, the tax deduction is calculated taking into account the costs of disposal, if the assets have been acquired by the investment income paying agent or sold and kept since then or managed. ( § 43a paragraph 2 sentence 1 and 2 ITA).

Many income (but not for dividends, for example ) an exemption from the tax deduction will take place unless the tax withholding agent for an exemption application or a non-assessment certificate is submitted ( § 44a para 1 to 3 ITA). Exemption orders may total up to the amount of the lump sum savers (801 € / € 1,602 for married couples ) will be used ( § 44a Paragraph 1 No. 1 German Income Tax Act in conjunction with § 20 para 9 ITA). Systematically exemption applications are to be found at the level of tax collection and are therefore to be distinguished from the tax allowance, which is to be applied only in case of any disposition.

Transmits the taxable assets to another ( own or other people's ) custody and not it is a chargeable event, the losing domestic paying agent of the acquiring domestic paying agent shall notify the acquisition of data (§ 43a para 2 sentence 3 of the Income Tax Act ). So the ( aggregate or individual ) legal successor ( § 43a paragraph 2 sentence 3 and 4 Income Tax Act in conjunction with § 43 Section 1 Sentence 4 & 5 ITA ) In particular, having gratuitous acquisition processes, the acquisition values ​​of the assignor attributed. Are (due to a transfer operation ), the acquisition data is not detected, the tax deduction of the revenue from the sale or redemption of the assets is measured at 30 percent ( § 43a para 2 S. 7 ITA).

Reduced tax rate

Performance of operations of a commercial type of legal entities of public law subject only to a tax rate of corporation tax in the amount of 15% ( § 43a, Section 1 of the Income Tax Act No. 2 ), since this income for the recipients (the legal entity of public law itself) paid due to its limited tax liability ( § 32 Section 1 of the Corporation Tax Act in conjunction with § 2 No. 2 of the Corporation Tax Act ). Thus, corresponding to the capital gains tax and the ultimate effective corporate tax rate.

The same applies for benefits to

• Tax- exempt corporations,
• Other domestic legal entities of public law,
• Federal associations, German pension insurance Knappschaft- Bahn-See, associations of health insurance funds and
• Limited corporation tax who have neither their management nor their registered office in Germany

( § 44a para 8-9 ITA).

Certain payments to tax-exempt entities that pursue profit, charitable or religious purposes are even completely exempt from tax deduction ( § 44a para 7 ITA).

Payment of capital gains tax

In accordance with § 44 Section 1 of the Income Tax Act, all credit institutions operating in the country is obliged to withhold the tax and remit the tax to the tax authorities. In return types with issuer control (eg domestic dividends ) the capital gains tax including solidarity surcharge is already been paid by the issuer to the tax authorities. In these cases, the bank will no longer receive the entire income, but an already vorbesteuerten amount. The Bank reserves then as paying agent, only the church tax, and executes these amounts in total under reporting of allocation to the respective churches and regions to the tax office from. The taxpayer itself remains anonymous to the tax offices and churches.

In the case of issuer control, the bank must, in the case of clients with abgeltender taxation and the Bank may at companies in the presence of tax liberating reasons ( such as an existing tax exemption certificate or an unused allowance ) the existing tax withheld advance the customer and will itself into a recovery process ( § 44b para 6 ITA). This reclaiming process of controlling is carried out at the Federal Central Tax Office as part of the single application Disk Regulation ( SADV ); investments in domestic fund the recovery of the fund is handled. Recovery of tax amounts is produced industrially by offsetting the refund amounts against the arising from the paying agent tax transfer tax amounts, so that usually the dissipation is reduced by the bank. In the case of imprest accounts, tax the bank can take liberating circumstances react through reduced withholding tax to tax-free dividend. Realized losses from capital gains must be used ( for private investors ) for the reimbursement of tax already paid by the bank. The bank charged the tax return with the open monthly tax payments to the tax office and report the numbers in the capital gains tax registration. The process of collecting restitution is described in § 45b German Income Tax Act.

Definitive effect

The withheld tax is the tax for the related investment income generally settled ( § 43 para 5 ITA ) for the private investor. These capital gains are no longer included in the annual income tax return (Article 2 § 5b Income Tax Act), but can be included for various reasons yet. If the tariff income tax compulsory for investment income ( eg certain income from silent participations ), the compensation effect will not occur.

The voluntary involvement in the assessment, for example, make sense if the use of the lump sum savers subsequently leads to tax refunds because there is no exemption application has been granted. It can also be useful if the marginal tax rate for the entire taxable income is below 25%. With the choice of taxation at the individual tax rate, it is avoided that the income from capital investments in low-income taxpayers are higher than taxed at the marginal tax rate ( assessment option § 32d para 4, 6 ITA).

Investment income, which could, for example, by the bank not be definitively taxed, because the bank was not available all the necessary information must also be assessed later ( § 32d para 3 ITA ). For growth funds, for example, no church taxes are withheld by the bank because no flow of payments. So there are some of withholding tax taxable income that are not taxed abgeltend by the bank and require individual tax return for capital assets.

Capital gains that are realized in the context of a business activity, the tax withheld not final ( § 43 para 5 p 2 Income Tax Act) has. An exception is made for certain bodies, in particular for limited taxpayers who have no permanent establishment in Germany. For these, the corporation is paid for by the tax deduction ( § 32 Section 1 of the Corporation Tax Act ). See also comments on a reduced tax rate in the tax section.

Losses

Losses are accounted for as follows: First, positive or negative income (eg interest rates on deposits and fixed-income securities, dividends, income from maturity of certificates of redemption gains on financial innovations, gains and losses from sales transactions ) will be charged at the level of the bank, where losses can be recognized as income from sale of stock only profits from the sale of shares ( § 20 para 6 ITA). Any remaining loss is either presented by the credit institution to the next year or, at the request of the customer until 15 December of each year, certified and may be offset against capital income of the current year with other banks or with capital income in subsequent years by assessment. ( § 43a paragraph 3 sentence 2 ff ITA).

Old losses that were incurred prior to 2009, could be charged up to 31 December 2013, capital income under the new law. However, this does not apply to interest or dividend payments, since this was not possible even under the old law. Since that time, a settlement of these losses only with speculative gains within the meaning of § 23 of the Income Tax Act is possible, eg with private capital gains from real estate transactions within the ten-year period.

Capital income with an international dimension

Foreign investment income by a resident

Income such as dividends paid by a foreign corporation will also be subject to withholding tax, provided that the paying agent (usually a bank) is located in Germany. If a foreign tax has already been levied, the foreign taxes on the total resulting capital gains tax to a maximum of 25 percent foreign tax ( § 43a para 3 sentence 1 ITA in conjunction with § 32d para 5 ITA ) must be included on the individual capital gains.

If, for example, under a double taxation agreement, the tax charged does not match the actual correction only in the course of assessment is possible.

The tax deduction subject to capital gains of a foreigner

Even regardless of that income the capital gains tax applies as for nationals of whether the Federal Republic is entitled to the right of taxation. However, the creditor of the investment returns for wrongly levied tax is a subsequent refund on the Federal Central Tax Office (§ 50d Income Tax, Corporation Tax Act § 32 para 5 ).

For the parent company in another EU country with a minimum 10 % stake in the German subsidiary distributions will be at the parent company at the request be waived ( § 43b German Income Tax Act ) due to the so-called parent-subsidiary directive. Nevertheless, the tax deduction is first performed here in the first step. In the second step a refund on the Federal Central Office is then apply for taxes.

Capital gains tax and church tax

Investors may also compensate the church tax at the bank by the end of 2014, by request. All they need the bank to share their religious affiliation and the applicable tax rate for her church. The Bank determines the church tax and executes them from across the Federal Finance Office in Berlin to the religious communities.

With a reported church tax liability the tax base of capital gains tax ( KapESt ) to the attributable to investment income, church tax ( church tax ) is reduced because the church tax paid here will be deducted as special expenses ( § 43a para 1 sentence 2 Income Tax Act in conjunction with § 32d para 1 S. 4 ITA). Considering that calculates the church tax from the product of church tax rate and the assessed income tax, this results in the following formula:

This e are the capital gains tax subject to capital gains and k is the church tax rate.

Solving the equation for the capital gains tax on, this results in a tax charge of

If the investors have no application to the bank, will be deducted from this no church tax. If it is, however, generally subject to tax, to state the income under the personal income tax return and attach the certificates to be issued by the Bank on the deduction of withholding tax. The withholding tax must not be used in corporate investors or counter transactions. In both cases, the foreign withholding tax is not deductible.

The church tax is not withheld from accumulations of domestic funds. Here is for the lump-sum tax deduction by the Fund prior to the reinvestment. The religious affiliations of the investors are not known and will not be considered. The reinvestment is by the banks with the individual characteristics, including available exemption order, etc., recalculated and the personal conditions are observed. To avoid that it is in all cases to a correction of tax already paid, will be omitted in coordination with the Ministry of Finance to a withholding tax of the church. The taxpayer must meet in the course of an individual assessment of his church tax.

From the year 2015, the church tax is withheld on investment income automatically from banks and other withholding agent. To prepare this automatic deduction of the church tax on withholding tax, the withholding agent, the religion of all customers, policyholders or shareholders ask once a year from the Federal Central Tax Office. Details are given in § 51a paragraphs 2b to e, and paragraph 6 of the Income Tax Act ( ITA). Data base for this method are the 39e according to § paragraph 2 sentence 1 No. 1 ITA stored religion information.

The Federal Commissioner for Data Protection and Freedom of Information had claimed in the 24th activity report significant concerns against the proposed method. In the literature, beyond constitutional concerns were raised. In essence, it is important that the legal basis for data storage ( § 39e Income Tax Act) and the data transmission to the withholding agent ( § 51a German Income Tax Act ) were adopted by the Bundestag; responsibility for legislation according to the Basic Law but excluding the national parliaments to exercise ( Article 140 of the Basic Law in conjunction. , Article 137, paragraph 6 Weimar Constitution ).

The Federal Central Tax Office (BZSt ) points out that every citizen may appeal in writing to the data retrieval contradiction by setting a barrier opinion expressed. For this purpose, the designated official form must be completed and signed by mail to the Federal Central Tax Office to send. The tax liability is not affected by this restriction notice. Instead of collecting at the source, the determination of church tax is then mandatory in the income tax return of the taxpayer, provided that belongs to a church tax collected religious community. In addition, the Federal Central Tax Office information to the tax office of the taxpayer are in this case further.

Tax certificate

Capital gains that are subject to the merits of capital gains tax, the person paying the capital gains or the paying agent is obliged to issue the holder of the capital income at the request of a tax certificate on the officially prescribed pattern. The certificate must contain the information required by § 32d Income Tax Act information. A Verpflichtigung to issue exists regardless of whether capital gains tax has been withheld or not. ( § 45a para 2-7 Income Tax Act)

History

In Germany since 1 January 1989, a ten percent so-called small capital gains tax was imposed on interest, but it was no withholding tax. It was abolished on 1 July 1989.

The capital gains tax was before 2009, initially only for a limited group of investment income, particularly dividends, applicable and has been extended to include interest income from 1993. The tax rate was

• 20 % for profit ( dividends)
• 30 % for interest on investments and
• 35 % for counter transactions.

The 30% and 35 % capital gains tax was also called " withholding tax " ( " ZASt "). In addition, there were other tax rates such as 25 % for dividends from typical silent partnerships.