Taxes in Europe Database v2
Capital yields tax, like wages tax, is a term used to designate one of the special forms of income tax. The legal basis is sections 43 to 45d of the Income Tax Act.
Capital Yields Tax on dividends:
federal government and federal states (Länder) governments 50 % each.
Capital Yields Tax on other investment income (interest, capital gains, etc.):
federal government and federal states (Länder) governments 44 % each, municipalities 12 %.
Federal Republic of Germany
Federal Republic of Germany
Income becomes liable to the tax when it accrues to the beneficiary. At such time the entity distributing or the agency paying out capital yields must deduct the tax due for the account of the beneficiary.
Subject to certain conditions the obligation to withhold capital yields tax may be waived (for instance where an exemption order has been issued or a certificate of non-assessment submitted). Further details concerning the exemption procedure may be obtained from tax offices and banks.
If the beneficiary's final tax liability is less than the capital yields tax withheld, the tax will, in principle, be refunded in whole or in part in the course of assessment. For non-residents subject to limited tax liability, the capital yields tax functions in principle as a tax in lieu. Nevertheless, it is possible, by way of a refund procedure, to reduce the tax burden to the permissible level of withholding tax under the relevant Double Taxation Agreement.
Capital yields tax is payable both on income and - in the case of privately held assets - on profits from the sale of capital assets and on profits from forward transactions.
Therefore the capital yields tax applies to dividends, income from profit participation rights, income from investments with credit institutions, futures, certificates and capital gains from dealings in shares or profits from the sale, encashment or return of other capital investments (e.g. long term bonds or financial innovations).
The basic rate of the capital yields tax is 25%. If church tax is owed, the capital yields tax is reduced by 25% of the church tax due on the capital yields (8% or 9% depending on the federal Land involved).
In the case of certain payments for corporations the capital yields tax is 15% (e.g. payments made by a commercial operation to the corresponding public-law corporation, or distributions of dividends, income from silent partnerships and income from profit participation rights which is paid to corporations which are exempt from corporation tax).
The capital yields tax has added to it the solidarity surcharge of 5.5% and - if a private investor applies for this option at his credit institution - the church tax.
Income becomes liable to the tax when it accrues to the beneficiary. At such time the tax due must be deducted for the account of the beneficiary. The tax withheld within a calendar month must be paid over to the tax office by the 10th of the following month.
Capital yields tax is collected by the federal states (Länder). It must be paid over to the tax office responsible for assessing the income of the distributing entity or disbursing agency.