Foreign withholding tax

When a US company pays you a dividend, the US keeps part of it up front as withholding tax (Quellensteuer). So the same dividend is not taxed twice, Germany credits the foreign tax against your 25 % flat tax (§ 32d Abs. 5 EStG). capi.tax prepares the creditable withholding tax per country for you.

Two ceilings

Not everything withheld abroad is automatically credited:

• The 25 % ceiling: at most 25 % foreign tax per individual item of capital income is creditable (§ 32d Abs. 5 EStG).
• The treaty ceiling: only the rate the source country is allowed to keep under the double-taxation treaty. For US dividends that is 15 % (Art. 10 of the Germany–US treaty).

The W-8BEN case

With a valid W-8BEN form, the US withholds only 15 %, which is fully creditable in Germany. Without a W-8BEN, the US withholds 30 %. Then only 15 % is creditable; you reclaim the extra 15 % not through the German return but directly from the US tax authority (a refund procedure).

Funds: credit after Teilfreistellung

For fund income the tax base is already reduced by the Teilfreistellung, so the creditable withholding tax shrinks accordingly. For an equity fund (30 % Teilfreistellung), only 70 % of a €15 US withholding — €10.50 — is creditable.

What matters with US brokers

A German broker nets the creditable withholding tax automatically. Interactive Brokers and Tastytrade do not — you enter it yourself on Anlage KAP (for funds, Anlage KAP-INV), in the lines for creditable foreign taxes. Note that US price gains on shares or options usually carry no US withholding to credit — only German tax applies there. Unused withholding tax is neither refunded nor carried forward in Germany.

capi.tax prepares your data and is not tax advice. Please review the figures and ask a tax advisor (Steuerberater) about your personal situation.