Field help: Do you want to credit foreign taxes against German income tax?

It is important to declare all foreign income that is taxable in Germany in your income tax return. This rule applies regardless of whether there is a double taxation agreement (DTA) or not.

If you have paid foreign tax on income which corresponds to German income tax, this foreign tax is generally credited against your German income tax in accordance with sect. 34c para. 1 of the Income Tax Act (EStG).

Please check the regulations of the respective DTA. If a DTA excludes or restricts the tax credit, the foreign tax cannot be credited. Your tax office will credit the foreign tax paid up to the amount of German income tax due on this income.

When can taxes not be credited?

However, there are situations in which foreign taxes cannot be credited:

1. Tax paid abroad has already been reduced due to reductions, regardless of whether you have claimed this reduction or not, even if it is already time-barred.
2. The foreign tax does not correspond to German income tax.
3. The foreign taxes were collected in a country other than the country from which the income originates.
4. The requirements for foreign income in accordance with sect. 34d of the Income Tax Act (EStG) are not met.

In these cases, it is not possible to credit the foreign taxes against German income tax. However, you have the option of recognising the taxes paid as business expenses or income-related expenses when calculating your income in accordance with sect. 34c para. 3 of the Income Tax Act (EStG).