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Where do I enter taxes paid abroad?

If foreign income is taxable in Germany, foreign taxes—if incurred abroad—can be credited against German income tax. The taxes paid abroad can be entered in Form AUS.

Certain limits may apply to the crediting of foreign taxes. It is also important to check in advance whether there is a refund claim for the taxes paid abroad with the respective tax authorities. This takes precedence over crediting in Germany, even if the process can be quite complicated.

If the foreign income is tax-free in Germany due to a double taxation agreement (DTA), the foreign taxes cannot be credited in Germany.

However, you must still declare the foreign income in your tax return, as it affects the tax rate on your domestic income without being taxed itself.

This income is subject to the so-called progression clause, meaning the income is included in the calculation of the tax rate applied to the taxable income.

(2023): Where do I enter taxes paid abroad?

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What is withholding tax?

If you are resident in Germany, foreign investment income is taxable in Germany. Foreign countries often withhold a withholding tax on your foreign investment income.

If the withheld withholding tax is higher than permitted under the double taxation agreement (DTA), apply for a refund of the overpaid withholding tax from the foreign tax authority.

For foreign investment income subject to foreign withholding tax, this has been credited against the withholding tax since 2009.

(2023): What is withholding tax?