foreign investor is subject to income tax

When business is carried out through a German partnership, the
foreign investor is subject to income tax on the German-source
income attributable to the German partnership. The profts are
determined on the level of the partnership and allocated to the
partners in proportion to their respective ownership and subject
to tax in their hands.

The profits derived from the partnership by
a non-resident individual are taxed according to such taxpayer’s
personal income tax rate (disregarding a zero-bracket amount)
plus solidarity surcharge. If the foreign investor is a corporation,
the foreign corporation is subject to corporate income tax (15%)
plus solidarity surcharge.

The German partnership as such is liable to trade tax if its busi-
ness activity qualifes as a trading activity. However, the trade
tax may be considered for income tax purposes of the partners
by providing a trade tax credit (§ 35 EStG).