Loans to borrowers residing in Germany and debentures of German issuers
Granting of loans to borrowers residing in Germany and deben-
tures of German issuers: Interest on debentures (e. G. Corporate
bonds) are generally not subject to non-resident tax liability. For
interest derived from loans to borrowers residing in Germany,
non-resident tax liability can also be avoided if
– the capital is not directly or indirectly secured by domestic
real property, by domestic rights subject to provisions of the
civil law regarding land, or by ships entered in a domestic ship
register or
– the interest derived is interest on deposits with banks and the
loan does not constitute an over-the-counter transaction.
If, however, the interest derived from loans is subject to non-res-
ident tax liability in Germany, tax is levied by withholding tax at
the source. There are the following exceptions to this rule:
– Interest derived from private loans
– Interest derived from shareholder loans
When withholding tax is withheld on interest (25% of the
gross amount plus solidarity surcharge, 5.5% of 25%) derived
from loans, such tax is, as a general rule, final for non-resident
taxpayers.
EU Forecast
euf:ba18f:169/nws-01