taxes in Germany for ETFs not bought in Germany?

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Topic Author
imbroke2
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Joined: Sat Dec 07, 2019 1:09 am

taxes in Germany for ETFs not bought in Germany?

Post by imbroke2 »

if i purchase accumulating UCITS ETFs while being a tax resident in Singapore and later relocate to Germany for work, do i have to pay tax as a germany tax resident on (1) the reinvested dividends and (2) capital gains if i sell the ETF as a Germany tax resident (even though I purchased the ETF earlier as a Singapore tax resident)?

logically i shouldnt have to pay for both scenarios as the ETF was purchased as a singapore tax resident and NOT as a german tax resident

thank you
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BeBH65
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Re: taxes in Germany for ETFs not bought in Germany?

Post by BeBH65 »

imbroke2 wrote: Tue Sep 08, 2020 7:47 am logically i shouldnt have to pay for both scenarios as the ETF was purchased as a singapore tax resident and NOT as a german tax resident
Why would you think this is "logically"?


I would find it more logically that you are taxed on the gains made during your stay in Germany.

Don't know the German tax legislation.
I have heard of countries where the capital gains tax is levied on the difference of between the sale and buy prices; independent when and where these were.

I have heard that people who move sell the holdings a short time before their move, and then rebuy them the next day.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
Storamin
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Location: Düsseldorf, Germany

Re: taxes in Germany for ETFs not bought in Germany?

Post by Storamin »

1) Yes, you will pay taxes on your ETFs every year that you are a German tax resident. It doesn't matter if they are accumulating or distributing. You need to look up the Vorabpauschaule taxation treatment in Germany. Taxation of ETFs does not only occur at time of sale in Germany - it occurs every year.

2) That's not how the system works. When you sell it, if you are a German tax resident, of course Germany would want to tax it.
Tylenol Jones
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Re: taxes in Germany for ETFs not bought in Germany?

Post by Tylenol Jones »

Storamin wrote: Tue Sep 08, 2020 9:54 am 1) Yes, you will pay taxes on your ETFs every year that you are a German tax resident. It doesn't matter if they are accumulating or distributing. You need to look up the Vorabpauschaule taxation treatment in Germany. Taxation of ETFs does not only occur at time of sale in Germany - it occurs every year.

2) That's not how the system works. When you sell it, if you are a German tax resident, of course Germany would want to tax it.
Is this yearly taxation only for dividends or for capital gains too?
Topic Author
imbroke2
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Re: taxes in Germany for ETFs not bought in Germany?

Post by imbroke2 »

Storamin wrote: Tue Sep 08, 2020 9:54 am 1) Yes, you will pay taxes on your ETFs every year that you are a German tax resident. It doesn't matter if they are accumulating or distributing. You need to look up the Vorabpauschaule taxation treatment in Germany. Taxation of ETFs does not only occur at time of sale in Germany - it occurs every year.

2) That's not how the system works. When you sell it, if you are a German tax resident, of course Germany would want to tax it.
do i have to declare my portfolio every tax year or is it automatically obtained by the tax authorities in germany?
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tre3sori
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Re: taxes in Germany for ETFs not bought in Germany?

Post by tre3sori »

imbroke2 wrote: Wed Sep 16, 2020 12:28 pm do i have to declare my portfolio every tax year or is it automatically obtained by the tax authorities in germany?
The tax is deduced automatically by the (Germany based) bank/broker. If you have accumulating ETFs, you have to make sure that there is enough money in your account to cover the tax deduction. Otherwise you have to declare it yourself.
Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep by him in reserve. Talmud | 34% Real Estate, 43% VGWL, 16% VAGE, 5% 8PSG, 2% Cash
Topic Author
imbroke2
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Re: taxes in Germany for ETFs not bought in Germany?

Post by imbroke2 »

tre3sori wrote: Wed Sep 16, 2020 1:51 pm
imbroke2 wrote: Wed Sep 16, 2020 12:28 pm do i have to declare my portfolio every tax year or is it automatically obtained by the tax authorities in germany?
The tax is deduced automatically by the (Germany based) bank/broker. If you have accumulating ETFs, you have to make sure that there is enough money in your account to cover the tax deduction. Otherwise you have to declare it yourself.
but the broker that i am using before i moved to germany is interactive brokers and not germany based (unless im wrong?).

does that mean it is a must for me to shift all my holdings to a germany based broker?
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tre3sori
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Re: taxes in Germany for ETFs not bought in Germany?

Post by tre3sori »

imbroke2 wrote: Thu Sep 17, 2020 1:05 am but the broker that i am using before i moved to germany is interactive brokers and not germany based (unless im wrong?).

does that mean it is a must for me to shift all my holdings to a germany based broker?
Contact Interactive Brokers and ask if they deduce the tax automatically.
Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep by him in reserve. Talmud | 34% Real Estate, 43% VGWL, 16% VAGE, 5% 8PSG, 2% Cash
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galeno
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Re: taxes in Germany for ETFs not bought in Germany?

Post by galeno »

Are you a German citizen or resident? Do you plan to work in Germany for a long time?

Is it possible to leave your non German IB holdings as is while working in Germany? Open a GERMAN brokerage account and contribute to it while you're in Germany?
KISS & STC.
Topic Author
imbroke2
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Re: taxes in Germany for ETFs not bought in Germany?

Post by imbroke2 »

galeno wrote: Thu Sep 17, 2020 2:52 pm Are you a German citizen or resident? Do you plan to work in Germany for a long time?

Is it possible to leave your non German IB holdings as is while working in Germany? Open a GERMAN brokerage account and contribute to it while you're in Germany?
not a german resident. duration of work in germany depends. may be a few years, may be forever

it is possible to leave my non-german IB holdings while in germany, but my need to sell some of them if needed while i'm working in germany. but i'm confused on whether i need to declare the stock sales to calculate the taxes i need to pay or will IB automatically deduct the taxes from the amount gross amount received

in order to buy shares while i'm working in germany, it is a MUST to buy through a german brokerage account? I can't purchase using my existing IB account?
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BeBH65
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Re: taxes in Germany for ETFs not bought in Germany?

Post by BeBH65 »

Not a German resident here, this is what i understand based on my own situation and the information previously posted here. Please check this with a reputable source.

You will be a German resident during your stay in Germany.
As German resident you will have to "report" an possibly pay taxes on your worldwide investments/income.
Such a reporting will be easiest using a German broker who knows all the rules and regulations.


Notes:
- I understand that funds that are available in Germany are "German reporting" providing the (German) broker with all the input that the broker needs to satisfy the German rules and regulations.
- the German administration will most likely receives information about your investments "wherever" you hold them. >> It is not a good idea to hide investments/income from the German administration
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
Storamin
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Location: Düsseldorf, Germany

Re: taxes in Germany for ETFs not bought in Germany?

Post by Storamin »

Tylenol Jones wrote: Wed Sep 09, 2020 5:01 am
Storamin wrote: Tue Sep 08, 2020 9:54 am 1) Yes, you will pay taxes on your ETFs every year that you are a German tax resident. It doesn't matter if they are accumulating or distributing. You need to look up the Vorabpauschaule taxation treatment in Germany. Taxation of ETFs does not only occur at time of sale in Germany - it occurs every year.
Is this yearly taxation only for dividends or for capital gains too?
There are numerous explanations of the Vorabpauschaule online with many examples in German.

Both dividends and an assumed or actual yearly capital gain are to be calculated and taxed.
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