Tax credit for foreign withholding tax on investment income against German trade tax

Decision of the Fiscal Court of Hesse dated 26 August 2020 – 8 K 1860/16

In a recent dispute, the Fiscal Court of Hesse ruled that, contrary to the opinion of the tax authorities, foreign withholding tax on dividend income can be credited for German trade tax purposes. It is advisable to check past dividend events for potential unused tax credits, especially since, in the view of the court, the issue of a so-called supplementary assessment notice to the (already legally binding) trade tax assessment notice is possible.

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