Reply to After 2017 election: The center holds

By PandaMunich,
Bad news for people who have interest income There's another change in the coalition agreement. They went back to taxing interest income with your personal variable income tax rate, instead of capping it (like until now) at 25% Abgeltungsteuer. Most people have a personal variable income tax rate that's higher than 25%, so they will be worse off. Other capital income like dividends or profit from the sale of shares/funds/bonds is not affected, i.e. the tax on those will still be capped at  25% Abgeltungsteuer.   Their reasoning is that they had originally only capped the tax at 25% to convince people to start declaring previously undeclared non-German interest, their argument back then was that it's better to get 25% of something than 42% (= maximum personal income tax rate) of nothing:   Well, now that the system for the worldwide automatic exchange of tax information is up and running, other countries are anyway telling Germany about interest income that German residents had in their banks, so they now feel it is no longer necessary to motivate people to declare non-German interest through a lowered tax rate. So now we're back at higher taxation for interest income.   This is contained on page 69, lines 3118 to 3119 in the coalition agreement:   By the way, this will also mean that people with capital income (= interest + dividends + profit from selling shares/funds/bonds) that exceeds 801€ (1,602€ if married) who up till now didn't have to submit a tax return, since in the past the bank simply deducted the 25% tax on their interest at the source, will now have to file a mandatory tax return every year.
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