Taxation on short term capital gains (US account)

2 posts in this topic

Greetings,

I am looking at dipping my toes into the world of stocks and have a question about taxes. U.S. citizen with long term residency in Germany and planning on staying for the forseeable future. I maintain a US based checking/brokerage account that is still registered at my family address back home. I would transfer post-tax EUR from my German account as USD to my US account using some exchange service like TW.

I expect this account to generate primarily short-term and also long term capital gains (hopefully!). How would these gains be taxed? As I understand, due to my residency status, the Finanzamt would have the first right to taxation on those gains. As such, those gains would be covered by the FEIE unless I break the 10x,xxx per year limit (unforseeable). Is this correct?

(Yes I know speaking with a tax German CPA would be my best chance at a clear answer, but I figure some of you might already deal with this).

Thanks everyone!

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On 9/3/2020, 5:02:32, LindyBaboa said:

I expect this account to generate primarily short-term and also long term capital gains (hopefully!). How would these gains be taxed? As I understand, due to my residency status, the Finanzamt would have the first right to taxation on those gains.

 

That is correct.  To the extent your net stock gains and net gains from other securities plus interest & dividends exceed the €801/€1602 Freibetrag, they will be subject to a maximum Abgeltungsteuer of 25% + SolZ.

 

The US will impose its tax on all such items and allow you a foreign tax credit for qualified taxes paid to the Germans (or other foreign country).

 

On 9/3/2020, 5:02:32, LindyBaboa said:

As such, those gains would be covered by the FEIE unless I break the 10x,xxx per year limit (unforseeable). Is this correct?

 

No.  The FEIE applies only to income from foreign-sourced personal services it has no application to any other kind of income.

 

On 9/3/2020, 5:02:32, LindyBaboa said:

 

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