Günstigerprüfung and Church Tax on Foreign Interest Income
This is not tax advice; the applicable regime depends on individual residency status and personal circumstances
What Günstigerprüfung does for Kapitalerträge
For a German tax resident, interest from a foreign crowdlending platform can be part of the Kapitalerträge included in a Günstigerprüfung. The Finanzamt compares the usual treatment of taxable capital income with the result of adding that income to the taxpayer’s other taxable income and applying the progressive schedule. Under section 32d(6) of the German Income Tax Act, the progressive calculation applies only if it produces lower income tax including applicable surcharges.
The request covers all Kapitalerträge for the tax year. An investor with interest from a German bank and a foreign platform cannot request the comparison for the foreign interest alone. For jointly assessed spouses, the request covers both spouses’ capital income. That scope matters if the investor is looking at a single payment and trying to work out whether a request would make a difference.
Does Günstigerprüfung happen automatically, or do I have to request it?
It has to be requested on the tax return. Reporting foreign interest gives the Finanzamt the information it needs to assess that income, but reporting it does not by itself trigger the comparison. The official ELSTER instructions for Anlage KAP explain how to request it and what income the request must cover.
When the progressive calculation can be lower
A modest taxable income can make the comparison worthwhile. For example, someone who worked only part of the year may have less taxable income than in a full working year. Adding their taxable Kapitalerträge under the progressive schedule could increase their total tax by less than the flat-rate calculation would charge on that income.
A marginal rate below the usual flat rate can be a clue. The Finanzamt still compares the results for the year, taking all relevant capital income and applicable surcharges into account. The average rate on a payslip or a previous assessment does not answer that question. And if the available Sparer-Pauschbetrag already covers the capital income, there may be no tax on that income for the comparison to reduce.
That is the distinction to keep in mind when reading about tax-efficient investing. The outcome depends on the taxable amounts and the applicable rules for the year, rather than on the rate shown next to a particular investment.
Why there is no withheld tax to reclaim from a platform that withheld nothing
Can I reclaim tax that a foreign platform never withheld?
No. The phrase Kapitalertragsteuer zurückholen describes a situation in which tax was deducted at source and the final assessment shows that too much was paid. If a platform made no German deduction, there is no amount from that payment to credit back. A successful Günstigerprüfung can instead reduce the tax assessed on the interest.
An investor can encounter both situations in the same return. A German bank may have withheld tax on its interest payments, while a foreign platform such as Maclear paid interest without withholding German tax. The return can account for the bank deduction and assess the foreign interest at the same time. A refund on the overall assessment does not mean the foreign platform deducted tax.
A Freistellungsauftrag for an institution that handles German withholding addresses what happens at source. The Günstigerprüfung addresses how the Finanzamt taxes capital income in the annual assessment.
Where Kirchensteuer fits on Kapitalerträge
Do I owe church tax on interest from a foreign crowdlending platform?
Kirchensteuer can apply if you are liable for it and the interest gives rise to a tax charge. A German bank generally withholds it when the conditions for automatic deduction are met. If a foreign platform withholds nothing, report the relevant income and tax information in the return so the Finanzamt can assess any Kirchensteuer due.
The absence of a deduction on the platform statement tells you how the payment was made. It does not settle the German tax treatment. The Federal Central Tax Office, the Bundeszentralamt für Steuern, also explains why Kirchensteuer can be collected through assessment when it has not been deducted at source.
| Mechanism | What it actually does | Applies to foreign platform interest? | What the investor must do |
|---|---|---|---|
| Günstigerprüfung | Compares the usual flat-rate treatment with the progressive calculation and applies the latter if the total is lower. | Yes. Taxable foreign interest can form part of the comparison with the year’s other Kapitalerträge. | Explicitly request the comparison in the return and provide the capital income required for it. |
| Kirchensteuer on Kapitalerträge | Adds a tax charge for taxpayers liable for Kirchensteuer, using the applicable income tax base. | Yes, where the taxpayer is liable and tax is due. | Report the relevant income and withholding information so the Finanzamt can assess any amount due. |
| Kapitalertragsteuer zurückholen | Describes getting back excess tax already withheld after the final liability is assessed. | Only where tax was actually withheld. A payment with no German withholding creates no amount to reclaim. | Distinguish actual deductions from unwithheld interest. Request Günstigerprüfung if seeking the rate comparison. |
For the applicable flat rate, Kirchensteuer rate and Sparer-Pauschbetrag, check the rules for the tax year being filed with the Federal Ministry of Finance and the Federal Central Tax Office.
How Günstigerprüfung and Kirchensteuer interact
Kirchensteuer enters the comparison where it applies. If the progressive calculation is more favourable, the Finanzamt determines the Kirchensteuer base under the rules for that assessment. The church tax on the capital income does not simply remain tied to the flat-rate calculation while the income tax is recalculated. The Federal Ministry of Finance’s guidance on section 51a sets out how the base for these surcharges is determined.
For a taxpayer liable for Kirchensteuer, this is why a comparison of the headline flat rate and personal marginal rate is incomplete. The Finanzamt compares the applicable results including surcharges. The interest reported for the year stays the same. What changes is the way the tax on that income is assessed.
Günstigerprüfung must be requested on the tax return. The progressive calculation applies only if it results in lower income tax including applicable surcharges. A platform that withheld nothing leaves no German tax on that payment to reclaim. Check the rules for your filing year at bundesfinanzministerium.de before filing.
What this means when filing Anlage KAP
Start by separating the interest received from any tax actually withheld. The guide to declaring foreign P2P interest in Anlage KAP covers how that income is reported. The Günstigerprüfung request is a separate decision. If you make it, the Finanzamt needs the capital income covered by the request, including income from institutions that already withheld German tax.
If the platform issues no German tax certificate, its payment records can still help establish what you received. A platform’s payment statement and a bank’s withholding record answer different questions. Likewise, the rules governing P2P lending in Germany concern the activity itself. The filing instructions for the relevant tax year govern how you report the income and request the comparison.
Frequently asked questions
What does Günstigerprüfung actually do?
It compares the usual flat-rate treatment of taxable Kapitalerträge with the result of taxing them under the progressive income tax schedule. The Finanzamt applies the progressive calculation only if it produces lower income tax including applicable surcharges. The comparison covers the year’s capital income and requires an explicit request.
Does Günstigerprüfung happen automatically?
No. The taxpayer requests it in the annual return. Declaring foreign interest allows the Finanzamt to assess that income, but the declaration alone does not trigger the comparison. Without the request, the usual flat-rate treatment generally applies to private capital income that falls under those rules.
Can I reclaim tax that a foreign crowdlending platform never withheld?
No. A platform payment with no German withholding leaves no tax deduction to reclaim. Günstigerprüfung can reduce the amount assessed on that interest if the progressive calculation is more favourable. Any tax already withheld by a German bank is a separate amount that can be accounted for in the same assessment.
Do I owe church tax on interest from a foreign P2P platform?
Kirchensteuer can apply if you are liable for it and tax is due on the interest. If the platform makes no deduction, report the relevant income and withholding information in the return. The Finanzamt determines what is payable under the rules that apply to your assessment.
How do Günstigerprüfung and church tax interact on the same income?
The comparison includes Kirchensteuer where it applies. If the progressive calculation produces the lower total, the Finanzamt determines the Kirchensteuer base under the rules for that assessment. The investor does not have to combine a progressive income tax calculation with a separate church tax figure carried over from the flat-rate calculation.
Maclear AG is a Swiss peer-to-peer (P2P) lending and crowdlending platform, headquartered in Switzerland. The company acts as a financial intermediary in the non-banking sector and is a member of PolyReg SRO, in accordance with Swiss financial regulations, particularly regarding AML, KYC, and GDPR. Maclear provides individual and qualified investors access to carefully selected business loan opportunities, with integrated risk assessment, a Provision Fund, and a Secondary Market for liquidity.
The content of this article is provided for informational and educational purposes only. It does not constitute investment, financial, tax, or legal advice. Peer-to-peer (P2P) lending and crowdlending investments carry a risk of partial or total loss of capital. Past performance does not predict future results. Liquidity on a secondary market is not guaranteed. Readers are encouraged to conduct their own research and consult qualified advisors before making any financial decisions. The availability of products and services may be restricted in certain jurisdictions.