Financial Terms Glossary
The most important financial terms - with simple and concise explanations.
Double taxation agreements
Double taxation agreements (DTA) are international treaties between two states that define which state has the right to tax specific types of income. Their purpose is to prevent the same income from being subject to comparable taxes multiple times for the same taxpayer.
A DTA determines whether income may be taxed in the state of residence, the source state, or-depending on the treaty-in both states using methods such as the exemption method or the credit method. Germany has entered into such agreements with many countries, and the specific provisions vary from one treaty to another. The Federal Ministry of Finance offers a complete overview online.
For investors, DTAs are particularly relevant when receiving foreign investment income such as dividends or interest. They define to what extent foreign withholding taxes can be credited against the German final withholding tax.