Indian FD Interest in Germany

How Germany taxes it

FD interest from an Indian bank is foreign-source investment income for German tax purposes. It is taxed at your personal marginal rate (not the 25% Abgeltungsteuer flat rate that applies to German Kapitalerträge), and is added to your total income alongside salary. Germany taxes the gross interest figure — the Indian TDS is a credit, not a reduction in the taxable amount.

DTAA treatment

DTAA India-Germany Article 11 caps Indian withholding tax at 10% for residents of Germany who furnish Form 10F + a Tax Residency Certificate (TRC). Germany then credits whatever was actually withheld in India (capped at the German tax that would have been due on that income — excess credit is not refundable).

Where it goes on your return

Indian FD interest goes on Anlage AUS, line 11 (foreign capital income). The gross figure is converted INR → EUR using either Bundesbank monthly rates or the RBI annual reference rate; consistency matters more than which one you pick. Indian TDS goes on the same row as foreign tax paid.

Common gotchas

• NRE account interest is tax-free in India under § 10(4)(ii) of the Indian Income Tax Act, but FULLY taxable in Germany — the Indian exemption does not pass through DTAA
• Bank interest certificates from India often cover Indian FY (April-March), not the German calendar year — only the overlapping months count for German tax
• Compounded FDs accrue interest annually for German tax purposes even if the deposit is locked for multiple years — declare what accrued, not what was paid out