Characterization of trust income
Characterization of trust income
Another double-taxation question, maybe a long shot if anyone knows: In Canada, when a trust pays out its income from interest, dividends, or capital gains to a beneficiary, it's no longer considered as such to the recipient, but is re-characterized as "trust income". If paid to a German-resident recipient, there will be a 25% withholding tax, instead of the reduced amounts under the DTA tax treaty (interest and dividends max 15%, capital gains 0%). Will Germany give a tax credit for the full 25%? Or will it say that under German tax law, it's still e.g. capital gains, which Canada can't tax, and not give a credit, resulting in double taxation (Canada's 25% + Germany's 26.375%)?