Tax compliance practice: The interaction of the progression proviso and the deduction restriction of Section 2a EStG (German Income Tax Act)

It is common practice for German residents to invest in foreign real estate. Rental income from these properties is generally tax-free in Germany due to double taxation agreements, but is subject to progression. In her current article, Teresa Noël sheds light on the extent to which the deduction restriction of Section 2a German Income Tax Act (EStG) restricts the (negative) progression proviso and what practical implications this has for German residents holding real estate.