Character Analysis
If we cheat and look at the novelization, we know that his first name is "Arnold," but the movie credits list him as Toht. No one actually asks for his name in the movie because when a cackling Gestapo agent shows up dressed in black and brandishing medieval implements of torture, we're pretty much past the point of petty formalities. The name is actually a riff on the German word "toten," which means "to kill." That should give you a good idea of what this guy is all about.
Mostly, he serves as a throwback to the classic serial villains who didn't need a lot of backstory or psychological breakdowns. They were evil, everyone knew they were evil, and that's all we needed. Two dimensions were plenty. Actually, just one: sinister. Steven Spielberg purportedly cast actor Ron Lacey in the role because he resembled Peter Lorre, a similarly creepy actor who played his share of bad guys back in the day.
And "creepy" is the right word here.
Because while we don't actually see him kill anyone, it's clear that (1) he's good at it and (2) he really prefers torture to killing. "Let me show you what I am used to," he tells Marion just before trying to burn her face off. He's clearly enjoying her fear and seems to have plenty of experience in the field of hot-poker torture, so we can make reasonable assumptions about his capacity to perform them. He doesn't deliver the evil wholesale like his buddies in the Wehrmacht do. He gets in close and makes it really personal. That's enough to set him up for God's big Wrath Rave and label him a clear member of Team Villain.