When adding a @annotation interface the syntax highlighting breaks
correct:

with annotation:

(Also using a $ will break the syntax of the return type).
This one is even worse, notice that the commented line is not commented at all:

It seems this only breaks when the @interface is not a top level type.
The issue needs to be reported for the upstream textmate grammar for Java that vscode embeds. See:
It works now

Closing since this is fixed in latest VS Code
Most helpful comment
It works now