What tax must be paid on investment income in Germany – briefly, by points. A detailed analysis with all allowances, forms and loss offsetting: what taxes does a German investor pay.
What tax you pay on investments
This is the most frequent question, as is the question about passive investing in an ETF Sparplan.
Income tax on investments in Germany consists of three parts:
- capital gains tax (capital gains tax) — 25 %. This is a separate tax; not to be confused with income tax on salary.
- Solidaritätszuschlag — solidarity surcharge, 5.5 % exempt from Abgeltungsteuer.
- Kirchensteuer — church tax, if you are a church member: 8 % or 9 % of the Abgeltungsteuer.
Total: 26,375 % without church tax, 27,82 % for church tax code 8 % (Bavaria and Baden-Württemberg) and 27,99 % at 9 % in the other regions.
Complete breakdown — tax rates, Sparerpauschbetrag, Freistellungsauftrag, loss offsetting and Form W-8BEN — in the article what taxes does a German investor pay. - Regarding cryptocurrency tax - in a separate article.
Who withholds the tax: the broker or you
Good news 1.
German brokers and banks will automatically withhold the tax from you. This is a plus. This principle is called Quellensteuer (withholding tax).
Good news 2.
There is a tax-free allowance for investment income, the so-called Sparerpauschbetrag – €1,000 for single people or €2,000 for couples (since 01/01/2023). If your investment income (including paid dividends) is within these limits at the end of the calendar year, you do NOT have to pay tax. However, to do this, you need to submit a Freistellungsauftrag to your broker – an application to exempt income from tax up to this amount.
However, if you fail to notify, the broker will automatically withhold tax from you. But when filing your tax return, you will be able to claim it back.
The FIFO rule and how the gain is calculated
The taxation of investments applies the principle of: “first in, first out”. I.e. the securities purchased first are sold first, and the income and tax are calculated accordingly.
Example:
You bought 100 shares in 2010 for €100 and 200 shares in 2012 for €150.
And they decided to sell 150 shares this year at €200 each.
You will sell 100 shares from 2010 and 50 shares purchased in 2012.
Your income will be: (200€ — 100€)x100pcs + (200€ – 150€)x50pcs, from which you must pay tax.
Recent Posts
- Mahnverfahren: how to recover a debt in Germany without a lawsuit or a court hearing
- Deutsche Bahn Familienticket for 99,99 € is now permanent: conditions and catches
- What changes in Germany in October 2026
- Dental insurance before the year ends: when the “short first year” really works
- Methods of earning pension points — Entgeltpunkte
