Capital Gains Tax in Germany: An Expat Guide
A practical map of the 25% rate, solidarity surcharge, saver allowance, domestic withholding, fund exemptions and return questions.
Reviewed 12 October 2026 · General information, not individual tax advice.
Direct answer
What is “capital gains tax” in Germany?
For private investors, Germany normally treats interest, dividends and many gains from selling securities as income from capital assets under §20 EStG. The familiar label Abgeltungsteuer describes the withholding and discharge system; it is not a separate tax statute.
The headline rate is 25%, but the result depends on the taxable category, acquisition and disposal data, losses, the saver allowance, fund rules, church tax, foreign tax and whether a return or assessment exception applies.
What enters the system
Interest, distributions and disposal gains
Interest
Bank and bond interest commonly falls within §20. Gross income, withholding and foreign tax need separate records.
Dividends
Company distributions generally enter capital income. Cross-border withholding may create treaty and credit questions.
Securities gains
For ordinary private holdings, a sale gain broadly reflects proceeds less tax cost and relevant transaction costs, subject to detailed rules.
Rate and solidarity surcharge
Section 32d(1) EStG sets a 25% rate for qualifying capital income that does not fall under §20(8). Section 43a also sets 25% withholding for the main listed cases.
Section 4 SolzG sets the solidarity-surcharge rate at 5.5% of its assessment base. In the simple examples below, that means 5.5% of the 25% income-tax amount—not 5.5 percentage points added to the gain.
Simple rate view
- €100 taxable capital income
- €25 income tax
- €1.375 solidarity surcharge
- €26.375 combined before church tax
Rounding, church tax, credits and assessment rules can alter a real result.
Allowance
Sparer-Pauschbetrag and Freistellungsauftrag
Section 20(9) EStG provides a €1,000 saver allowance for an individual and €2,000 jointly for jointly assessed spouses. Actual investment expenses are generally not deducted instead of this lump sum within that rule.
A Freistellungsauftrag tells a domestic withholding agent how much available allowance to apply before withholding. Section 44a requires the prescribed form and identification number. Allocations across institutions should not exceed the amount actually available.
Allowance versus refund
An allowance placed with the paying institution can prevent withholding within its scope. If it was missing or badly allocated, a later assessment may sometimes correct the tax result. That is not an automatic refund promise: the return, income and evidence determine the outcome.
Unused allowance does not carry forward as a new allowance to a later year.
Domestic withholding
What a German bank or broker usually does
Classify
The institution determines a withholding category from its records.
Offset
Available internal loss pots and a valid allowance may reduce the withholding base.
Withhold
Capital income tax, solidarity surcharge and potentially church tax are deducted.
Certify
Statements support reconciliation and any required tax return.
Assess exceptions
Foreign accounts, missing data and special cases can move work to the return.
Retain records
Keep purchases, sales, distributions, taxes, fund data and transfers.
Under §43(5) EStG, withholding commonly has a discharge effect, but the statute contains exceptions. “Tax already deducted” and “nothing more to report” are not interchangeable in every case.
Günstigerprüfung and assessment
Section 32d provides an application route under which capital income can be included in the assessment if that produces lower tax under the statutory comparison. A low marginal rate does not by itself prove the outcome; all relevant taxable income and assessment data matter.
Assessment can also matter for unused allowance, loss certificates, foreign tax, income without German withholding, corrected bank data and statutory exceptions.
Losses are compartmentalised
Section 20 restricts capital losses from offsetting unrelated income categories and provides carry-forward mechanics. Losses from shares have had a separate statutory limitation against gains from selling shares.
Domestic banks may keep different loss pots. Cross-bank use can require timely certificates and an assessment. Derivatives and failed investments have changed through legislation and case law; verify the law for the relevant year.
Funds and ETFs
Investment tax adds another layer
Three investment-income types
Section 16 InvStG names fund distributions, advance lump sums under §18 and gains from disposing of fund units under §19.
Vorabpauschale
Section 18 defines an advance amount linked to the fund’s distributions, opening value, 70% of the statutory base rate and annual value increase. It is not simply a flat percentage of the portfolio.
Partial exemptions
For private investors, §20 InvStG exempts 30% of qualifying equity-fund income and 15% of qualifying mixed-fund income. Classification requirements must be met.
The exemption reduces the amount entering the capital-income calculation; it does not turn the same percentage of the portfolio into a cash refund. Prior advance amounts can also matter when units are sold.
Worked examples
Two transparent calculations
Assumptions: private investor, full stated allowance remains available, no losses, no foreign tax, no church tax and no special assessment exception.
€9,000 share gain
- Gain: €9,000
- Less allowance: €1,000
- Taxable amount: €8,000
- 25% tax: €2,000
- 5.5% solidarity surcharge: €110
- Total: €2,110
€10,000 qualifying equity-fund gain
- 30% partial exemption: €3,000
- Remaining: €7,000
- Less allowance: €1,000
- Taxable amount: €6,000
- 25% tax: €1,500
- Solidarity surcharge: €82.50
- Total: €1,582.50
These are arithmetic illustrations, not forecasts. A real broker may apply loss pots, fund tax data, prior advance amounts, rounding and church tax.
Foreign brokers and foreign income
A foreign broker may not perform German withholding or maintain German-style loss pots. German tax residents may need to determine and declare interest, dividends, sale gains, fund income and foreign taxes themselves.
Preserve annual statements, transaction-level acquisition data, exchange rates, distributions, fund identifiers and taxes withheld. A treaty may cap source-country tax or provide credit mechanics, but it does not create one universal outcome for every country and account.
Crypto is not ordinary securities tax
Do not place every crypto disposal into §20. Depending on facts, private crypto transactions can instead involve §23 EStG, business income, staking/lending characterization and detailed unit tracking. The BMF issued updated crypto-asset income-tax guidance on 6 March 2025.
This guide’s securities examples should therefore not be reused as crypto calculations.
Cases needing separate analysis
- At least 1% company participation within the statutory five-year test: §17 EStG
- Property and other private-sale transactions: §23 EStG
- Business assets or professional trading
- Pre-2009 holdings and transitional rules
- Options, derivatives and compensation payments
Cross-border complexity
- Arrival or departure during the year
- Dual residence and treaty tie-breakers
- Exit taxation and substantial holdings
- Foreign trusts, companies or wrappers
- Estate, gift or pension interactions
Year-end workflow
Reconcile the evidence before filing
A tax result is only as reliable as the transaction history behind it. Build one annual file even when a domestic broker appears to have completed all withholding.
1. Inventory every account
List German and foreign banks, brokers, employee plans and transferred depots. Record opening and closing dates, account ownership and the country in which each institution is located. A missing account can make an otherwise neat summary incomplete.
2. Preserve acquisition data
Keep trade confirmations, fees, dates, quantities and corporate-action notices. Depot transfers can arrive without complete tax lots, especially across borders. Do not reconstruct cost from memory or from the year-end market value.
3. Separate income types
Reconcile interest, dividends, fund distributions, advance lump sums, securities sales and foreign taxes. Keep fund identifiers and classification evidence because the partial exemption depends on the statutory fund category rather than the word “ETF”.
4. Reconcile allowances and losses
Compare Freistellungsauftrag allocations with the allowance actually available. Collect each institution’s loss-pot information and any requested loss certificate. A loss visible at one broker is not automatically known to another.
5. Check foreign currency
Foreign statements may report results in another currency or according to another country’s tax method. Preserve the original figures, dates, exchange-rate method and source-country withholding instead of importing the foreign taxable gain as a German answer.
6. Explain differences
Compare cash received, broker tax certificates and your transaction ledger. Document corrections, transferred positions, cancelled trades and prior advance amounts. Escalate unexplained or material differences before a filing deadline rather than forcing the numbers to balance.
Retention periods and filing duties depend on the facts. Keep source documents long enough to support open assessments, foreign-tax claims and acquisition values for holdings that may be sold years later.
Frequently asked questions
Short answers
Is German capital gains tax always 26.375%?
No. That shorthand combines 25% tax with a 5.5% surcharge on that tax, before church tax. Allowances, losses, fund exemptions, assessment and special categories alter the effective result.
Do I pay tax if my gain is below €1,000?
Not necessarily, but the allowance applies to total relevant capital income, not each transaction. Withholding also depends on a valid allocation or later assessment.
Does my German broker finish everything?
Often for ordinary domestic cases, but not universally. Foreign income, wrong data, cross-bank losses and statutory exceptions can require a return.
Are ETF gains taxed on only 70%?
Qualifying equity-fund income receives a 30% partial exemption for private investors. The fund must meet the statutory classification, and other calculations still follow.
Can a lower personal rate apply?
A statutory assessment comparison can be requested under §32d. The tax office calculates the result from the full assessment facts; this page cannot predict it.
Official sources