The flat withholding tax
Interest, dividends and gains from selling shares, bonds and funds are taxed at a flat 25%, plus the solidarity surcharge and, if you are a church member, church tax. There is no holding period — shares held for ten years are taxed just like shares held for ten days.
German banks and brokers deduct the tax automatically. If your personal income tax rate is lower than the flat rate, you can apply in your return to have the investment income taxed at your personal rate instead.
The saver's allowance
Each person has an annual saver's allowance (Sparer-Pauschbetrag), doubled for married couples filing jointly. Give your German bank an exemption order (Freistellungsauftrag) and it will not withhold tax up to that amount. Actual costs such as fees are not deductible beyond the allowance.
ETFs and funds
Equity funds and ETFs receive a partial exemption: only part of the income is taxed. Accumulating funds additionally trigger an annual advance lump sum (Vorabpauschale) — a notional taxable amount even though you received no payout. It is credited when you sell later, so it is not a double tax, but it needs cash in the account in January.
Foreign brokers and foreign dividends
Foreign brokers do not withhold German tax. All their income — and losses — has to be declared in your German return (Anlage KAP), converted to euros. Many internationals keep an old home-country account and simply forget it.
- Foreign withholding tax on dividends can be credited up to the treaty rate.
- Any excess above the treaty rate must be reclaimed from the foreign country, not from Germany.
- Losses from shares can only be offset against gains from shares.
What is not covered by the flat rate
Real estate sold within ten years and crypto sold within one year fall under private sale transactions and are taxed at your personal rate, not the flat rate. Substantial shareholdings of 1% or more in a company follow the partial-income method. If you move abroad holding such a stake, the German exit tax can apply to unrealised gains.
Frequently asked
What is the capital gains tax rate in Germany?
A flat 25% plus solidarity surcharge, and church tax for church members — just over 26% in total for most people without church tax.
Is there a holding period that makes share gains tax free?
No. Unlike crypto and property, shares and funds bought today are taxed regardless of how long you hold them.
Do I have to declare a foreign brokerage account?
Yes. Income from foreign brokers is not withheld in Germany and must be reported in your German tax return.
Does Germany tax unrealised gains?
Generally not. The exceptions are the advance lump sum on accumulating funds and the exit tax on substantial shareholdings when you move abroad.
This guide is general information on German tax law, not advice on your individual case. Rules and figures change with each tax year.