Germany — Capital Gains Tax (Abgeltungsteuer)

|---| | Country | Germany | | System | Abgeltungsteuer (withholding tax on investment income) | | Rate | 25% + 5.5% solidarity surcharge = 26.375% total | | Annual exemption (Sparer-Pauschbetrag) | €1,000 single / €2,000 joint (from 2023) | | Loss offsetting | Capital losses can only offset capital gains | | Church tax | Additional 8-9% on the 25% base if member | | Exit tax | Yes — on departure with substantial shareholdings | | Primary legislation | Einkommensteuergesetz (EStG) §20, §32d | | Tax authority | Bundeszentralamt für Steuern / local Finanzamt | | Verified by | Pending — German Steuerberater sign-off required |

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Section 2 — What is Taxed: Abgeltungsteuer

The Abgeltungsteuer (withholding/flat tax) applies to:

• Capital gains from disposal of shares, bonds, funds, ETFs
• Dividends
• Interest income
• Gains from derivatives, CFDs, options
• Crypto asset gains (treated as private sale transactions under §23 EStG)

The 26.375% is a final withholding tax — German banks withhold it automatically. Income subject to Abgeltungsteuer is NOT added to the progressive income tax base (no further top-up unless electing progressive rates and the marginal rate is lower).

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Section 3 — Annual Exemption (Sparer-Pauschbetrag)

Each individual has an annual tax-free allowance:

Status	Allowance
Single individual	€1,000
Jointly assessed couple	€2,000

The allowance covers all investment income (dividends + interest + gains combined). Unused allowance cannot be carried forward.

Freistellungsauftrag: instruct your German bank to apply the exemption automatically (up to the €1,000/€2,000 limit across all banks).

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Section 4 — Loss Offsetting Rules

Capital losses (Verlustverrechnungstopf) can only be offset against capital gains:

• Share losses can only offset share gains (stricter rule from 2020)
• Other capital losses (e.g. bond gains) can offset each other
• Unused losses carry forward indefinitely to future years
• Capital losses cannot offset employment income or other income

Annual capital loss certificate issued by banks (Verlustbescheinigung) — can be used when filing tax return.

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Section 5 — Substantial Shareholdings: Different Rules

For substantial holdings (≥1% shareholding in a company), gains are NOT taxed under Abgeltungsteuer. Instead, they are taxed under the Teileinkünfteverfahren:

• 60% of the gain is included in taxable income
• Taxed at the progressive income tax rate (up to 45%)
• Effective rate: up to 27% (60% × 45%)

This applies regardless of whether the company is German or foreign.

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Section 6 — Exit Tax (Wegzugsbesteuerung) — CRITICAL

Germany imposes an exit tax (§6 AStG) when an individual leaves Germany and holds a qualifying shareholding.

Qualifying holding: ≥1% shareholding in a corporation at any point in the preceding 5 years.

Trigger: departure from Germany (ceasing German tax residence).

What happens: deemed disposal of the shares at market value — unrealised gains are taxed as if the shares were sold on the day of departure.

Rate: Teileinkünfteverfahren (60% of gain at progressive rates).

Deferral options:

• Moving within EU/EEA: tax can be deferred interest-free until actual disposal
• Moving to third country (e.g. UAE, Singapore, UK): tax is immediately payable (or can be paid in 7 annual instalments in some cases)

This is a major planning consideration for anyone leaving Germany with significant company shareholdings.

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Section 7 — Crypto Assets

Cryptocurrency gains in Germany are subject to special rules under §23 EStG (not Abgeltungsteuer):

• Holding period < 1 year: gain fully taxable at progressive rates (no flat 26.375%)
• Holding period ≥ 1 year: completely exempt from tax
• Annual exemption for §23 gains: €1,000 total (not the €1,000 Sparer-Pauschbetrag)
• Loss offsetting: §23 losses only offset §23 gains

See de-crypto-tax for full crypto analysis.

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Section 8 — Sources

• EStG §20 (investment income), §32d (Abgeltungsteuer), §23 (private sale transactions)
• AStG §6 (exit tax)
• Bundesfinanzministerium: bundesfinanzministerium.de
• BMF-Schreiben on Abgeltungsteuer

Working paper only. Exit tax (§6 AStG) analysis requires shareholding history and market value determination — engage a German Steuerberater before departing Germany with shareholdings ≥1%.