What is the Abgeltungsteuer?
The Abgeltungsteuer is Germany's flat-rate withholding tax on capital income. Since 2009, investment income (interest, dividends, capital gains) is taxed at a flat 25% plus 5.5% solidarity surcharge and optional church tax. This results in an effective rate of approximately 26.375% without church tax.
What is the Sparerpauschbetrag?
The Sparerpauschbetrag is a tax-free allowance on investment income: €1,000 for single filers and €2,000 for married couples filing jointly. Capital gains up to this amount are completely tax-free. You should set up a Freistellungsauftrag with your bank to avoid automatic tax withholding.
How does church tax affect capital gains?
If you are a church member, church tax (8% in BY/BW, 9% elsewhere) is also applied to the Abgeltungsteuer. However, the church tax reduces the base tax rate: the effective Abgeltungsteuer rate is calculated as 25% / (1 + church tax rate), resulting in a slightly lower base rate to offset the church tax addition.
Disclaimer: These calculations are estimates based on 2025 German tax rules and should not be considered professional tax advice. Consult a Steuerberater for your specific situation.
How Germany taxes your investment profits, dividends, and savings interest
What is the Abgeltungsteuer on capital gains?
Germany taxes investment income with a flat 25% Abgeltungsteuer (withholding tax) plus 5.5% Solidaritätszuschlag on the tax, bringing the effective rate to 26.375%. If you are a church member, Kirchensteuer adds another 8% or 9% of the tax. This applies to share profits, dividends, interest, and fund distributions.
How much can you earn tax-free from investments?
Every person has a Sparerpauschbetrag (saver's allowance) of €1,000 per year (€2,000 for married couples filing jointly). The first €1,000 of investment income is completely tax-free. You need to set up a Freistellungsauftrag (exemption order) with your bank so they do not withhold tax on amounts below this limit.
How are stock profits taxed when you sell?
When you sell shares at a profit, the gain is taxed at the flat 26.375% rate. If you bought shares for €5,000 and sold them for €8,000, your gain is €3,000. After the €1,000 allowance, €2,000 is taxed, costing you about €527 in tax. Your bank or broker automatically deducts the tax and pays it to the Finanzamt.
Can you offset losses against gains?
Yes, losses from selling shares can be offset against gains from selling other shares (but not against interest or dividends). If you lost €2,000 on one share and gained €5,000 on another, you pay tax on the net €3,000. Losses that are not used in the current year are carried forward to future years in a Verlustverrechnungstopf (loss pot).
Is the Günstigerprüfung relevant for low earners?
Yes. If your personal income tax rate is below 25%, you can apply for a Günstigerprüfung in your tax return. The Finanzamt then taxes your investment income at your lower personal rate instead of the flat 25%. This is useful for students, retirees, or part-time workers earning below about €18,000 per year.
How are crypto gains taxed differently?
Cryptocurrency gains are not subject to the 25% Abgeltungsteuer. Instead, they are taxed as private sales (private Veräußerungsgeschäfte) at your personal income tax rate, which can be up to 45%. However, if you hold crypto for more than one year, the gain is completely tax-free. There is also a €600 annual exemption for short-term gains.
Bundesfinanzministerium-Aligned: Based on 2025 Bundesfinanzministerium rates and thresholds. For personal advice, speak to a qualified Steuerberater (tax adviser).
Disclaimer: This calculator provides estimates based on current German tax rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax adviser before making financial decisions. Read our terms
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