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Taxes & Withholding Taxes

Efficient and Transparent Through the Tax Maze

Understand taxes, apply them correctly, and maximize benefits — with clear information and solid strategies. Navigate complex tax regulations efficiently and optimize your tax burden.

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Income Tax

How are capital gains, dividends, and profits taxed? In Germany, capital gains (such as interest, dividends, and profits from the sale of securities) are subject to income tax.

Capital Gains Tax

A flat tax rate of 26.375% (including solidarity surcharge and church tax, if applicable) is applied to capital income. There is, however, a tax-free allowance of €1,000 for individuals and €2,000 for married couples or registered partnerships. Capital income up to these amounts remains tax-free.

Dividends

These are also subject to the capital gains tax. In Germany, a withholding tax rate of 26.375% applies. If the investor resides in another country, withholding taxes may also apply in the country of origin, which can be credited against German taxes under certain conditions.

Capital Gains Tax

Overview of Taxation on Income from Securities

Capital income from securities, such as shares, bonds, or mutual fund units, is subject to capital gains tax in Germany (26.375%).

Stock Gains

Profits from the sale of shares are taxed at 26.375%.

Dividends

Taxed at the same rate of 26.375%.

Interest

Earnings from fixed-term deposits or bonds are also taxed at 26.375%.

It’s important to note that capital gains tax also applies if no explicit withholding tax was deducted (e.g., foreign income).

Loss Offsetting

What to do in case of investment losses and how to use them for tax benefits? Investment losses can be claimed for tax purposes in Germany to reduce tax liability.

Capital income from securities, such as shares, bonds, or mutual fund units, is subject to capital gains tax in Germany (26.375%).

Loss
Offsetting

Losses from capital investments can be offset against gains from other capital investments (loss offsetting).

Loss
Compensation

Losses from capital income, such as the sale of securities, can be offset against other capital gains (e.g., interest or dividends).

Loss
Carryforward

If there are no profits to offset in the current year, losses can be carried forward to future years to offset against future capital gains.

It is advisable to systematically record losses to ensure your tax declaration is accurate and you don’t miss out on potential tax benefits.

Overview of Withholding Tax Rates in Europe

Country Dividend Withholding Tax Tax Treaty with Germany Effective Tax Burden for German Investors
Belgium30%Yes15% creditable, 15% can be reclaimed
France30%Yes15% creditable, 15% can be reclaimed
Greece5%Yes5% creditable, no further burden
United Kingdom0%YesNo withholding tax, no credit or refund required
Italy26%Yes15% creditable, 11% can be reclaimed
Croatia12%Yes12% creditable, no further burden
Luxembourg15%Yes15% creditable, no further burden
Netherlands15%Yes15% creditable, no further burden
Austria27.5%Yes15% creditable, 12.5% can be reclaimed
Portugal28%Yes15% creditable, 13% can be reclaimed
Sweden30%Yes15% creditable, 15% can be reclaimed
Switzerland35%Yes15% creditable, 20% can be reclaimed

Important Notes

Crediting: Generally, up to 15% of foreign withholding tax can be credited against German capital gains tax if a tax treaty (DBA) exists.

Reclaiming: The portion of withholding tax exceeding the creditable 15% can often be reclaimed from the source country. However, this usually involves bureaucratic processes and should be checked on a case-by-case basis.

United Kingdom: The UK does not levy withholding tax on dividends for foreign investors, so there is no need for crediting or reclaiming.

Insure

Treue Investments was founded in 2011 and has established itself as a leading digital platform for investments in Germany. As a pioneer in simple savings, investment, and retirement solutions, we offer private clients easy access to global capital and deposit markets — an advantage that also benefits financial institutions.

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