Abgeltungsteuer Rate and Scope
The Abgeltungsteuer (capital yield tax) was introduced in 2009. It is a final withholding tax — once applied at source by the bank, no further income tax declaration is required for most investment income.
| Income Type | Rate | Effective Rate (incl. Soli) | Notes |
|---|---|---|---|
| Dividends (portfolio, <1% stake) | 25% | 26.375% | Withheld by bank/company |
| Interest income | 25% | 26.375% | Bank withholds automatically |
| Share sale gains | 25% | 26.375% | All holding periods — since 2009 |
| Fund distributions | 25% | 26.375% | InvStG 2018 reform applies |
| Real estate gains (<10yr hold) | Up to 45% | Regular Einkommensteuer | Spekulationssteuer — different rules |
| Real estate gains (≥10yr hold) | 0% | 0% | Tax-free for private owners |
Sparerpauschbetrag (Annual Tax-Free Allowance)
€1,000/year per person (€2,000 for jointly-assessed married couples) of investment income is tax-free under the Sparerpauschbetrag.
- Submit a Freistellungsauftrag to your German bank to claim exemption at source
- Freistellungsauftrag can be split across multiple banks
- Income above the allowance is automatically taxed at 26.375% by the bank
- If not claimed at source, declare in annual tax return (NV-Bescheinigung)
Teileinkünfteverfahren — For GmbH Shareholders ≥1%
Individual shareholders holding ≥1% of a GmbH (or who have been employed by the GmbH) cannot use Abgeltungsteuer — they must use the Teileinkünfteverfahren (partial inclusion method) instead.
Under Teileinkünfteverfahren: 60% of dividend income is included in Einkommensteuer at the shareholder's personal marginal rate (up to 45%), 40% is tax-free. This is typically less favourable than Abgeltungsteuer for high earners, but allows deduction of related expenses.
Corporate Shareholder Treatment (§8b KStG)
For companies (GmbH, AG) receiving dividends from ≥10% shareholdings: §8b KStG provides a 95% exemption — only 5% is deemed taxable income. This is far more favourable than any individual investor treatment.
- ≥10% shareholding: 95% of dividends exempt from KSt (§8b(1) + §8b(5))
- Capital gains on corporate share disposals: 95% exempt (§8b(2))
- <10% shareholding (Streubesitz, §8b(4)): dividends fully taxable — no exemption
- Effective KSt leakage on qualifying dividends: 0.79% — one of Europe's most efficient regimes
Common questions.
Is crypto taxed like shares in Germany?
No. Crypto gains are treated as private sale transactions under §23 EStG — not as financial instruments under the Abgeltungsteuer regime. Gains on crypto held MORE than 1 year are entirely tax-free for individuals. Gains on crypto held less than 1 year are taxed as regular income (up to 45%).
Is German real estate capital gains tax different from share gains?
Yes. Share gains are subject to Abgeltungsteuer (25%) regardless of holding period. Real estate gains held for more than 10 years are entirely tax-free for private owners (Spekulationssteuer §23 EStG). Gains on real estate held under 10 years are taxed as regular income (up to 45%).
Do non-residents pay German capital gains tax on shares?
Generally, non-residents are only taxed on German-source income. Share sale gains from a German GmbH are generally not taxed in Germany for non-residents (subject to DTA). Dividends are subject to 25% withholding tax (Kapitalertragsteuer), reducible under DTAs.
What is the difference between Abgeltungsteuer and Teileinkünfteverfahren?
Abgeltungsteuer (25% flat) applies to portfolio investors with <1% shareholding. Teileinkünfteverfahren (60% included in income tax at marginal rate) applies to shareholders with ≥1% of a GmbH or who are employed by the company. For most high earners, Abgeltungsteuer is more favourable.
Is there a capital gains tax allowance (Freistellungsauftrag) in Germany?
Yes. Each individual is entitled to a Sparerpauschbetrag (savings lump sum) of €1,000/year (€2,000 for jointly assessed married couples) from 2023. Capital gains, dividends, and interest up to this amount are tax-free. You must file a Freistellungsauftrag with your German bank to apply the exemption at source.
How are GmbH share sales taxed in Germany for an individual seller?
Gains on selling GmbH shares are taxed under the Teileinkünfteverfahren if the seller held ≥1% at any point in the last 5 years — 60% of the gain is included in regular income tax (up to 45% + Soli). If the holding was <1% (portfolio investment), the 25% Abgeltungsteuer applies. Corporate sellers benefit from the §8b KStG 95% exemption.
Does Germany tax unrealised capital gains (exit tax)?
Yes. Under §6 AStG, Germany imposes an exit tax when a shareholder holding ≥1% in a corporation moves their tax residence out of Germany. The deemed disposal is based on the fair market value of the shares at the time of departure. Payment can be spread over 7 years in some cases. Brexit and moves to non-EU countries are fully taxable at the moment of departure.
Are ETFs and investment funds taxed differently from shares in Germany?
Yes. Since the 2018 Investmentsteuerreform, German-resident investors in investment funds (UCITS ETFs) pay 25% Abgeltungsteuer on distributions and gains, but with a partial exemption (Teilfreistellung): 30% for equity funds, 60% for real estate funds. This reduces the effective rate. Accumulating ETFs are now fully comparable to distributing ETFs under the Vorabpauschale regime.
Optimise your German investment tax position.
Our Steuerberater advises on Abgeltungsteuer, Teileinkünfteverfahren elections, §8b holding structures, and real estate tax planning.
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