Capital gains tax in Germany: complete 2026 guide for expats and non-residents
Germany taxes investment gains differently depending on the asset. For the 2025 tax year, most private investment income is subject to a 25% flat tax plus a 5.5% solidarity surcharge on that tax, while property and privately held cryptocurrency follow separate holding-period rules.
US citizens and green card holders living in Germany have another layer to consider. The US continues to tax its citizens and resident aliens on worldwide income, so German investment gains may need to appear on both German and US filings even when Germany has already withheld tax.
Capital gains tax in Germany: quick answer guide (2025)
For the 2025 tax year, Germany generally taxes dividends, interest, and ordinary portfolio share gains at 25%, plus a 5.5% solidarity surcharge on the tax. That produces a standard effective rate of 26.375% before any church tax, while separate rules apply to property and private cryptocurrency.
Germany applies a flat 26.375% capital gains tax rate on most investment income, including dividends, interest, and stock sale profits.
The following 3 figures give the quickest view of the rules:
- Standard investment-income rate: 25% Abgeltungsteuer plus a 5.5% solidarity surcharge on the tax, or approximately 26.375%.
- Saver's allowance: €1,000 per individual or €2,000 for jointly assessed spouses for 2025.
- Private cryptocurrency: a disposal after more than 1 year is generally outside the taxable private-sale period under §23 EStG.
The asset itself matters. Our guide to capital gains and losses for US taxpayers explains the separate US rules that can apply to the same transaction.
What is capital gains tax in Germany? (Kapitalertragsteuer explained)
Germany taxes most private investment income through the Kapitalertragsteuer withholding system, with a 25% rate for covered capital income. Since 2009, the Abgeltungsteuer regime has generally allowed German financial institutions to withhold the tax directly rather than requiring every investor to calculate it separately.
Germany does have a capital gains tax – it is called Kapitalertragsteuer and is withheld automatically by German financial institutions at a flat rate.
The term Kapitalertragsteuer refers to the tax withheld on capital income, while Abgeltungsteuer describes the flat-tax regime under which that withholding often settles the German income-tax liability. Covered income includes interest, dividends, and gains from ordinary portfolio investments.
That treatment does not apply to every asset. Private real-estate transactions, certain cryptocurrency disposals, and gains from substantial corporate shareholdings can fall under separate German income-tax provisions rather than the ordinary 25% regime.
US taxpayers should also distinguish German investment taxation from their US obligations. See our tax and investment guide for Americans with international investments for the US side of cross-border investment reporting.
German capital gains tax rate: the 26.375% breakdown
The standard German capital gains tax rate on covered investment income is 25% plus a solidarity surcharge equal to 5.5% of the tax, producing a 26.375% effective rate before church tax. Registered members of certain churches may also owe Kirchensteuer at the applicable state rate.
The standard capital gains tax rate in Germany is 26.375%, combining the 25% flat tax and the 5.5% solidarity surcharge.
For €10,000 of fully taxable investment income before allowances, the basic tax and solidarity surcharge total €2,637.50 before any applicable church tax.
| Component | Rate | Notes |
|---|---|---|
| Abgeltungsteuer | 25% | Flat rate on covered private capital income |
| Solidarity surcharge | 5.5% of the 25% tax | Equivalent to 1.375% of the taxable capital income |
| Church tax | Usually 8% or 9% of income tax | Applies where the investor is liable for Kirchensteuer; interaction with the capital-income calculation slightly changes the effective total |
| Standard total without church tax | 26.375% | 25% plus 1.375% solidarity surcharge |
So, how much is capital gains tax in Germany on ordinary investment income? Before allowances and church tax, a €20,000 fully taxable gain subject to the flat regime produces €5,000 of tax plus €275 of solidarity surcharge.
The annual saver's allowance (Sparerpauschbetrag) and Freistellungsauftrag
For 2025, §20(9) EStG provides a €1,000 Sparer-Pauschbetrag for an individual and €2,000 for jointly assessed spouses. A Freistellungsauftrag tells a German bank to apply that exemption allowance in Germany before withholding tax on eligible investment income.
Filing a Freistellungsauftrag with your German bank is the simplest way to ensure your saver's allowance is applied before any tax is withheld.
The following 3 points determine how the allowance works in practice:
- You can allocate your €1,000 individual allowance among more than 1 German financial institution, but the combined orders should not exceed the available allowance.
- Jointly assessed spouses have a combined €2,000 allowance for 2025.
- If no sufficient Freistellungsauftrag was in place, excess withholding can generally be addressed through the German income-tax assessment rather than being permanently lost.
The Freistellungsauftrag affects withholding, not the underlying character of the income. Investment income above the available allowance remains subject to the applicable rules.
Capital gains tax on stocks in Germany
For the 2025 tax year, ordinary portfolio share-sale gains generally fall under the 25% Abgeltungsteuer regime, with the solidarity surcharge bringing the standard total to 26.375% before church tax. German brokers normally calculate and withhold this tax for taxable domestic-account transactions.
Profits from selling stocks held in a German brokerage account are subject to the 26.375% Abgeltungsteuer, withheld automatically at the point of sale.
The following 4 rules cover the main categories of capital gains tax German stock investors encounter:
- Dividends: German and foreign share dividends received by a German resident generally form part of taxable capital income.
- Stock sales: ordinary portfolio gains normally receive the flat-rate treatment regardless of whether the shares were held for 8 months or 8 years.
- Investment funds: ETFs and mutual funds can qualify for partial exemptions under the Investment Tax Act depending on fund classification.
- Stock losses: under §20(6) EStG, losses from disposals of shares remain subject to special offset rules and generally offset gains from share disposals rather than unrelated interest income.
The German capital gains tax stocks rules differ from the US treatment, particularly because the US normally distinguishes short-term from long-term gains. Americans holding employer shares should also review our guide to avoiding double taxation on employee stock purchase plans.
Foreign brokerage accounts require extra attention because German tax may not have been withheld automatically. Anlage KAP can be relevant when a German resident must self-report covered foreign investment income.
Cryptocurrency capital gains tax in Germany: the 1-year holding rule
For privately held Bitcoin, Ether, and comparable payment cryptocurrencies, a disposal within 1 year of acquisition can constitute a private sale transaction under §23 EStG.
A disposal after more than 1 year is generally outside that taxable private-sale period. Within that period, a crypto gain is taxed at the seller's personal progressive income tax rate under §23 EStG – not at the 25% Abgeltungsteuer rate that applies to ordinary investment income.
Germany offers a unique tax advantage for long-term crypto investors: cryptocurrency held for more than one year is generally outside the taxable private-sale period for privately held assets.
The German capital gains tax treatment of crypto therefore differs sharply from the treatment of stocks. A taxable disposal within 1 year is included under the progressive income-tax rules, subject to the §23 rules, rather than the standard investment-income flat rate.
For 2025, aggregate profits from covered private-sale transactions remain tax-free if they are less than €1,000 for the calendar year. Once the statutory threshold is reached, the treatment differs from a deduction-style allowance.
The German cryptocurrency capital gains tax holding period of 1 year describes the central timing rule, but each acquisition and disposal must be traced. Exchanging one cryptoasset for another can itself be a disposal and begins a new acquisition period for the asset received.
Short-term vs. long-term capital gains tax in Germany
Germany does not use one universal short-term versus long-term system. For ordinary stocks, holding the shares beyond 1 year does not create a lower German rate, while privately held real estate generally uses a 10-year period and covered private crypto transactions generally use a 1-year period.
Unlike the US system, Germany does not offer a reduced long-term rate for stocks – the 26.375% flat rate applies regardless of how long shares are held.
The holding period matters most for property and private crypto: 10 years is the key German real estate period, while more than 1 year is the key §23 period for privately held payment crypto.
| Asset type | Short-term treatment | Long-term treatment |
|---|---|---|
| Ordinary portfolio stocks | Generally 26.375% before church tax | Generally the same rate; no reduced stock rate based only on time held |
| Private real estate | Gain can be taxable at progressive rates if sold within 10 years, subject to exceptions | A sale after more than 10 years is generally outside §23 |
| Privately held payment crypto | A sale within 1 year can be taxable under §23 | A sale after more than 1 year is generally outside §23 |
This makes short-term capital gains tax in Germany treatment asset-specific rather than a single tax category. The German long-term capital gains tax result likewise depends on whether the asset is shares, real estate, cryptocurrency, or another private asset.
Capital gains tax on property in Germany
A private sale of German real estate within 10 years of acquisition can be taxable under §23 EStG at the seller's progressive income-tax rate, subject to the owner-occupation exception. A sale after the statutory period is generally outside the private-sale rule.
Selling a German property within 10 years of purchase triggers tax on the gain at your personal income tax rate, which can reach 45% plus any applicable solidarity surcharge.
The owner-use exception can apply even when a property is sold before 10 years. The statute covers property used exclusively for the owner's residential purposes from acquisition to disposal, or in the year of disposal and the 2 preceding calendar years.
That wording matters. The rule does not necessarily require 2 complete 365-day periods before the year of sale, so the precise occupancy dates should be checked rather than applying a generic 36-month test.
For a US owner, capital gains tax treatment of German property does not determine the US outcome. A sale can also be reportable on the US federal return, and the US home-sale exclusion follows separate ownership and use requirements.
Our guide to US capital gains tax on foreign property explains how Americans report overseas property sales and why a German exemption does not automatically create a US exemption.
Germany unrealized capital gains tax: what you need to know
Germany does not impose a general annual tax on unrealized investment gains for an ordinary individual investor. Section 6 AStG can instead create an exit-tax event when certain shareholders leave German tax residence, including cases involving shares covered by the substantial-shareholding rules.
Germany does not tax unrealized investment gains annually for ordinary investors, but an exit tax may apply to significant shareholders who relocate abroad.
The Germany unrealized capital gains tax concern is therefore primarily an exit-tax issue rather than an annual mark-to-market tax on every portfolio. Section 17 EStG generally uses a 1% ownership threshold during the preceding 5 years for substantial corporate holdings.
The current installment rule also differs from older descriptions of EU/EEA deferral. Under current §6(4) AStG, a taxpayer may apply to pay the assessed exit tax in 7 equal annual installments, generally subject to security. The first installment is due within 1 month after assessment, with later installments due on July 31 of subsequent years.
Anyone moving out of Germany with a substantial corporate holding should have the German exit-tax consequences reviewed before the move, because later transfers, missed payments, or other events can accelerate unpaid installments.
Capital gains tax in Germany for non-residents and foreigners
Non-residents normally have limited German tax liability, so Germany taxes specified German-source income rather than worldwide income. For capital gains tax in Germany for foreigners, the result differs among dividends, ordinary portfolio shares, substantial corporate interests, and German real estate.
Non-residents selling German real estate are subject to German tax on covered gains, while most ordinary portfolio gains from German stocks are not taxed in Germany solely because the company is German.
The following 3 rules are central to capital gains tax in German non-resident cases:
- German-company dividends: German withholding can apply at 25% plus the solidarity surcharge, although an applicable treaty can reduce the final German burden and permit a refund of excess withholding.
- Share disposals: German domestic law can tax certain substantial interests, including where the seller met the §17 threshold of at least 1% during the preceding 5 years. Treaty provisions must then be checked.
- German real estate: Germany retains taxing rights over gains from German immovable property, subject to the applicable domestic and treaty rules.
A second capital gains tax in Germany for foreigners issue arises when the investor lives in a treaty country. Treaty relief does not automatically mean Germany has no taxing right – the applicable article and the asset type control.
Foreign investors with US filing exposure should distinguish this from the US rules discussed in our guide to capital gains taxation of nonresident aliens in the US.
The US-Germany tax treaty and capital gains: how it works
Article 13 of the US-Germany income tax treaty allocates taxing rights for gains, including a rule allowing the country where real property is located to tax covered real-estate gains. For US citizens resident in Germany, the treaty's saving-clause structure means US worldwide-income reporting generally continues.
The US-Germany tax treaty reduces double taxation but does not exempt US citizens living in Germany from reporting German capital gains on their US federal return.
The tax treaty United States-Germany provisions must be read together with Article 23, which addresses relief from double taxation. Depending on the gain and its sourcing, a US taxpayer may use the Foreign Tax Credit mechanism, including treaty re-sourcing where the treaty and US rules permit it.
This is why treaty benefits between Germany and the US cannot be reduced to “pay tax only once.” Both countries may calculate the transaction under their own rules, while the treaty and credit system determine how overlapping tax is relieved.
Capital gains also differ from earned income. Our comparison of the Foreign Tax Credit and Foreign Earned Income Exclusion explains why the FEIE does not exclude ordinary investment gains and why Form 1116 is often the relevant US form.
Get help with your US return when you have German investment gains
German investment income can affect Form 1040, Schedule D, Form 8949, Form 1116, Form 8938, and foreign-account reporting. TFX prepares US tax returns for Americans abroad, including returns involving German-source investment income, while German tax-return preparation remains outside TFX's service scope.
FBAR and FATCA reporting for US expats with German investment accounts
For 2025, an FBAR is required when the aggregate maximum value of covered foreign financial accounts exceeds $10,000 at any point during the calendar year. Form 8938 uses separate, much higher thresholds, including up to $200,000 at year-end or $300,000 at any time during the year for qualifying non-joint filers living abroad.
US citizens and green card holders in Germany must report German brokerage accounts on both the FBAR and Form 8938 if account values and assets meet the respective requirements.
The following 2 reporting systems need to be tested separately:
- FBAR – FinCEN Form 114: the $10,000 test applies to the aggregate maximum value of covered foreign accounts, not $10,000 per account. The regular due date is April 15, with an automatic extension to October 15.
- Form 8938 – FATCA: a qualifying taxpayer living abroad and filing other than jointly generally files above $200,000 at year-end or $300,000 at any time. For married taxpayers filing jointly abroad, the thresholds are $400,000 and $600,000.
The IRS's official comparison of Form 8938 and FBAR requirements confirms that filing one form does not replace the other.
For a practical side-by-side explanation, see our FBAR versus Form 8938 guide.
Foreign Tax Credit for German capital gains tax paid
Eligible German income tax paid on a gain may support a US Foreign Tax Credit on Form 1116, but the credit is not automatically equal to every euro of German tax paid. US sourcing rules, income categories, treaty re-sourcing, and the Form 1116 limitation determine the allowable amount.
Form 1116 is the main US mechanism for claiming eligible German income tax on investment gains, subject to the US foreign-source and Foreign Tax Credit limitation rules.
Based on our client scenario at TFX: A US citizen living in Munich sells ETF shares for a €20,000 gain through a German broker. Assuming, for simplicity, that no Teilfreistellung (partial fund exemption) or remaining Sparer-Pauschbetrag applies, the broker's 25% tax plus solidarity surcharge would be approximately €5,275 before church tax. In practice, a qualifying equity ETF would typically receive a 30% partial exemption, which would reduce the taxable gain and the tax due.
The taxpayer must separately calculate the transaction for US purposes and report the gain where required on Form 8949 and Schedule D. The eligible German tax can then be considered on Form 1116, commonly in the passive category, but the amount actually creditable depends on the US limitation and sourcing rules.
The 2025 Form 1116 instructions specifically recognize circumstances in which gain from eligible personal property can be foreign source when a taxpayer has a foreign tax home and at least 10% foreign tax is paid on the gain. Treaty re-sourcing can also require separate treatment.
For Americans dealing with double taxation in Germany, correct categorization matters as much as the amount paid. Our guide to FATCA and CRS reporting requirements explains the separate financial-account information-sharing rules.
Mutual funds and ETFs: capital gains tax in Germany for residents
Since the 2018 Investment Tax Act reform, Germany applies standardized rules to qualifying domestic and foreign investment funds. For a private investor, §20 InvStG provides a 30% partial exemption for qualifying equity funds and 15% for qualifying mixed funds, with higher exemptions for qualifying real-estate funds.
German residents holding US-domiciled mutual funds or ETFs can face different German and US reporting consequences, but a fund is not automatically treated as an “opaque” fund solely because it is domiciled in the United States.
For private investors, current German partial exemptions include 30% for qualifying equity-fund income, 15% for mixed funds, 60% for qualifying real-estate funds, and 80% for qualifying foreign-real-estate funds. The fund must satisfy the statutory classification requirements.
The German tax on foreign capital gains mutual funds for residents therefore involves more than fund domicile. Classification, the fund's assets, German withholding, distributions, deemed amounts where applicable, and the investor's tax residence all matter.
If no German financial institution has withheld the appropriate German tax on foreign-fund income, the relevant investment income can require self-reporting through the German income-tax return, including the applicable KAP schedules.
US citizens have a separate issue: a non-US mutual fund or ETF can potentially be a passive foreign investment company for US purposes, producing Form 8621 obligations even where Germany gives the investment-fund income a partial exemption.
How German capital gains tax is reported: the KAP annex
Anlage KAP is used for covered capital income that must be included in a German income-tax assessment, including foreign investment income where no German institution withheld the correct tax. It is not the correct schedule for every asset – privately held crypto disposals under §23 are generally reported through Anlage SO.
Most German residents with only domestic brokerage accounts may not need Anlage KAP solely for income already finally taxed at source, but US expats with foreign investment accounts frequently need to review whether KAP reporting is required.
The following 5 situations can make Anlage KAP relevant:
- Foreign investment income: report covered interest, dividends, and investment gains on which German tax was not correctly withheld.
- Unused saver's allowance: use the assessment process where the full Sparer-Pauschbetrag was not applied at source.
- Loss treatment: report or reconcile applicable losses where an assessment is needed.
- Günstigerprüfung: request the favorable-rate test if your individual tax rate is below the 25% flat rate and the statutory requirements are met.
- Withholding reconciliation: address applicable withholding issues, including circumstances involving church tax or foreign tax.
This distinction matters for expat tax filing in Germany cases because one taxpayer can have German stock income on KAP and a separately reportable private crypto disposal on Anlage SO in the same year.
Significant shareholding rule: when German capital gains tax applies differently
Section 17 EStG applies where a seller held at least 1% of a corporation directly or indirectly at any point during the preceding 5 years. A covered share-sale gain is treated differently from an ordinary small portfolio holding and does not simply receive the standard 25% flat-tax treatment.
If you own or recently owned 1% or more of a corporation, your share-sale gain may be taxed under the substantial-shareholding rules rather than the standard 26.375% portfolio-investment regime.
Under the Teileinkünfteverfahren, the statutory partial-income system can generally leave 40% of a qualifying gain exempt while 60% enters the progressive income-tax calculation. The taxpayer's marginal rate can reach 45% before other applicable charges.
This rule matters to founders, business owners, and employees with concentrated equity positions because investment income rules in Germany for a 2% corporate stake differ from those for 200 shares in a widely held public company.
For a nonresident seller, satisfying the German domestic 1% rule does not end the analysis. German-source provisions and the applicable treaty must also be checked to determine whether Germany can exercise its domestic taxing right.
File your US expat tax return with German investment income
German share gains, property sales, and crypto transactions can each require different entries on a 2025 US Form 1040 filed in 2026. TFX prepares US expat returns involving foreign investment income and can account for applicable reporting forms and eligible US tax credits.
Capital gains tax in Germany vs. the US: key differences for expats
Germany and the US can tax the same investment under different holding-period and rate rules. For 2025, ordinary German portfolio gains generally face the 25% flat tax plus solidarity surcharge, while US long-term gains use 0%, 15%, or 20% federal rates depending on taxable income.
US expats in Germany face two separate capital gains tax systems simultaneously – the German result does not determine how the same sale is classified or taxed on the US return.
The biggest distinction is that Germany has no reduced long-term rate merely for holding ordinary shares longer than 1 year, while the US generally reserves long-term rates for capital assets held more than 1 year.
| Feature | Germany | United States | Impact for US expats in Germany |
|---|---|---|---|
| Ordinary stock gains | Generally 26.375% before church tax | Long-term generally 0%, 15%, or 20%; short-term generally ordinary rates | The same gain can produce different tax calculations |
| Stock holding period | No reduced rate merely for holding longer | More than 1 year generally creates long-term treatment | Purchase dates remain critical for US reporting |
| Private crypto | Covered §23 sale after more than 1 year generally outside taxable private-sale period | Crypto is property; taxable dispositions remain reportable regardless of how long held | A German tax-free sale can still generate US tax |
| Private real estate | More than 10 years generally outside §23; owner-use exception may apply sooner | §121 can exclude up to $250,000, or $500,000 for certain joint filers, if requirements are met | Each country's residence and ownership tests must be applied separately |
For 2025, the US 0% long-term capital-gain ceiling is $48,350 for most single filers and $96,700 for married couples filing jointly. The German rate does not change merely because the US rate falls into the 0% bracket.
US expats should also check whether the 3.8% Net Investment Income Tax applies. Our guide to the Net Investment Income Tax explains the separate US thresholds and rules.
Pro tips: reducing your capital gains tax burden in Germany
The main opportunities depend on 4 separate rules: the €1,000/€2,000 German saver allowance, the 1-year private-crypto period, the Günstigerprüfung for taxpayers below the 25% flat rate, and the US Foreign Tax Credit rules for eligible German tax.
For a US expat, the correct result comes from applying the German rule first and then calculating the US return separately – not from assuming tax paid in one country automatically cancels tax in the other.
The following 4 Pro Tips address the most useful checks:
- Use the full Freistellungsauftrag: For 2025, allocate up to the €1,000 individual or €2,000 joint Sparer-Pauschbetrag across your German banks so eligible investment income is not unnecessarily subjected to withholding first.
- Track the 1-year crypto period: For privately held payment crypto covered by §23, preserve acquisition and exchange dates. A disposal after more than 1 year is generally outside the private-sale period, while an exchange within 1 year can create a taxable event.
- Check the Günstigerprüfung: If your applicable personal German income-tax rate is below 25%, review whether requesting the favorable-rate comparison through Anlage KAP can produce a lower assessment.
- Calculate Form 1116 rather than assuming a credit: Eligible German tax can support a foreign tax credit Germany claim, but Form 1116 sourcing, category, and limitation rules control the allowable US credit. The Foreign Earned Income Exclusion does not exclude capital gains because they are not foreign earned income.
For the US return itself, see our guide to where foreign income is reported on Form 1040.
Catch up on unfiled US returns with German investment income
Eligible US taxpayers residing abroad can use the Streamlined Foreign Offshore Procedures to submit the most recent 3 required tax returns and 6 years of delinquent FBARs after non-willful failures. Tax and interest remain payable, but specified penalties are not imposed when all program requirements are satisfied.
Frequently asked questions
Yes. For ordinary private investment income, Germany generally applies a 25% flat tax plus a 5.5% solidarity surcharge on that tax, producing 26.375% before church tax. Different rules apply to assets such as private real estate, cryptocurrency under §23, and substantial corporate holdings.
The standard capital gains tax rate in Germany for covered portfolio investment income is 25%, plus a solidarity surcharge equal to 5.5% of that tax. The resulting standard rate is 26.375% before church tax, with the €1,000 individual or €2,000 joint saver's allowance potentially reducing taxable capital income.
Non-residents are generally taxed only on specified German-source income. German real estate gains remain within Germany's taxing jurisdiction, while ordinary portfolio gains from German shares are usually outside German tax unless a special rule applies, such as a qualifying 1% substantial interest. Treaty provisions can further change the result.
For privately held payment cryptocurrencies covered by §23 EStG, a disposal after more than 1 year is generally outside the taxable private-sale period. A disposal within 1 year can be taxable at progressive rates. Current BMF guidance does not impose a 10-year holding period merely because payment crypto was staked or lent.
A US citizen in Germany may have reporting or tax exposure in both countries because the US taxes citizens on worldwide income. Double taxation relief can come through Form 1116 and treaty provisions, but the allowable Foreign Tax Credit depends on sourcing, category, and limitation rules rather than automatically matching German tax paid.
A Freistellungsauftrag is an exemption order given to a German financial institution so it applies the Sparer-Pauschbetrag before withholding. For 2025, the allowance is €1,000 for an individual or €2,000 for jointly assessed spouses, and the available amount can be distributed among multiple German institutions.
Germany does not impose a general annual tax on an ordinary investor's unrealized portfolio gains. An important exception is exit taxation under §6 AStG for certain substantial shareholders leaving German tax residence. Current law permits an application to pay covered exit tax in 7 annual installments, generally subject to security.
US capital gains are generally reported through Form 8949 and Schedule D with Form 1040, while eligible German tax may be addressed on Form 1116. German accounts can also trigger FBAR or Form 8938. Review our detailed FBAR filing guide, and note that the IRS distinguishes capital losses from taxable gains in its official capital gains and losses guidance.