Simple Guide: Understanding Capital Gains Tax Explained
Capital gains tax is a tax on profits earned from the sale of assets or investments. In Germany, this tax applies to various forms of investment income, including interest earnings, dividends, and profits from selling stocks or other securities.
The tax rate for capital gains in Germany is 25%, plus a solidarity surcharge of 5.5% of the tax amount. Church members must also pay church tax, which varies by region.
Key Types of Income Subject to Capital Gains Tax:
- Interest from bank accounts (checking, savings, fixed deposits)
- Stock dividends and trading profits
- Investment fund and ETF returns
- Foreign account earnings
- Private loan interest
- Tax office refund interest
- Foreign capital gains
Tax Exemptions:
- Annual saver's allowance (Sparerpauschbetrag) of €801 for individuals or €1,602 for married couples
- Profits from selling assets held for more than 10 years
- Certain inheritance and gift situations
Filing Requirements: You must declare capital gains in your tax return if:
- You haven't paid capital gains tax yet
- You want to reclaim overpaid taxes
- You have foreign income
- Your tax situation requires optimization
Reclaiming Overpaid Taxes: You can reclaim overpaid capital gains tax by providing:
- Total capital gains achieved
- Capital gains tax paid
- Solidarity surcharge paid
- Church tax paid (if applicable)
- Claimed saver's allowance
The deadline for reclaiming capital gains tax is generally four years from the end of the calendar year in which the tax was paid.
Important Documents:
- Annual tax certificates from banks
- Investment account statements
- Documentation of buy/sell transactions
- Proof of foreign income
Remember to keep all relevant documentation for potential tax authority audits and consult with a tax professional for complex situations.