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Complete Germany Tax Guide 2025
Abgeltungsteuer, ETFs, Crypto & ELSTER Filing
Anlage KAP, Anlage KAP-INV, Anlage SO - Kapitalertragsteuer, Vorabpauschale, Krypto
KEY GERMAN TAX CONCEPTS FOR 2025
ABGELTUNGSTEUER (Flat Tax)
Germany applies a flat 25% tax on capital income plus 5.5% Solidaritatszuschlag = 26.375% effective rate. If you're a church member, Kirchensteuer (8-9%) also applies.
SPARERPAUSCHBETRAG (Tax-Free Allowance)
Single: First 1,000 of capital income is tax-free
Married (joint): First 2,000 is tax-free
Apply via Freistellungsauftrag at your broker or claim in Anlage KAP.
FOREIGN BROKERS (Revolut, IBKR, etc.)
Foreign brokers don't withhold German tax. You must declare all income in your annual tax return (Einkommensteuererklarung) via ELSTER using Anlage KAP, KAP-INV, or SO.
Stocks & Capital Gains (Anlage KAP)
Tax Rate Calculation
| Component | Rate |
|---|---|
| Kapitalertragsteuer (Capital gains tax) | 25.00% |
| Solidaritatszuschlag (5.5% of KESt) | +1.375% |
| Total (no church tax) | 26.375% |
| + Kirchensteuer (if applicable) | +8-9% |
ANLAGE KAP - Key Fields
- Zeile 7: Capital gains from stock sales (Gewinne aus Aktienveraußerungen)
- Zeile 8: Losses from stock sales (Verluste aus Aktienveraußerungen)
- Zeile 14-16: Dividends and similar income
- Zeile 37-38: Dividend withholding tax credits
Loss Offsetting Rules (Verlustverrechnung)
Stock losses can ONLY offset stock gains (separate "pot").
Other capital losses (ETFs, bonds, derivatives) can offset any capital income.
Unused losses carry forward to future years automatically.
ETFs & Teilfreistellung (Anlage KAP-INV)
Partial Exemption Rates (Teilfreistellung)
Since 2018, investment funds benefit from partial tax exemption based on their asset composition:
| Fund Type | Exempt % | Taxable % | Examples |
|---|---|---|---|
| Equity Funds (>51% stocks) | 30% | 70% | MSCI World, S&P 500 ETFs |
| Mixed Funds (25-51% stocks) | 15% | 85% | Balanced portfolios |
| Domestic Real Estate | 60% | 40% | German property funds |
| Foreign Real Estate | 80% | 20% | International REITs |
| Other Funds (<25% stocks) | 0% | 100% | Bond ETFs, money market |
Example: Selling an Equity ETF
Capital gain: 1,000
Teilfreistellung (30%): -300
Taxable amount: 700
Tax (26.375%): 184.63
ANLAGE KAP-INV - Key Sections
- Section 1 (Zeile 4-8): Distributions (Ausschuttungen)
- Section 2 (Zeile 9-13): Vorabpauschale (deemed distributions)
- Section 3 (Zeile 14-28): Capital gains from sales (Veraußerungsgewinne)
Vorabpauschale (Deemed Distribution)
What is Vorabpauschale?
For accumulating (thesaurierende) ETFs that don't distribute dividends, Germany taxes a "deemed distribution" called Vorabpauschale. This prevents indefinite tax deferral on unrealized gains.
Calculation Formula
Basisertrag = Fund Value (Jan 1) x Basiszins x 0.70
Vorabpauschale = Basisertrag - Actual Distributions
Taxable = Vorabpauschale x (1 - Teilfreistellung)
Basiszins Rates
| Year | Basiszins |
|---|---|
| 2023 | 2.55% |
| 2024 | 2.52% |
| 2025 | 2.29% |
| 2026 | 2.50% (est.) |
Example: Accumulating Equity ETF
Fund value Jan 1: 10,000
Basiszins (2024): 2.52%
Basisertrag: 10,000 x 0.0252 x 0.70 = 176.40
Teilfreistellung (30%): -52.92
Taxable Vorabpauschale: 123.48
Tax (26.375%): 32.57
Important Notes
- Vorabpauschale is zero if the fund lost value during the year
- Vorabpauschale is capped at actual fund gains
- Paid Vorabpauschale increases cost basis (no double taxation on sale)
- German brokers withhold automatically; foreign brokers require manual declaration
Dividends (Anlage KAP)
Foreign Dividend Tax Credit
Germany allows credit for foreign withholding taxes up to certain limits under double tax treaties:
| Country | Withholding | Creditable | Notes |
|---|---|---|---|
| USA | 15% | 15% | W-8BEN required |
| Ireland | 25% | 15% | Many ETFs domiciled here |
| France | 25% | 15% | Can reclaim excess |
| UK | 0% | 0% | No UK withholding |
ANLAGE KAP - Dividend Fields
- Zeile 14-16: Gross dividend income (before foreign tax)
- Zeile 37: Creditable foreign withholding tax (anrechenbare Quellensteuer)
- Zeile 38: Deductible foreign tax (abziehbare Quellensteuer) - excess over treaty rate
Cryptocurrency (Anlage SO)
Tax-Free After 1 Year!
Crypto held for more than 1 year is completely tax-free (Haltefrist). This makes Germany one of the most favorable jurisdictions for long-term crypto holders.
Crypto Taxation Overview
| Type | Tax Treatment | Form |
|---|---|---|
| Capital Gains (<1 year) | Personal income tax rate (up to 45%) | Anlage SO, 23 EStG |
| Capital Gains (>1 year) | TAX-FREE | No declaration needed |
| Staking/Mining/Airdrops | Personal income tax rate | Anlage SO, 22 Nr. 3 EStG |
Critical: Freigrenze vs Freibetrag
Capital gains (23): 1,000 Freigrenze - if you exceed this, the entire amount is taxable!
Other income (22): 256 Freigrenze for staking, mining, airdrops
Unlike Freibetrag (allowance), a Freigrenze means crossing the threshold makes ALL income taxable, not just the excess.
10-Year Rule Abolished (2022)
The extended 10-year holding period for staked crypto was abolished in 2022. Staking does NOT extend the holding period - 1 year is still sufficient for tax-free gains.
Commercial Mining Warning
Mining income exceeding 10,000/year may be classified as commercial activity (Gewerbebetrieb). This requires Anlage G instead of Anlage SO and may trigger VAT obligations.
ELSTER Filing Guide
Filing Deadlines
| Tax Year | Self-Filed | With Tax Advisor |
|---|---|---|
| 2024 | July 31, 2025 | February 28, 2026 |
| 2025 | July 31, 2026 | February 28, 2027 |
How Tax-Wizard Helps
Tax-Wizard generates an Excel report with a Schnellubersicht (Quick Reference) sheet showing exact values to enter in ELSTER:
- Values formatted as "(Anlage KAP, Zeile 7)" for easy copy-paste
- Separate sheets for Anlage KAP, KAP-INV, and SO
- Teilfreistellung and Vorabpauschale pre-calculated
- Foreign tax credit breakdown by country
Required Forms Summary
- Anlage KAP: Stocks, bonds, dividends, interest from foreign brokers
- Anlage KAP-INV: Investment funds (ETFs, mutual funds) - distributions, Vorabpauschale, capital gains
- Anlage SO: Cryptocurrency trades (<1 year), staking, mining income
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