Abgeltungsteuer: Germany's 25 % flat tax on investment income
Abgeltungsteuer is the German income tax on private investment income such as interest, dividends, fund income and capital gains. It is a flat 25 % (§ 32d EStG), plus a 5.5 % solidarity surcharge and church tax where due. Your bank withholds it, and that normally settles the tax.
Also: Abgeltungssteuer · Kapitalertragsteuer · German capital gains tax · flat tax on investment income
In Germany private investment income is not taxed at your personal income tax rate but at a flat 25 % (§ 32d (1) EStG). Your bank or broker withholds it as Kapitalertragsteuer (§ 43a EStG), and that withholding “settles” (abgelten) the income tax on it (§ 43 (5) EStG), which is where the name comes from. You will also see the spelling “Abgeltungssteuer”. Status: October 2026.
How much tax?
| Church tax | Total rate |
|---|---|
| none | 25 % + 5.5 % surcharge on it = 26.375 % |
| 8 % | about 27.82 % |
| 9 % | about 27.99 % |
Church tax slightly reduces the flat tax, because the law nets it out:
flat tax = (e − 4q) ÷ (4 + k)
Here e is the investment income, q any creditable foreign withholding tax and k the church tax rate. With 9 % church tax and no foreign tax, that gives 24.45 % tax, 1.34 % surcharge and 2.20 % church tax.
One thing that surprises newcomers: the solidarity surcharge exemption threshold (€20,350 of income tax, €40,700 for joint filers) does not apply here. The 5.5 % is always charged on withheld investment tax (§ 3 (3) and § 4 SolZG).
What it covers
Interest, dividends, fund distributions and Vorabpauschale, and gains from selling shares, bonds and fund units. Before the tax, the saver’s allowance of €1,000 is deducted, and for funds the Teilfreistellung. Exceptions are listed in § 32d (2) EStG, for example loans between related people or large stakes in a company.
Example
Clara earned €3,000 interest on a savings account in 2026. Her €1,000 Freistellungsauftrag sits at that bank, so €2,000 is taxable:
- without church tax: €2,000 × 26.375 % = €527.50
- with 9 % church tax: €2,000 ÷ 4.09 = €489.00 tax, plus €26.89 surcharge and €44.01 church tax, €559.90 in total
Losses: the rules people miss
- Investment losses cannot be set against salary or rent (§ 20 (6) sentence 1 EStG). They carry forward to later years.
- Losses from selling shares can only be offset against gains from selling shares (§ 20 (6) sentence 4 EStG). Gains from selling ETFs do not count; they are fund income (§ 20 (1) no. 3 EStG).
- Your bank offsets gains and losses within the year automatically and carries the rest forward (§ 43a (3) EStG). If gains and losses sit at different banks, you need a loss certificate (Verlustbescheinigung) and a tax return.
When filing still helps
The withheld tax is not always final. With Anlage KAP you can ask the tax office to recalculate, for example when your allowance was not fully used or you have losses at another bank (§ 32d (4) EStG). If your personal tax rate is below 25 %, the Günstigerprüfung can tax the income at the normal rate instead (§ 32d (6) EStG).
In your plan
What matters for planning is often less the rate than the timing. With accumulating funds you pay each year only on the Vorabpauschale, and the rest when you sell. The ETF savings plan calculator shows what is left after costs and tax, and how long will my money last shows how withdrawals play out. The guide the tax plan looks at taxes across a whole plan.