ETFs & tax in Germany: the essentials
In Germany, ETF gains are subject to the flat capital gains tax (25 % plus solidarity surcharge and possibly church tax). Three terms matter.
1. Saver’s allowance (Sparerpauschbetrag)
Each year 1,000 € of capital income is tax-free (couples: 2,000 €). Set up an exemption order (Freistellungsauftrag) with your broker so it is applied automatically.
2. Partial exemption (Teilfreistellung)
For equity ETFs (at least 51 % stocks), 30 % of gains are tax-free. This offsets taxes the fund already pays internally, meaningfully lowering your effective tax on equity-ETF gains.
3. Advance lump-sum tax (Vorabpauschale)
Because accumulating ETFs pay no dividends, the Vorabpauschale applies: a small yearly advance tax on a notional minimum return.
- It only applies if the ETF rose during the year.
- It is usually small and credited against tax at later sale (no double taxation).
- A German broker collects it automatically – nothing to do.
Holding via a foreign broker
Foreign brokers don’t withhold German tax automatically – you must declare the income yourself. A German broker handles it for you.
This article is general information, not tax advice. Rules can change; consult a tax adviser if in doubt.