Sell shares, receive dividends or earn interest as a German tax resident and the headline is simple: a flat 26.375%, withheld at source, regardless of how long you held. That is the 25% Abgeltungsteuer plus the 5.5% solidarity surcharge on the tax, and it is unchanged for 2026. Church members pay an additional 8 or 9% of the tax on top, which brings the total to roughly 27.8 to 28%.
The headline is simple. The arithmetic underneath it is not, because three German specifics decide what you actually pay: which shares you are deemed to have sold (FIFO), what slice of a fund's gain is exempt before the rate applies (Teilfreistellung), and how much of your allowance is left (Sparer-Pauschbetrag). Most English-language guides state the rules. This post computes one real sale through all three, and then prices the identical sale across two borders.
The short version
- Flat 26.375% on gains, dividends and interest, withheld by German brokers at source. No reduced rate for long holding: since 2009 there is no holding-period relief for securities.
- The first 1,000 euro of all investment income combined is tax-free per person, 2,000 for jointly assessed couples. It only works at source if you file a Freistellungsauftrag with your broker, it can be split across brokers, and an unused allowance does not carry to next year.
- When you sell part of a position bought in tranches, German law sells the oldest shares first. FIFO is not a choice, and it usually maximises the taxed gain in a rising market.
- Fund investors get a discount the headline rate hides: 30% of an equity fund's gains and distributions are exempt (Teilfreistellung), making the effective rate on equity ETFs about 18.5% before the allowance. Mixed funds get 15%, real estate funds 60%.
- Share-sale losses live in their own bucket and only offset share-sale gains; other losses offset other investment income. Loss pots carry forward indefinitely.
One sale, computed in full
A worked example, not a real client. You bought one stock in three tranches and sell part in 2026:
| Tranche | Bought | Shares | Price | Cost |
|---|---|---|---|---|
| 1 | Jan 2019 | 100 | 50.00 | 5,000 |
| 2 | Mar 2022 | 100 | 80.00 | 8,000 |
| 3 | Feb 2025 | 100 | 120.00 | 12,000 |
In June 2026 you sell 150 shares at 130.00, proceeds 19,500.
FIFO decides which 150 shares left: all of tranche 1, then 50 shares of tranche 2.
- Tranche 1 gain: 100 x (130.00 - 50.00) = 8,000
- Tranche 2 gain: 50 x (130.00 - 80.00) = 2,500
- Taxable gain: 10,500
Assuming the full single allowance is unused: 10,500 - 1,000 = 9,500. Tax at 26.375% = 2,505.63. A jointly assessed couple with the full 2,000 available pays 2,241.88.
Notice what FIFO did: you sold at 130 shares you mostly bought at 50, so the taxed gain (10,500) is far larger than the "average" story you might tell yourself. The average cost of the whole position is 83.33, and 150 x (130.00 - 83.33) is only 7,000. Germany does not care; the oldest, cheapest shares go first.
The same sale, if it were an equity ETF
Had this been an equity fund rather than a single stock, the Teilfreistellung exempts 30% of the gain before anything else:
- Taxable share: 10,500 x 0.70 = 7,350
- Minus allowance: 7,350 - 1,000 = 6,350
- Tax at 26.375% = 1,674.81
That is an effective 18.46% rate on fund gains before the allowance, which is the single most under-communicated number in German investing: the flat tax on a broad equity ETF is not 26.375%, it is roughly 18.5%. The counterweight is the Vorabpauschale, a small annual advance tax on accumulating funds in years when markets rose, credited against the final bill when you sell.
The identical trade across two borders
Same tranches, same sale, different tax residence, using each country's 2026 regime:
| Residence | Method | Taxable gain | Tax due |
|---|---|---|---|
| Germany | FIFO, 1,000 exempt, 26.375% | 10,500 | 2,505.63 |
| France | 31.4% flat (PFU), no exemption | 10,500 | 3,297.00 |
| Belgium | Average cost, 10,000 exempt, 10% | 7,000 | 0.00 |
Belgium's average-cost method computes the gain at 7,000, which sits entirely inside its 10,000 annual exemption, so the same trade that costs 2,506 in Munich and 3,297 in Paris costs nothing in Antwerp. We wrote up the Belgian regime and the French one separately, arithmetic included; the long-run effect of these gaps on a retirement date is computed in the 4% rule in Europe, where the identical portfolio's stop date lands more than two years apart between Germany and Belgium.
If you would rather run your own plan under German settings than trust our example, the free calculator loads with the 26.375% rate and the 1,000 allowance prefilled, needs no signup, and every input is editable.
What the Krosos preset does and does not model
Krosos ships a Germany preset that mirrors the mechanics above where they matter for a portfolio ledger: FIFO cost basis, 26.375% on gains, dividends and interest, and a 1,000 euro annual exemption with no carry-forward, which matches how the Sparer-Pauschbetrag actually behaves.
Honesty about the edges: the preset applies the single allowance (enter 2,000 as a couple if that fits your filing), and it does not model the Teilfreistellung, the Vorabpauschale, church tax, or Germany's separated loss buckets. For a portfolio heavy in equity funds the preset therefore overstates the tax somewhat, which is the conservative direction, but check the fund arithmetic above if precision matters to you. Crypto sits outside the Abgeltungsteuer entirely in Germany: private sales are tax-free after a one-year holding period, a regime of its own that no flat-rate preset represents.
What this leaves out
- The Günstigerprüfung. Below roughly 19,000 euro of total income, you can elect your personal income-tax rate instead of the flat 26.375%. Retirees on modest incomes should check it; the tax office applies whichever is cheaper if you ask.
- Rates change by budget law. France proved it this year by lifting its flat tax to 31.4%. Everything above was verified against the 2026 rules in August 2026; check the year before relying on a number.
- Withholding is not filing. The broker's deduction usually settles the tax, but foreign brokers do not withhold German tax at all, and then the Anlage KAP declaration is on you.
As always: these are estimates from stated assumptions, for planning. Not tax advice.