The short answer

Gains from ETFs are taxed at 25% plus a small surcharge. The first €1,000 of investment income per year is tax-free, and for equity ETFs another 30% of the gain is tax-free.

One flat rate, two discounts

Sell an ETF for more than you paid and the difference is investment income. Dividends and interest count too. Germany taxes all of it at the same flat rate. Your yearly allowance keeps the first part tax-free, and equity funds get a further discount on top.

Sam made €10,000. How much does Sam keep?

Sam, 41Hamburg · sells part of an equity ETF
Hypothetical example

Profile

Tax resident in
Germany
Church member
No
Allowance used this year
€0

Inputs

Gain on sale
€10,000
Fund type
Equity fund
Allowance left
€1,000

What happens

Sam keeps€8,417.50

Total tax is €1,582.50, about 15.8% of the gain.

Why

30% of the gain is tax-free because it is an equity fund. The allowance covers another €1,000. Only €6,000 is taxed.

Simplified. No losses, no earlier Vorabpauschale, no foreign taxes.

Now change Sam's numbers. Make the gain smaller, switch the fund type or use up the allowance, and watch where the money goes.

Try it with imaginary numbers

Follow a gain through the German tax rules

€
What kind of fund?
Most broad stock ETFs count as equity funds (over 50% in shares).
€
€1,000 per person per year. Interest and dividends use it up too.
  1. Your gainWhat you sold for, minus what you paid
    €0
  2. Tax-free partTeilfreistellung: 30% for this kind of fund
    €0
  3. Your allowanceSparer-Pauschbetrag, used up to what's left
    €0
  4. What actually gets taxedOnly this part
    €0
  5. Tax25%, plus a 5.5% surcharge on that tax
    €0
  6. You keepOverall that's a tax of about 0% on your gain
    €0

2026 rules for a private investor in Germany. No church tax, no losses and no earlier Vorabpauschale. The order of the steps is the legal one: tax-free part first, then the allowance. Try a sale, a payout or the Vorabpauschale

The four things that decide your tax

1. The partial exemption. For equity funds, 30% of the gain is tax-free. For mixed funds it is 15%. Other funds get none. Teilfreistellung in detail

2. Your allowance. The first €1,000 of all your investment income each year is tax-free (€2,000 for married couples assessed jointly). Interest and dividends use it up too.

3. The flat tax. What is left is taxed at 25%, plus a 5.5% solidarity surcharge on that tax. Together that is 26.375% of the taxable amount. Church members pay church tax on top.

4. Who pays it. German banks and brokers take the tax off automatically. To use your allowance there, you give them a Freistellungsauftrag. A foreign broker usually does not withhold German tax; you then declare the income in your tax return. German or foreign broker?

For accumulating funds. Funds that reinvest income can trigger a small taxable amount each year even if you sell nothing: the Vorabpauschale. What you pay this way is deducted from the gain when you sell, so the same amount is not taxed twice. The Vorabpauschale explained

Want the nerdy details?The rules, the exact numbers and the edge cases. Open it whenever you're curious.
  • Where each number comes from

Where each number comes from

  • § 32d EStGCapital income is taxed at 25%.
  • § 20 (9) EStGSparer-Pauschbetrag: €1,000, or €2,000 for jointly assessed spouses.
  • § 44a (2) EStGFreistellungsauftrag: lets your bank apply the allowance directly.
  • § 20 InvStGTeilfreistellung: 30% for equity funds, 15% for mixed funds.
  • § 2 InvStGWhat counts as an equity fund (over 50% shares) or mixed fund (at least 25%).
  • § 18 InvStGVorabpauschale: yearly advance taxation of funds that pay out little.
  • § 4 SolZGSolidarity surcharge of 5.5% on the tax.
Official ruleChecked

Tax on fund gains for private investors (2026)

  • Flat tax 25% plus 5.5% solidarity surcharge on the tax.
  • €1,000 yearly allowance per person, €2,000 for jointly assessed spouses.
  • Equity funds: 30% of income tax-free. Mixed funds: 15%.

Source: § 32d EStG: flat tax rate on capital income · § 20 EStG: capital income and the Sparer-Pauschbetrag (para. 9) · § 20 InvStG: Teilfreistellung

Three things worth checking

  • With a German broker, set up a Freistellungsauftrag so your allowance is used automatically.
  • With a foreign broker, keep the yearly report. You'll need it for your tax return.
  • Check whether your ETF is an equity fund. If it is, 30% of the gain is tax-free.

Check yourself

In which order are the two tax-free parts applied?

Video lesson · In the makingHow Germany taxes ETF gains

Official sources

  1. § 32d EStG: flat tax rate on capital income
  2. § 20 EStG: capital income and the Sparer-Pauschbetrag (para. 9)
  3. § 44a EStG: Freistellungsauftrag (para. 2)
  4. § 20 InvStG: Teilfreistellung
  5. § 2 InvStG: equity funds and mixed funds (paras. 6 and 7)
  6. § 18 InvStG: Vorabpauschale
  7. § 4 SolZG: solidarity surcharge rate

Last checked:

We explain how the German rules work in general. This isn't personal tax, legal or financial advice, and your bank, employer or tax office may treat your own case differently.

Where to go from here

See it with your own numbersInvestment Tax Calculator

Also useful

TeilfreistellungThe VorabpauschaleGerman or foreign broker?