Saving Taxes as an Investor: The Complete Guide for 2026

Anyone earning investment income in Germany pays 25 percent capital gains tax plus solidarity surcharge and possibly church tax – a total effective burden of 26.38 to 27.99 percent. With a tax exemption order, loss carry-forward, favorable assessment, and the right choice of fund structures, this burden can be legally and significantly reduced. Key to success are understanding the tax-free allowances, distributing them correctly across multiple accounts, and consistent year-end planning.

How Investment Income is Taxed in Germany

The taxation of private investment follows a clear pattern. Anyone holding stocks, ETFs, or bonds and earning income from them pays a flat 25 percent capital gains tax. In addition, there is a 5.5 percent solidarity surcharge on the tax itself, as well as 8 or 9 percent church tax if one is subject to church tax. The bank deducts the amount directly and forwards it to the tax authority.

What Counts as Investment Income

Investment income includes interest from savings products, dividends from stocks, distributions from funds, and realized capital gains from the sale of securities. Income from certificates and certain insurance products also falls under this category. Unrealized gains remain tax-free as long as the security remains in the portfolio.

The Effective Tax Burden at a Glance

• Capital gains tax: 25 percent
• Solidarity surcharge: 5.5 percent of the tax
• Church tax: 8 or 9 percent (depends on state)
• Total burden without church tax: 26.38 percent
• Total burden with church tax: up to 27.99 percent

Saving Taxes as an Investor: The Key Levers

Private investors who want to reduce their tax burden should combine multiple instruments. The saving allowance forms the foundation. Only the combination with loss carry-forward, smart fund selection, and favorable assessment unleashes the full effect. Each of these levers requires attention – but the effort often pays off within just a few hours of administrative work per year.

Using the Saving Allowance and Tax Exemption Order Correctly

Since 2023, the saving allowance stands at 1,000 euros per person, and 2,000 euros for married couples and registered life partners. Investment income up to this amount remains tax-free. However, this requires a tax exemption order filed with your bank or broker.

Utilizing the Tax-Free Allowance Across Multiple Accounts

Many investors have accounts and portfolios at different institutions. In such cases, the tax exemption order can be flexibly divided, for example 600 euros with Bank A and 400 euros with Bank B. Those wanting to use the full allowance should review the distribution annually, as unused portions expire at year-end.

What Happens Without a Tax Exemption Order

Without a filed tax exemption order, the bank automatically deducts taxes, even if the saving allowance remains untouched. The money can be recovered later via tax return, but the interest effect is lost. Once issued, an order remains valid until revoked.

Strategically Using Loss Carry-Forward

Loss carry-forward is one of the most effective instruments for reducing tax burden. Realized losses offset realized gains, so only the net amount is taxed. Banks automatically maintain loss accounts for this purpose.

General Loss Account and Equity Account

Tax law distinguishes two accounts. The equity account collects losses and gains from the sale of individual stocks. The general loss account accumulates losses from ETFs, funds, bonds, and certificates. Stock losses can only be offset against stock gains, but other losses are more broadly applicable.

Loss Certificate by December 15

Those maintaining portfolios at multiple banks and wanting to offset losses from one bank against gains from another need a loss certificate. The request must be submitted no later than December 15 of the current year. If this deadline is missed, losses carry forward to the next year and can only be applied there.

Tax-Loss Harvesting at Year-End

In November and December, it's worth reviewing your portfolio. Those holding underwater positions can strategically sell them, realize the losses, and repurchase the securities afterward. This creates usable losses without changing the long-term strategy.

Requesting a Favorable Assessment from the Tax Authority

If your personal income tax rate is below 25 percent, the flat capital gains tax is unfavorable. In this case, a favorable assessment is worthwhile. Through your tax return, the tax authority automatically applies the lower personal rate and refunds the difference.

Who Benefits From a Favorable Assessment

Typical beneficiaries are students, apprentices, part-time employees, retirees with low income, or those on parental leave. Once taxable income falls below the basic exemption of 12,348 euros for 2026, the entire investment income remains tax-free.

NV Certificate for Low-Income Investors

Those consistently earning below the basic exemption can request an NV certificate from the tax authority. The bank then withholds no capital gains tax from the outset. The form is numbered NV 1 A and is available from your local tax office.

NV Certificate for Children and Retirees

The NV certificate is valid for three years and must be renewed thereafter. It is particularly useful for children's portfolios, as children have their own basic exemption and their own saving allowance. Many retirees also benefit because they remain below the threshold.

Partial Exemption for Funds and ETFs

Since the Investment Taxation Reform of 2018, partial exemption applies to funds and ETFs. It is meant to compensate for the lack of foreign withholding tax credit at the fund level. The rates depend on the asset class.

Partial Exemption Rates

• Equity funds and equity ETFs: 30 percent tax-free
• Balanced funds with at least 25 percent equity allocation: 15 percent tax-free
• Real estate funds: 60 percent tax-free
• Real estate funds with predominantly foreign real estate: 80 percent tax-free

Accumulating ETFs and the Advance Flat Rate

Accumulating ETFs pay no dividends but reinvest them. The deferral effect works long-term like an additional return accelerator. However, the tax authority levies an annual advance flat rate, which is modest at low interest rates and is offset against later capital gains.

Saving Capital Gains Tax Through Withholding Tax Optimization

Those investing in foreign stocks often pay twice: once the withholding tax in the country where the company is seated, and once German capital gains tax. Germany credits a maximum of 15 percent foreign withholding tax. Higher amounts, such as from Switzerland or France, must be actively reclaimed.

Ireland-Domiciled ETFs

For US stocks, choosing ETFs domiciled in Ireland helps. The double tax treaty between Ireland and the US reduces withholding tax to 15 instead of 30 percent. Over years, this creates a noticeable return advantage.

Swap-ETFs as an Alternative

Swap-ETFs do not physically hold US stocks but replicate performance through swap transactions. Since no dividends flow directly, no withholding tax applies. The tax treatment via advance flat rate is unaffected by this.

Children's Portfolio as a Tax Instrument

A portfolio in the child's name unlocks a second saving allowance and a separate basic exemption. This allows investment income to be earned tax-free well into the four-digit range. Parents should note that the money legally belongs to the child and becomes fully available upon reaching adulthood.

Legacy Holdings Before 2009 and Tax-Free Asset Classes

Securities purchased before January 1, 2009 receive grandfather clause protection. Capital gains from these stocks or fund shares remain tax-free upon sale up to 100,000 euros per person. A transfer of assets within the family can extend this advantage.

Gold, Cryptocurrencies, and the Holding Period

Physical gold, gold ETCs with delivery option, and cryptocurrencies like Bitcoin fall under § 23 EStG. After a holding period of more than one year, gains are completely tax-free. As of 2025, there is also a 1,000 euro annual threshold for short-term private disposals.

Real Estate and the Ten-Year Speculation Period

Real estate also follows a holding period rule. Those holding a rental property for longer than ten years can sell it tax-free. For owner-occupied residential property, the period is shortened to the year of sale and the two preceding years in which the property was used for personal residence.

Tax Tips for Investors: Avoiding Common Mistakes

Many private investors pay more taxes than necessary because they overlook typical pitfalls. The following points come up particularly often in practice and cost real money.

Missing or Poorly Distributed Tax Exemption Order

Those maintaining multiple portfolios but filing a tax exemption order with only one bank often forgo three-digit amounts per year. An annual review prevents this.

Loss Carry-Forward Across Year-End

Those forgetting the loss certificate in December don't lose the losses but defer them to the next year. In years with high gains, this works like an interest-free loan to the tax authority.

No Tax Return Despite Refund Potential

Already-withheld capital gains tax can only be recovered through Schedule KAP. Those not filing a tax return forfeit the difference from favorable assessment or unused exemptions.

Asset Transfer and Gifting

Those holding larger amounts in their portfolio should understand gifting exemptions. Per parent and child, 400,000 euros can be transferred tax-free every ten years. Between spouses, the amount is 500,000 euros. Smart planning over decades can shift considerable wealth to the next generation without incurring inheritance tax.

Practical Year-End Checklist

1. Review tax exemption order and distribute across banks
2. Request loss certificate by December 15
3. Review portfolio for realizable losses
4. Request NV certificate if income is low
5. Check favorable assessment box in tax return
6. Document foreign withholding taxes
7. Plan gifts within the family

When Professional Advice Pays Off

For simple portfolios, self-research and a careful tax return suffice. However, once foreign income, legacy holdings, major gifts, or mixed structures involving real estate and securities come into play, consulting a tax advisor pays off. The cost of advice is often less than the avoided tax burden of a single year.

Risk Disclaimer and Liability

The information presented here does not replace individual tax advice. Tax laws change, and each investor's personal situation is different. Aktie.com assumes no liability for decisions made solely on the basis of this article. Those moving large amounts or planning complex structures should consult a tax advisor or legal specialist.