Capital gains in the tax return

Stock profits are subject to a 25% withholding tax. Here’s how your capital gains are taxed and how to report them in the Taxfix app.

🚀 Your Guide 

• What are capital gains, and how are they taxed?
• What is the tax-free allowance?
• What is an exemption order?
• What if no exemption order was issued?
• Favorable tax assessment for capital gains
• Do I need to report capital gains in my tax return?
• Which capital gains cannot be reported with Taxfix?

What are capital gains, and how are they taxed?

Capital gains refer to income from investments such as stock profits, interest, or dividends. These are subject to a uniform 25% withholding tax, plus a solidarity surcharge and, if applicable, church tax.

Your bank automatically deducts this tax and forwards it to the tax office. You will receive a tax certificate from your bank, which you can use for your tax return.

What is the tax-free allowance?

The tax-free allowance (Sparerpauschbetrag) is the amount investors can earn from capital gains before the withholding tax applies.

👉 Tax-free allowance over the years:

• Until 2022: Singles up to €801, married couples up to €1,602 tax-free.
• Since 2023: Singles up to €1,000, married couples up to €2,000 tax-free.
• From 2024: No changes to allowances; the limits remain at €1,000 for singles and €2,000 for married couples.

📌 Important from 2024: To take full advantage of the increased allowance, update your exemption order at your bank. If not updated, the old amount applies, leading to excess tax deductions.

The withholding tax is usually deducted directly by the paying institution and sent to the tax office.

Investors should ensure their exemption orders align with the current limits to maximize tax benefits.

How to Enter Your Tax-Free Allowance in the Taxfix App

Simply enter your tax certificate in the Taxfix app. The system automatically calculates whether you've overpaid capital gains tax, helping you secure a refund effortlessly.

What is an exemption order?

An exemption order allows you to keep capital gains tax-free up to the tax-free allowance. You can apply for it directly at your bank or financial institution.

You may distribute your exemption across multiple banks, but the total must not exceed the tax-free allowance.

What if no exemption order was issued?

If you don’t have an exemption order, your capital gains are automatically taxed at 25%. If your earnings are below the tax-free allowance, you can reclaim overpaid tax via your tax return.

Simply declare your capital gains in your tax return—Taxfix will calculate whether you’re entitled to a refund.

Favorable Tax Assessment for Capital Gains

The tax office automatically checks if your personal tax rate is lower than 25%. If so, your capital gains will be taxed at the lower rate. Otherwise, the standard 25% withholding tax applies.

This assessment happens automatically and can never result in higher taxes for you.

Do I need to report capital gains in my tax return?

Capital gains from domestic banks usually do not need to be declared, except in specific cases:

• You mistakenly issued exemption orders exceeding €1,000 (or €2,000 for married couples).
• You are subject to church tax and placed a blocking notice at the Federal Central Tax Office.

If neither applies, reporting your capital gains is optional but may be beneficial due to the favorable tax assessment.

Which Capital Gains Cannot Be Reported with Taxfix?

Capital gains from foreign banks cannot be declared via Taxfix. These must be reported separately in your tax return.

Domestic capital gains, such as from ETFs or stocks, can be easily entered in the Taxfix app in the category "Income" under the section "other incomes" by choosing the option "Capital gains".

💡 Further helpful articles:

• What is foreign income?
• How is foreign income taxed in Germany?
• Foreign investment income in the tax return with Taxfix
• Bitcoins and cryptocurrency in the tax return

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