Capital Gains Taxes In Deutsch

Understanding Capital Gains Tax in Germany: A Guide for Expats

What is Capital Gains Tax in Germany?

Capital gains tax is a tax that is levied on profits made from the sale of capital assets such as stocks, bonds, real estate, and other investments. In Germany, capital gains are subject to an Abgeltungsteuer, or withholding tax, at a flat rate of 25%. This tax is applied to the gross profit from the sale of the asset, meaning that expenses such as acquisition costs and brokerage fees cannot be deducted from the taxable amount.

Who is Liable for Capital Gains Tax in Germany?

Capital gains tax in Germany is applicable to both residents and non-residents who realize capital gains from the sale of assets in Germany. Residents are subject to tax on their worldwide income, including capital gains. Non-residents are only subject to tax on capital gains from the sale of German assets.

How is Capital Gains Tax Calculated?

The amount of capital gains tax owed is calculated by multiplying the gross profit from the sale of the asset by the tax rate of 25%. For example, if you sell a stock for €10,000 and you had purchased it for €5,000, your gross profit would be €5,000 and your capital gains tax would be €1,250.

It's important to note that certain exemptions and allowances may apply to capital gains tax in Germany. For example, private sales of real estate are exempt from capital gains tax if the seller has owned the property for more than ten years. Additionally, individuals are entitled to a basic allowance of €1000 per year for capital gains.

Reporting Capital Gains Tax in Germany

Capital gains are reported on the German tax return. The deadline for filing tax returns is July 31st of the following year, and the tax must be paid by this date. Expats can use the Capital Gains Tax Calculator for Germany to estimate their tax liability and prepare their tax return.

Conclusion

Capital gains tax is an important consideration for expats living in Germany. By understanding the rules and regulations surrounding this tax, expats can ensure that they are meeting their tax obligations and minimizing their tax liability. It is advisable to seek professional tax advice to navigate the complexities of German capital gains tax and ensure compliance with local laws.