Frequently asked questions

The “Abgeltungsteuer” is a definitive flat rate withholding tax on capital income and realized capital gains, which will be deducted by banks from all private capital gains at source, discharges all liability and is directly paid to the tax authorities.

The “Abgeltungsteuer” was introduced on January 1, 2009, and completely replaced the half-income method applied to dividends.

The tax affects interest, dividends, gains on the private sale of securities and forward transactions, option-taker premiums from option transactions, proceeds from, and increases in, the value of investment funds and financial innovations as well as gains on the private sale of insurance benefits (especially endowment policies).

The “Abgeltungsteuer” amounts to 25% of the proceeds or gains (plus the solidarity surcharge and—where applicable—church tax). Advertising costs cannot be deducted; the only deduction will be a savers’ flat rate of €801 (€1,602 for married couples).

1. The half-income method for private investors ceased to exist. This means dividends and capital gains are taxed on a 100% basis. Before the introduction of the new tax, dividends and capital gains were only taxed (at the personal tax rate) on a 50% basis within the speculation period (one year).
2. The one-year speculation period ceased to exist. Capital gains are taxable, regardless of the holding period.
3. Since January 1, 2009, onwards, the savers’ flat rate deduction of €801 per person and year has to cover all capital gains on securities transactions, in addition to interest and dividends. Realized capital gains are reclassified from private capital gains to proceeds from capital assets.

The new capital gains taxation rules only apply to securities purchased after December 31, 2008. The one-year speculation period is still in force for securities purchased before this date. Therefore, anyone who purchased securities in 2008 and held them for more than one year receives related gains tax-free after 2009 as well. A special rule applies to certificates.

The 25% deduction continues to apply to dividends received from 2009 onwards, as long as the savers’ flat-rate deduction has been exhausted—even if the securities were purchased before 2009.

The 25% deduction can be reduced retrospectively, if the capital gains are stated in the income tax return and the individual’s total tax charge lies below 25%.

Yes, but a difference is made between losses incurred before and after 2009. According to old legislation, speculative losses stated in the tax notice could be carried back one year and carried forward indefinitely. In contrast, losses incurred before 2009 are subject to an expiry date: They may still be offset against new gains on the sale of capital assets until 2013, but not against interest or dividends. Losses on shares incurred after 2009 may only be offset against gains on private sales transactions, but not against other capital gains such as interest and dividends.