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Capital Gains Tax in Germany: A Comprehensive Guide
Understanding the Kapitalertragsteuer
The Kapitalertragsteuer, also known as the Abgeltungsteuer, is the final withholding tax on capital gains in Germany. Individuals must pay tax on capital gains accrued from the sale of assets, such as stocks, bonds, and real estate.
Tips to Save on Capital Gains Taxes
To minimize capital gains taxes, consider the following strategies:
- Utilize the tax-free allowance of up to €801 (single) and €1,602 (married).
- Hold assets for at least one year to qualify for the lower long-term capital gains rate.
- Offset capital gains with capital losses from other transactions.
Special Cases
Under certain conditions, gains from private disposals may be exempt from capital gains tax. For instance, the sale of personal belongings or real estate held for more than ten years is typically not subject to taxation.
Final Withholding Tax
Since 2009, a final withholding tax of 25% must be paid on capital gains. This tax is automatically deducted by financial institutions upon the sale of assets. In some cases, tax refunds may apply if the individual's overall tax liability is lower than the amount withheld.