Flat-rate withholding tax (Abgeltungsteuer)

What does the flat-rate tax cover?

The tax covers income from capital assets under § 20 EStG – essentially everything private capital yields. Banks and corporations withhold the tax at source as Kapitalertragsteuer and remit it to the tax office. In the normal case, the income then no longer appears in the tax return at all – hence the name "abgeltend" (settling).

• Interest from savings, bonds and loans.
• Dividends and GmbH profit distributions.
• Distributions and advance lump sums from investment funds.
• Capital gains on shares, funds and certificates – regardless of holding period.
• Income from derivatives and option premiums.

Saver's allowance and loss offsetting

Each person receives €1,000 of investment income tax-free per year (saver's allowance; €2,000 for joint filers) – in exchange, deducting actual expenses such as custody fees or financing interest is excluded. Important in practice: the allowance only works if the bank holds an exemption order (Freistellungsauftrag). In addition, losses from share sales may only be offset against gains from shares – a separate loss pot that surprises many investors.

The Günstigerprüfung: when is assessment better?

If your personal marginal tax rate is below 25 % – for example in retirement, in a loss year or during a start-up phase – you can apply for the Günstigerprüfung in your tax return (Anlage KAP). The tax office then calculates both variants and automatically applies the more favourable one. The application can never make you worse off – it is a pure option in your favour.

Exceptions under § 32d (2) EStG

The flat rate does not apply everywhere. Interest on loans to your own GmbH (shareholding of 10 % or more) or between related parties is taxed at the personal rate – the legislator wants to prevent profits from being artificially shifted into the 25 % regime via shareholder loans. Conversely, GmbH shareholders holding at least 25 % (or 1 % plus significant professional influence) can opt into the partial-income method (Teileinkünfteverfahren): 40 % of the distribution remains tax-free, and expenses such as acquisition financing interest become 60 % deductible.

Distribution strategy

Distribute, retain – or build a holding?

Whether the flat tax, the partial-income method or retention in a holding is the best route depends on your shareholding, financing and private plans. We model the variants for your specific situation – with numbers, not gut feeling.

Discuss your distribution strategy

The most common mistakes in practice

• No exemption order filed – the bank withholds tax even though the saver's allowance is still unused.
• Forgetting the Günstigerprüfung although the personal tax rate is below 25 %.
• Calculating shareholder loans to your own GmbH at 25 % – in reality, the personal rate applies.
• Not opting into the partial-income method despite a debt-financed share purchase – the interest then evaporates for tax purposes.