Germany Dividend Tax Guide (Besteuerung von Dividenden)
Dividend income in Germany is subject to the Abgeltungsteuer — a flat 25% withholding tax (Kapitalertragsteuer) plus 5.5% Soli and church tax (if applicable). The Sparerpauschbetrag (€1,000 single / €2,000 married) covers dividends, interest, and capital gains up to the limit. A Freistellungsauftrag with your broker prevents tax withholding on amounts within this allowance. Equity funds benefit from a 30% Teilfreistellung on dividends.
When a German company pays dividends, it automatically withholds 25% Kapitalertragsteuer plus Soli and church tax and remits it to the Finanzamt. For dividends from foreign companies, the withholding may be at a different rate — but Germany's tax treaties (Doppelbesteuerungsabkommen) typically limit foreign withholding to 15%, with the remainder taxed in Germany subject to a foreign tax credit. For related reading, see our Capital Gains Tax Guide → and Savings Allowance Guide →.
How Dividends Are Taxed
- Kapitalertragsteuer (withholding tax): 25% is automatically withheld by your German broker or bank on all dividend payments. This applies to dividends from German companies (Aktiengesellschaften), foreign companies held via German brokers, and fund distributions. The bank sends the tax directly to the Finanzamt.
- Additional surcharges: 5.5% Solidaritätszuschlag on the 25% tax = 1.375% of the dividend. Church tax (Kirchensteuer) at 8%–9% of the 25% tax = ~2%–2.25% of the dividend. Total maximum: ~28.6%.
- Sparerpauschbetrag (€1,000/€2,000): The first €1,000 of investment income (dividends + interest + capital gains) per person is tax-free. Married couples sharing accounts can use €2,000. To use this at source, file a Freistellungsauftrag with each broker; without one, tax is withheld immediately and you must reclaim it via the tax return.
- Teilfreistellung (partial exemption): For equity funds (Aktienfonds) with >50% stocks, 30% of dividend distributions are tax-free — only 70% is subject to Abgeltungsteuer. For mixed funds with >25% stocks, 15% are tax-free. Direct share dividends do not benefit from Teilfreistellung.
Foreign Dividends and Tax Treaties
- Withholding in the source country: If you hold shares in a US company (e.g., Apple, Microsoft), the US typically withholds 15% dividend tax under the Germany-US DBA. Your German broker then credits this 15% against your German withholding tax, so you pay only the difference (25% – 15% = 10% German tax, plus Soli and church tax).
- Anlage KAP (tax return form): If your bank has correctly withheld German tax, you generally do not need to report dividends separately. However, if you want to reclaim overpaid foreign withholding, apply the Günstigerprüfung, or claim unused Sparerpauschbetrag, you must file Anlage KAP with your Steuererklärung.
- Dividends from non-DBA countries: Some countries (e.g., certain tax havens) have no DBA with Germany, resulting in higher withholding. You can claim a deduction or credit for the foreign tax on your German return, subject to limits. In extreme cases, the foreign withholding may exceed the German tax due.